A further case (East Living Ltd. v Sridhar and TSG Services Ltd.) has confirmed the approach an Employment Tribunal (ET) should take when deciding whether or not an agency worker is in reality the employee of the end user company.
Mr Sridhar was supplied by TSG Services Ltd. (TSG) to work as a care worker for East Living Ltd. There was no contract of employment between Mr Sridhar and East Living but he had signed a contract for services with TSG. He was paid by TSG and was obliged to provide the agency with weekly time sheets. In addition, he was obliged to comply with TSG’s business policy and procedure and all matters set out in its handbook.
Problems arose over Mr Sridhar’s work performance. These were discussed at a meeting with his supervisor at East Living, Mr Murray. Mr Sridhar was unhappy with the way this was handled and sent a grievance letter to East Living, copying in one of the managers at TSG, Mr Singh. At a further meeting, Mr Sridhar became angry and accused Mr Murray of being a ‘liar, a racist’ and ‘not fit to be a manager’. As a result, Mr Murray informed Mr Singh that he did not wish Mr Sridhar to do any further work for East Living.
Mr Sridhar claimed that he had been victimised on racial grounds and on grounds of sexual orientation. The question for the ET was whether or not he was an employee of East Living.
Mr Sridhar claimed that he was. He was obliged to undergo the same appraisal procedure as employees of East Living and was referred to on the appraisal form as an employee of the company.
The ET found that the way in which the contract was performed was consistent with an implied contract of employment between Mr Sridhar and East Living. The company appealed.
The Employment Appeal Tribunal (EAT) allowed the appeal. In its view, the ET had applied the wrong test. The correct approach, as established in James v Greenwich Borough Council, is to ask:
- Whether or not the express contractual arrangements put in place at the outset adequately explain the actual relationship of the three parties involved at that stage.
- If they do, have any subsequent words or conduct of the parties changed matters?
- If they have, or if the answer at the first stage was ‘no’, ask whether or not, in light of those changes, it is necessary to imply a contract of employment, taking account at that stage of the irreducible minimum mutuality of obligation that is required for there to be such a contract.
The ET had not done so. In raising his grievance with East Living, rather than with TSG, Mr Sridhar had been acting in accordance with his obligations under TSG’s handbook. Furthermore, Mr Murray spoke with Mr Singh, not Mr Sridhar, when he wished to terminate the working relationship. These actions were all readily explained by reference to the contract entered into between Mr Sridhar and TSG. Although his name had been entered in a box marked ‘Name of Employee’ on the appraisal form, Mr Sridhar’s stated job title made it clear that he was an agency worker.
In the EAT’s view, the ET had fallen into the trap of thinking that ‘since the Claimant looked like an employee and acted like an employee, he was an employee’.