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Change for employment status, again?

Andrea London
21st century

There’s a new row brewing about the employment status of workers and HR directors would do well to keep close tabs on it as it progresses through the courts. Contributor Andrea London, Partner and Head of Employment at London law firm Fletcher Day.

It comes hot on the heels of the recent appeal from Uber directly to the Supreme Court (a spectacular leap-frogging of the Court of Appeal) to try to overturn the Employment Appeal Tribunal (EAT) finding that its drivers are, in fact, workers. There is already significant uncertainty amongst employers as to whether contract staff are indeed, self-employed contractors or are actually workers. Or, even worse, employees.

This new dispute involves the University of London and has potentially even further reaching consequences than the highly publicised Uber case.  It involves another subdivision of workers advocating their entitlements to more employment rights: the outsourced worker.

What is an outsourced worker anyway?
Outsourced workers are typically the cleaners, porters, catering, security persons and other ‘infrastructure’ staff whom many businesses in the UK rely on to keep the ancillary basics of their business ticking over. A security guard in a supermarket or an office cleaner would be good examples. Using outsourced workers is often a significantly lower cost and more efficient way to manage work and activity in areas of a business which are necessary to be dealt with, but often not needed more than a few hours a day, to enable others to get on with the core purpose of the business itself.

Step forwards… the FM company and flexibility
Usually, outsourced workers are sourced and engaged to operate via facilities management (FM) companies to service a business or sometimes, its premises. Individuals are employed or engaged by the FM company as temps, casuals, zero hours, (sometimes agency) or employees and then ‘hired out’ and utilised by other businesses. Often, outsourced workers are provided to a number of end users simultaneously, for a few hours each.  Cleaners, for example, may service three or four different offices in a day (or evening).

These people are employed, or engaged by the FM company who enter into a commercial agreement with a business for the provision of certain cleaning services. The FM company is informed of the amount of work to be undertaken, preferences for hours and/or days and it is for them to manage the requirements of that contract using the staff at their disposal. The workers are then given instructions by their employer; the FM company. If the workers tend to provide work for one business all their time, then they are, in addition, protected by TUPE (Service Provision Change) if or when the business decides to change service provider or take the work in-house.

The claim now raised
Recently, a group of some seventy-five workers supplied to the University of London by a FM company are bringing a legal challenge to obtain the same benefits, pay, terms and conditions as those who are employed directly by the University.

They want their FM company and the University to be deemed “joint employers”.  Such a determination could enable the unions of such workers to directly negotiate better terms and conditions for them on a collective basis.

The workers feel it is unfair that the “client” of the FM company engages it to supply staff, at specific pay levels to work in particular conditions which is significantly different to those of their employees when that client then proceeds to exercise a significant amount of control over the workers. Since the “client” is not their employer, they obtain the benefits but avoid the obligations and costs of being their employer.

In the now ever-constant employment status argument, the issue of ‘control’ of the individual carrying out the services is a key concept which the courts return to time and again. This case is no different.

‘Joint employer’ status
The crux of the argument is that these outsourced workers want the FM company and the University (being the business which hires them out and the end user who engages them) to both be deemed joint employers.  The concept doesn’t exist (yet) in the UK, but has been prevalent in the US in various forms for a number of years.

I’ll let that sink in a moment. If it’s challenging enough now being the sole employer of an individual or managing outsourced contracts now, then if this case succeeds employers could themselves managing employee issues jointly with other companies.

As a “joint employer” both companies would be jointly responsible for someone who is potentially outside of at least one party’s day-to-day control.  Employers would have to work alongside multiple third party organisations to ensure compliance with coherent employment practices.

Serious issue
This particular claim has the potential to become a serious issue and HR staff should follow it closely. Whilst it has the ability to positively affect (by way of improvement of pay and conditions) more than three million outsourced workers in the UK, the “downside” is that this has perhaps not been properly considered, since it has the potential to make outsourced workers effectively pointless. It is an unnecessary layer of complexity for employers in an already difficult employment law landscape.

The fact is that for every huge organisation which may exert a high(er) degree of control over its outsourced workers, there are a hundred, or maybe a thousand, smaller and medium sized businesses which do not. Whilst it may be the case that such large organisations see outsourced workers as a way of obtaining cheap labour, for many smaller entities it is the only way they can reasonably and efficiently obtain these kinds of services.

So, how would the courts differentiate – in this scenario – between an outsourced worker being utilised properly and one which was not? It is unclear how can this be addressed without undermining the whole point of outsourcing, which for most employers is the flexibility and cost efficiency of the workforce without having the legal obligations of an employer. It’s an issue that the courts might well have to shortly wrestle with. HR directors, particularly of those who use outsourced workers, should therefore WATCH THIS SPACE  Remember, nobody ever said working in HR was easy.

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