Agency Workers, Determining an Employer and Redundancy Payments

Background

The case of Amanda Craddock v Head–Hunt International Limited (ADJ00036831) examines the circumstances under which a redundancy payment would ordinarily be payable to an agency worker.

Ms Craddock (the Complainant) brought a complaint under Section 39 of the Redundancy Payments Act, 1967 against Head-Hunt International Limited (the Respondent) to the Workplace Relations Commission (WRC), alleging that, having been employed as a legal secretary from 13 March 2000 until 10 September 2021, she was entitled to a redundancy payment on the termination of her employment.

This case had initially been progressed by the late Mr Richard Grogan, with the file being passed to Crushell & Co. Solicitors following his passing. In addition to the redundancy payments claim, Mr Grogan had also filed complaints under Section 8 of the Unfair Dismissals Act, 1977 against the Department of Housing, Local Government & Heritage as well as the Department of the Environment, Climate & Communications, to ensure that Ms Craddock could avail of the requisite redress, should it be found that one of those governmental agencies was actually her employer. 

Legislation and Case Law

The complaint was primarily grounded in Section 2 of the Redundancy Payments Acts, 1967, which describes the employer as;

"Employer” means in relation to an employee the person with whom the employee has entered into or for whom the employee works under (or where the contract of employment has ceased, entered into or worked under) a Contract of Employment, subject to the qualification that the person who under a Contract of Employment referred to in Paragraph (b) of the Definition of the Contract of Employment is liable to pay the wages of the individual concerned in respect of the worker services concerned shall be deemed to be the individual's employer".

Ms Craddock worked for the Mahon Tribunal in Dublin Castle. In 2020, Ms Craddock had been sent to an interview to the Mahon Tribunals Offices by Head-Hunt International, an employment agency.

Throughout the time of her employment with the Mahon Tribunal, the Complainant worked as a secretary reporting exclusively to personnel within the Mahon Tribunal and had no contact whatsoever with the Respondent other than to send her weekly timesheets to the Respondent and to deal with matters regarding her pay. The Respondent on receipt of the weekly time sheets sent them to a third-party Elite Accounting and Auditing located at Oakley Wood, Tullow Road, Ennis, Co Clare. Elite Accounting and Auditing provide payroll services and it was they who prepared the pay slips for the Complainant and made the transfer of her wages directly to her.

The Respondent generated invoices which it would send directly to the Mahon Tribunal for reimbursement of the monies owing to it by the Mahon Tribunal. The Respondent is a holder of an Employment Agency License but it has never conducted business as an Employment Agency.

The question in this case is whether an employment relationship existed and if so with whom did that relationship exist. The first point to make is that when conducting an analysis of any specific situation limited reliance should be placed on any contractual documentation between the parties themselves. In other words, any label that the parties themselves gives to an arrangement cannot determine the nature of the arrangement, rather that is a question of legal analysis of the factual reality of the relationship. The courts have in determining whether individuals are employees or independent contractors set out various tests including the control test, the entrepreneur test, and mutuality of obligation, and the Revenue Commissioners have published a code of practice to assist in establishing the work status of an individual as recently as July 2021.

What is relevant in this case is the position in relation to agency workers who until relevantly recently were regarded as employees of the agency and not the end user. There have however been a number of important decisions in the UK and Ireland which are relevant.

The English Court of Appeal in the case of Dacas v Brook Street Bureau (UK) limited 2004, concluded based on the facts in that case that had the Wandsworth Borough Council continued to be a party to the proceedings it would have been found to be the employer on the basis that;

• There was no obligation on the agency to provide Ms. Dacas with work and she was under no obligation to accept work.
• The fact that the agency renumerated MS Dacas did not mean that it was her employer.
• Control of Ms. Dacas's day today activities had been exercised by the council. Accordingly, there was no contract of service between the agency and Ms. Dacas.
• The Court found that the role of the agency (Brook Street) was not that of an employer of Ms. Dacas. Rather it was of any agency finding suitable work assignments for her and, so far as the Council was concerned performing the task of staff supplier and administrator of staff services. The Judge concluded that the only sensible finding was that Ms. Dacas had a contract of service with the Council rather than with the employment agency saying in particular.

"the result of the consideration will depend on the evidence in the case about the relationship between [workers] and the end user and how that fits into other triangular arrangements. In general, it would be surprising if, in a case like this, the end user did not have powers of control or direction over such a person in such a working environment".

The Respondent relied on the case of Diageo Global Supply v Mary Rooney EAT determination January 2004. In that case Ms. Rooney had worked part¬ time as a nurse at Diageo's Occupational Health Centre at the Guinness Brewery in Dublin since 1991. When she first became aware of a vacancy she applied to the appropriate person in Diageo, was interviewed by Diageo and offered the job. She agreed her hours of work, rate of pay and other particulars of her duties and benefits directly with Diageo.

She was however told at the outset that her wages would be paid through a licensed employment agency, Irish Recruitment Consultant, who throughout the continuance of her employment paid her wages and issued her with P60's. Notwithstanding this Ms. Rooney never met with any person representing IRC and never negotiated with them in relation to her conditions of employment. Ms. Rooney presented a claim to a Rights Commissioners on the basis that she was a Diageo employee and was being treated less favorably than comparable permanent Diageo employees. The matter came before the Labour Court on Appeal.

The Labour Court applied the principles set out Readymix Concrete (South East) Limited v Minister for Pensions and National Insurance and concluded that Ms. Rooney was an employee of Diageo. The Labour Court was satisfied that all the elements of an employee contract existed between Diageo and Ms. Rooney. There was an offer of employment made by Diageo, which was accepted by Ms. Rooney, there was valuable consideration, and there was mutuality of obligation in the sense that Diageo undertook to provide work and Ms. Rooney undertook to perform that work.

The Court also noted that Diageo "directed" Ms. Rooney in her employment at all material times. Increases in pay were negotiated and agreed with Diageo. Ms. Rooney was required by Diageo to be a member of a Trade Union and Diageo paid the Union contribution on her behalf. Diageo determined her hours of work. She worked exclusively at Diageo's Health Centre and had never been assigned to other locations during periods when Diageo did not require her services. In those circumstances, the Court was satisfied that Diageo exercised control over Ms. Rooney in the performance of her work to such a degree to make them her employer.

In a 2007, ruling by the Labour Court in the case of Enterprise Ireland v Irene McMahon, the issue was further re-examined. In this case Enterprise Ireland were appealing a ruling by the Equality Tribunal to the effect that it was the appropriate respondent in an Equality claim taken by Ms. McMahon who was the administrator of the UCD based National Agricultural and Veterinary Biotechnology Center (NAVBC). Before proceeding to a full hearing, the Labour Court had to decide whether the correct respondent in the initial action was Enterprise Ireland or UCD.

In the case of Brightwater Selection (Ireland) Limited v Minister of Social & Family Affairs 2010, the High Court re-examined the issue of agency workers. Gilligan J stated that the Chief Appeals Officer failed to establish if there was mutuality of obligation between the agency worker and the employment agency. The employment agency did not have the power to direct the manner in which the individual conducted her work.

Gilligan J stated however that it should be considered if there was a contract "sui generis" or indeed an alternative category of contract. The court referred to the imaginative approach that the English Court of Appeal has adopted in relation to agency workers in order to take into consideration the atypical nature of their employment. The court in Brightwater was clear that every case must be considered in light of its particular facts and that there is no one size fits all test.

Agency workers maybe involved in working arrangement in two distinct ways. Firstly, where any agency introduces an individual to the hirer business and the individual is then employed by that business. In that scenario, it is usually clear that the individual is the employee of the hirer and has a direct employment relationship with them and all of their rights and obligations that arise in the employment relationship apply as between the employee and the hirer.

The second scenario is where an agency assigns an agency worker to a hirer on a temporary basis. Under such an arrangement, the agency worker is generally neither an employee of the agency nor the hirer business. Rather the agency worker is engaged by an agency under a contract "sui generis", i.e., a unique type of contract. The key consideration in a series of British cases in determining whether an agency will be found to be an employer of an agency worker is that of control over the work of the individual. In other words, because the agency will lack control over the work of the individual and there will be insufficient mutuality of obligation between the agency worker and the agency such an individual is unlikely to be engaged as working under a contract sui generis.

Decision

Ultimately, the Adjudication Officer decided that in the instant case there is no doubt whatsoever that the Complainant was an employee of the Respondent but was under the control of the hirer:

“The complaint against this named respondent is well founded and I now order the respondent to pay the complainant her statutory redundancy payment within 42 days from the date of this decision.”

The Adjudication Officer determined that agency work was regulated by an EU Directive in 2008 (Directive 2008/104/EC on Temporary Agency Work). The Directive was given effect in Irish law by the Protection of Employees (Temporary Agency Work) Act 2012. The main purpose of both the Directive and the 2012 Act is to provide agency workers with an entitlement to the same basic working and employment conditions as directly employed employees of the hirer. The entitlement to equal treatment with directly employed employees of the hirer extends to conditions in relation to basic pay, shift premium, piece work, overtime, unsocial hours worked, and Sunday work. The definition of pay in the Act does not include occupational pension schemes, sick pay, bonuses maternity pay or benefit in kind.

For the purposes of the Act, a temporary agency worker is one who is employed by an agency and is assigned to work for another organisation (the hirer) and does so under the supervision and control of the hirer. In order to come within the scope of the Act the worker must be employed by the agency but managed on a day-to- day basis by the hirer.

Takeaway

The takeaway for employees considering bringing a complaint under Section 39 of the Redundancy Payments Act, 1967, if they are an agency worker, is to be in a position to correctly identify who is actually the employer. If in doubt, as Mr Grogan had done at the outset of this case, it would be prudent to name all possible employers to ensure a right of redress is not lost.

For employers, it will be necessary to demonstrate that they were not the requisite or proper employer or, in the alternative, that a redundancy payment was not owing or was in fact paid.