UK: Brook Street Bureau (UK) Ltd v Dacas: The Practical Consequences

In their judgment, the Court of Appeal held that the Employment Tribunal, although correct in their finding that there was no contract of employment between Mrs Dacas and Brook Street (an employment agency), had erred in holding that Mrs Dacas was not an employee of the council to which she had been assigned by Brook Street to work as a cleaner for a number of years. The Tribunal had failed to consider that a contract of employment between the agency worker and the end user (i.e. the council) may be implied as a necessary inference from the conduct of the parties and the work done.

This decision has thrown into doubt the position of the agency worker. It appears that, agency workers will now be able to run an argument that they have an implied contract of employment with the end user of their services. It seems likely that, from now on, if agency workers are retained for more than 1 year by the end user, they will qualify for the right not to be unfairly dismissed. If this argument is followed to its logical conclusion it also seems likely that agency workers who are retained for shorter periods will also have the right not to be dismissed for an automatically unfair reason, for which the 1 year qualification period is not a requirement.

In reality, the effect of this decision will vary from case to case. The burden will remain with the agency worker to show on the facts that an implied contract of employment has arisen, for example, through mutuality of obligation and conduct. That is a high hurdle for the agency worker to get over. What the decision does mean though is that in such cases Employment Tribunals will be more likely to at least consider whether an implied contract of employment has arisen.

As a result of this decision, many organisations will now consider that there is little advantage in engaging agency staff in the future rather than taking on employees on temporary or short term contracts. At least if an organisation takes on employees on temporary contracts, it will have control in managing the termination of employment at the end of those contracts rather than having to rely on the uncertain argument that there is no implied contract of employment and that the termination of employment was not the organisation’s responsibility. It would be advisable to restrict such short term contracts to a period of less than one year to avoid the risks of an unfair dismissal claim on termination. In short, this case could have huge consequences for employment agencies across the country.