4.3 Temporary workers: vicarious liability for casual or agency staff?

course of employment. As more work is contracted out by employers, the typical employment relationship becomes one of employer–independent contractor rather than employer–employee.’56

This may appear harsh when one considers that many casual workers are used on a regular basis and may regard this work as their main source of income. Further, due to contracting-out policies undertaken by many public bodies and large organisations, matters such as cleaning and security are commonly undertaken by agency staff, who are considered to be more cost effective than permanent staff. Agency staff may thus work for one employer for a number of years, although, for reasons of cost, will not be accepted as permanent staff. Should vicarious liability thus depend on the employment practices of the employer? More pertinently, should the victim’s ability to rely on the principle of vicarious liability to ensure compensation depend on whether the person wearing the company’s uniform is actually permanent or agency staff?

4.3.1 Finding liability

Concern has been raised that a strict application of this test serves to deprive temporary workers of the rights provided to employees. For example, in O’Kelly v Trusthouse Forte,57 casual waiting staff at a hotel were held not to be employees, even though they worked on a regular basis exclusively for the hotel. The Court of Appeal held that in the absence of an obligation on the claimants to accept work and on the hotel to provide it, no contract of employment would arise. An assurance of priority for any available work created no more than an expectation of work. It was not a contractual promise.58

The majority of the Court of Appeal in Nethermere (St Neots) Ltd v Taverna and Gardiner59 adopted a more flexible approach when faced with a similar situation. Here, the court was prepared to accept that homeworkers, operating on a piecework basis for more than two years, were in reality employees under a contract of employment implied by conduct. Well-founded expectations of continuing homework over a year or more could thus harden into an enforceable contract of service.60 By implying an ‘overall’ or ‘umbrella’ contract obliging the company to continue to

56‘Employers’ liability for independent contractors in tort law’ Judicial Review, 4 (2000), 395.

59[1984] ICR 612 (Kerr LJ dissenting), relying on Airfix Footwear Ltd v Cope [1978] ICR 1210.

60See [1984] ICR 612 at 627 per Stephenson LJ.

provide and pay for work and the workers to continue to accept and perform the work provided, the applicants were able to bring claims for unfair dismissal.

The more recent English case of Brook Street Bureau (UK) Ltd v Dacas61 demonstrates that a more generous approach may also be developed for agency staff. Mrs Dacas had worked for Wandsworth Council as a contract cleaner for over four years, although throughout that time had been supplied to the local authority through the Brook Street agency. She had been paid by the agency on the basis of time sheets supplied by the council. When dismissed, the question arose against whom any claim for unfair dismissal should be brought? Was she employed by the council, or the agency, or was she an independent contractor? The majority of the Court of Appeal held that, depending on the evidence, it could be argued that Mrs Dacas was employed by the council by means of an implied contract of employment. In view of her long service and the fact that she could be said to be paid indirectly by the council, mutual obligations could be found.62

The courts have, as yet, been reluctant, however, to find a contract of employment between the worker and the end-user, save where it satisfies the test of necessity and does not conflict with any express terms of the contracts between the parties.63 Such an approach has led commentators to suggest that there has been ‘a reversal of the “employee protective” and policy-oriented approach developed in Franks, Dacas and Muscat . . . returning to the classic orthodoxy of common law principles’.64

61[2004] EWCA Civ 217, [2004] ICR 1437. See also Frank v Reuters Ltd [2003] EWCA Civ 417, [2003] ICR 1166. Although technically obiter, the reasoning was approved by the Court of Appeal in the later case of Cable & Wireless plc v Muscat [2006] EWCA Civ 220, [2006] ICR 975 (contract of employment found with end-user where Muscat had initially been an employee of the end-user, but had been persuaded by the company to provide his services via an agency, without any change in function).

62Contrast the view of Munby J dissenting that such a conclusion was impossible unless the end-user paid the worker. Note also the earlier case of McMeechan v Secretary of State for Employment [1997] ICR 549: agency could be ‘employer’ in respect of individual assignments, but subsequent case law has re-emphasised the need to find mutual obligations on employer/employee: see Montgomery v Johnson Underwood Ltd [2001] EWCA Civ 318, [2001] ICR 819.

63See Cable & Wireless plc v Muscat [2006] EWCA Civ 220 at paras. 38–9 per Smith LJ; and James v Greenwich LBC [2008] EWCA Civ 35, [2008] ICR 545.

64M. Wynn and P. Leighton, ‘Agency workers, employment rights and the ebb and flow of freedom of contract’, Modern Law Review, 72 (2009), 91 at 92.

4.3.2 A less technical approach?

A number of difficulties arise here. The formalism of common law contract law – the requirement of consideration moving from promisor to promisee, privity of contract, restrictions on terms implied in fact – all obstruct a more general application of the principle of vicarious liability based on the ‘totality of the relationship’, including who controls the work of the employee. The analysis of the courts runs the risk of finding no one strictly liable for the worker, classifying him an independent contractor. In a situation where casual or agency staff are most unlikely to obtain insurance, subject to any specific contractual requirements, there is an obvious risk of failing to meet the policy objectives of vicarious liability, be they compensation to the victim, accident prevention or loss distribution. It is noticeable that civil systems, possessing no doctrine of consideration,65 have been more ready to find an employer liable for the torts of such temporary staff. Applying the general tests of subordination (French law) or the right to give instructions (German law), one sees a greater readiness in agency situations to render the end-user liable, subject to express contractual conditions. In Germany, for example, if the worker is found to be fully integrated into the work of the end-user (and it is for the end-user to terminate the relationship), then the end-user will be the Gescha¨ftsherr for the sake of } 831 BGB.66 In France, the so-called inte´rimaires (temporary workers) problem is dealt with under the ordinary ‘subordination’ test – again, it being most likely that the end-user will be found to be the commettant under Article 1384(5) as the body exercising direction and control over the worker.67 Again, the express terms of the contract between the agency and the end-user will be relevant. For example, in 1985, the Criminal chamber of the Cour de cassation held that a clause stating without any ambiguity that, during the course of the detachment, the end-user is the worker’s employer/commettant, signified that the end-user would be liable under

65K. Zweigert and H. Ko¨tz, An Introduction to Comparative law, 3rd edn (Oxford: Clarendon Press, 1998), ch. 29.

66See OLG Dusseldorf, 23 December 1994 NJW-RR 1995, 1430, upheld by BGH on appeal; and see van Gerven et al., Tort law, 5.G.9.

67See Gaudu, ‘La responsabilite´ civile’ Nos 24–5. This also deals with the problem of ‘stagiaires’, undertaking placements under government schemes. Although there was some initial doubt whether the agency or the end-user should be liable (see, for example, Civ 29 November 1973 D 1974.194 note B. Dauvergne; RTD civ. 1974.419 obs G. Durry), modern case law favours rendering the end-user liable: see Crim 10 May 1976 D 1976 IR 175, RTD civ. 1976.785 obs G. Durry; Paris 25 February 1977 D 1977 IR 329 obs C. Larroumet.