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Agency staff rights after 12 months service

Agency staff rights after 12 months service

My brother has his own Limited Company and is contracting through a recruitment agency to a local public organisation.

He has been in his current position for approximately 10 months and he has been told that his employment will end very shortly to prevent him accruing any rights having been with them for 12 months.

I do not understand what benefits / rights that he could accrue considering he is a contractor through an Agency. I have spoken to ACAS and our legal helpline and have been told that he will not get any rights. Unfortunately their HR Department have dug their heels in and are refusing to change their minds and despite intervention by senior management, it would appear he is going to lose this contract.

Maybe someone could enlighten me what benefits you might accrue in the circumstances above (or confirm that there aren’t any). Also if anyone has any bright ideas of a way round (maybe a weeks break in continuity of service) please let me know.

Thanks for your help.

Matt Young


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23rd Jun 2006 09:45

Hi Matt,

As you're probably aware, the major entitlement after 12 months employment service is unfair dismissal. Additionally, the mere fact of a long term engagement with one organisation could (theoretically) lead to an assumption of an employment relationship (and all its attendant entitlements - holidays, sick pay, statutory protections etc)

However, assuming your brother does not have a contractual link with the end user organisation (i.e. he works on the basis of a contract/service agreement between the end user and the agency), then its unlikely that he would be regarded as being an employee of the end user. This proposition is supported by the EAT decision in Hewlett Packard v Murphy.

It seems the end user is taking a 'no risk' approach in the matter. Maybe it would be worthwhile referring them to the above case - it might help ease their concerns.

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By Anonymous
22nd Jun 2006 13:42

Even though he has his own company and is working through an agency the first question is:

Is he a contractor or employee? Of late the Revenue have been taking the view that you must be able to answer yes to all of the following:

Can you hire someone to do the work for you or engage helpers at your own expense?
Do you risk your own money?
Do you provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves?
Do you agree to do a job for a fixed price regardless of how long the job may take?
Can you decide what work to do, how and when to do the work and where to provide the services?
Do you regularly work for a number of different people?
Do you have to correct unsatisfactory work in your own time and at your own expense?

I would suggest that the HR Department are looking at the fact that he is not working for anyone else apart from them so thinking that if they were challenged over his employment status and he was found to be an employee after one year he would gain employment rights.

The other thing is that they may just be trying to save money or safeguarding their position by having a perm employee in the post rather than a contractor who can hold them to ransom.

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By marriot
27th Jun 2006 10:22

The fact that an individual contracts through his own company and then through an agency does not preclude him from being found to be an employee of the end-user.

The recent cases of Brook Street Bureau v Dacas and Cable & Wireless v Muscat have been clear in their finding that it is a Tribunals duty to look to see if they should imply a contract between the individual and the end-user effectively removing both the agency and the limited company from the chain. If on the evidence the implied contract is one of employment then that is what they must find. It is because of the above cases that individuals are being prevented from accruing employment rights.

Whether the implied contract is one of employment will depend on three key issues. Is the individual required to provide his own personal service? Are there mutual obligations between the parties? Is the individual controlled as to 'how' the services are provided? Other ancillary factors will be looked at if the above three criteria are satisfied. Unfortunately following what the Revenue say as to employment status will not be the same as following the case law.

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