Tribunal victory “blows a hole” in agency payroll model

Unite has won a major legal victory at the employment appeal tribunal (EAT) in its battle against bogus self-employment and the use of payroll companies.

The union said the decision “blows a hole” in the way workers are employed on many sites via agencies using payroll companies.

Unite took the case on behalf of pipe fitter Russ Blakely against the employment agency On-Site Recruitment Solutions Limited and payroll company Heritage Solutions City Ltd.

The original case over the unlawful deduction of wages and employer’s national insurance contributions as well as the non-payment of holiday pay was rejected by Reading employment tribunal.

But the appeal to the EAT was upheld making it an important test case.

The employment appeal tribunal found:

  • The original tribunal was wrong to decide that Blakely was not a worker
  • When determining whether there was a contract (part of the test of whether someone is a worker) the tribunal must consider the intentions of the worker and all surrounding circumstances, not just the intentions of the employer
  • There was a contract between Blakely and On-Site (the agency) – importantly, the use of a payroll company did not circumvent this relationship
  • Blakely (and therefore other agency workers being paid through payroll companies) could be a worker of the agency, the payroll company or both.

Unite assistant general secretary Howard Beckett said: “This is a groundbreaking victory secured by Unite’s Strategic Case Unit in the fight against bogus self-employment in construction and other sectors.

“It blows a hole in the way that employment agencies hide behind payroll and umbrella companies and pretend that they are not responsible for the employment of the workers they recruit.

“The fact the EAT held that a worker could be jointly employed by two organisations is a game changer in the campaign against bogus self-employment.

“Unite will be ensuring that the EAT’s findings are fully utilised to ensure that other workers are not denied their basic employment rights or exploited by agencies and parasitical payroll companies.

“This decision sends out an unequivocal message to all those involved in bogusly self-employing workers, Unite and our Strategic Case Unit is on your case.

“Whilst this isn’t the type of appeal that a mistreated worker might bring on their own, employers should beware, as Unite members have the unwavering support of the country’s largest trade union.”

The case has now been returned to the employment tribunal, to determine who was Blakely’s employer, whether it was On-Site, Heritage or both.

The tribunal will also decide on his compensation, which is expected to be around £2,500.