Safety umbrella: A temporary fix to liability?

A quick search of the internet and one notes that the make-up of the workforce is changing. Many companies now advertise for self-employed contractors instead of employees and there is no shortage of recruitment agencies offering work contracts to candidates in all areas of industry and with a range of qualifications. This has seen the rise of the so-called ‘gig economy’ – an economy characterised by an abundance of self-employment and short-term contracts, as opposed to permanent jobs.

The courts have recently been examining the employment status of some of these individuals in cases involving Uber and CitySprint looking at whether they were employees, self-employed, or had the status of ‘worker’, which gives some, but not all, of the rights that an employee would have. The latest ruling by the Court of Appeal in the case of Gary Smith v Pimlico Plumbers Limited [2017] EWCA Civ 51, which found that a plumber was a worker rather than a self-employed contractor and should therefore be granted a host of employment rights including holiday pay, sick pay, and minimum wage, arrived at a similar conclusion to the Uber and CitySprint cases, all of which have been in the context of Employment Tribunal claims. Cases such as these are reigniting legal and political debate over the changing workforce. The prime minister has commissioned an independent review into the impact of new working models on employee rights and employment regulatory frameworks, exploring issues around areas such as pensions and pay.

Far from being an issue specific to employment lawyers, new working models mean personal injury litigators are increasingly having to deal with what duties are owed to the new breed of workers and who owes those duties. The rise of the recruitment agency rather muddies the traditional boundaries of employer liability claims. Claimant solicitors are now having to carefully consider the nature of the relationship the individual has with that agency and the relationship that the agency has with the end user of that individual’s labour.

Frequently the recruitment agency is simply a vehicle for putting the individual in touch with a company willing to pay for his or her work, giving rise to no employee/employer relationship and associated duties. But not every recruitment agency is just a recruitment agency. Some are now multi-faceted business models not merely supplying workers, but providing fully managed services such as on site workforces, from labourers to supervisors and managers, as well as training and supporting HR departments. For the purposes of an injury claim who, if any one, is the employer?

We have moved away from the traditional claimant/employer relationships and find ourselves inextricably linked with a number of potential parties to an injury claim. For with recruitment agencies often come the ‘umbrella companies’. The umbrella company will deal with payroll in a tax efficient way for the individual. A standard model will see the worker getting paid by the umbrella company and contracting for services with the recruitment company, who in turn contracts with the end client.

Common law principles dictate that the employer owes a non-delegable duty to an employee to ensure their safety while at work. But who in the myriad of companies involved in the umbrella scheme is the employer? And who should be responsible to the worker? In the absence of a clear employment contract what will the court consider? The court can no longer simply imply a contract but requires a detailed analysis of the relationships between the parties. While the starting point might be to look at the contracts that are in place, in cases where the basis upon which the parties are contracting is not clear and/or in the absence of commercial clauses dealing with indemnity, primarily the courts are required to consider control and supervision of workers. But what of the agencies who supply workers with training and personal protective equipment or the agency that provides a fully managed service?

Case law is well versed that an end client who benefits from the worker’s services can and will be deemed a temporary de facto employer and therefore be liable to the worker. The extent to which other companies involved in the supply of labour are liable is much less straightforward and should be carefully examined before involving every other party in the chain.

Bethany Haycock is a solicitor at Kennedys

@KennedysLaw

www.kennedyslaw.com