The contract worker rules
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Page not yet updated for changes from 1st October 2004.
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It is worth checking whether you are covered by the contract worker rules if you are facing discrimination by someone who is not legally your employer. This page expands on the general employment page to look specifically at these rules.
Why are the rules important?
- The DDA employment provisions generally cover discrimination by your actual or prospective employer. However, you may also work for someone (whom the DDA calls the "principal") who is not legally your employer.
- The aim of the contract worker rules, where they apply, is to place non-discrimination and reasonable adjustment obligations on the principal as well as on the legal employer.
- So, for example, if you are (or would like to be) employed by an employment agency, you are normally protected against discrimination by the employment agency under the basic rules, since it is your employer. If the employment agency supplies you (or proposes to supply you) to work for a company, the effect of the contract worker rules is that you are normally also protected against discrimination by that company (as the "principal"), eg if the company refuses without "justfication" to accept you .
- Be aware that in practice it is sometimes difficult to be sure who your legal employer is.
Who is covered by the "contract worker " rules?
- The contract worker rules in the DDA cover more people than would be considered "contract workers" in the normal sense, and are not limited to employment agency situations.
- A "contract worker" is defined by reference to who is a "principal". A "principal" is a person who makes work available for doing by individuals who are employed by another person (the "employer") who supplies them under a contract made with the principal. A "contract worker" is any individual who is supplied to the principal under such a contract.
- So examples of people who may well fall within the contract worker rules include:
- a person supplied by an employment agency, where the employment agency is legally the employer (see below where an agency only acts as agent)
- a person employed by one company in a corporate group who actually works for another group company (the principal);
- an individual, such as an IT specialist, employed by a one-man company who does work for a client (the principal) - and as explained under Indirect supply of staff below this applies even where there is an employment agency inbetween the one-man company and the client.
- staff of a sub-contractor working on a building site.
Indirect supply of staff can also be covered
- The contract worker rules also apply where there is more than one person in the chain of supply between the individual and the principal. Only the legal employer and the "end-user" (the principal) have the obligations under the DDA.
- The relevant case is Abbey Life Assurance Co. Ltd v Tansell [2000] IRLR 387, and its facts give a useful example of how the principle can apply. (The full Court of Appeal judgment in the case is available on the Court Service website.)
Mr Tansell offered his computer skills and services through Intelligents Ltd. Intelligents was his employer, and he was its sole shareholder. He placed his name with several agencies, including MHC which specialised in placing computer personnel with third parties. MHC contracted with Abbey Life to supply them with personnel. Abbey Life interviewed Mr Tansell, and MHC contracted with Intelligents to to supply Mr Tansell's services to Abbey Life. This had the effect of putting him under the control of Abbey Life. Mr Tansell alleged that Abbey Life subsequently rejected his services because of a disability.
The Court of Appeal held that Abbey Life was the "principal" and accordingly had obligations to Mr Tansell under the DDA. This was so even though there was no direct contractual relationship between the employer (Intelligents) and the principal (Abbey Life). MHC itself was not a "principal". The Court considered that the language of the section was reasonably capable of bearing this meaning, and further: "In a number of authorities the appellate courts have stressed the importance of giving the wide ranging provisions of the discrimination legislation a generous interpretation.
- What would happen if, purely hypothetically, MHC had discriminated in the postings it was prepared to offer Mr Tansell because of his disability? MHC would not be liable as a "principal". MHC might be liable to Mr Tansell under the goods and services provisions if one could say there was a service which was provided by MHC to Mr Tansell personally and which was offered to members of the public. If the one-man company were not there and MHC discriminated in this way, then of course MHC would potentially have a DDA liability as Mr Tansell's employer in the normal way (see below on DDA obligations of the employer ).
Extending the rules still further - is managerial control necessary?
- In many cases covered by the contract worker provisions, the employee will be under the managerial control of the principal rather than the employer.
- However, it is very possible that the principal need not necessarily have managerial control of the employee for the provisions to apply. In Harrods Ltd v Remick [1997] IRLR 583, the Court of Appeal decided that managerial control was not necessary for a similar but not identical provision in the Race Relations Act. The Court held that this provision did apply to employees of Harrods concessionnaires.
- The Court of Appeal decision is interesting not only on that specific point but because it showed a general willingness to interpret the provision in favour of an employee seeking protection: "... we should, in my judgment, give a construction of the statutory language which is not only consistent with the actual words used but also would achieve the statutory purpose of providing a remedy to victims of discrimination who would otherwise be without one."
What are the DDA obligations of the employer and principal?
- Both the employer and the principal have obligations not to discriminate against the employee (see the Employment page as to what is meant by "discrimination").
- The principal's obligations are not to discriminate against the employee in certain defined ways, for example discrimination by not allowing him to do the work or continue to do it, or by subjecting him to any other detriment. The defined areas are quite wide and should cover most problems.
- The employer itself, for example the employment agency or sub-contractor, also has the normal obligations not to discriminate. So, for example, it is not allowed to discriminate as regards taking the person on in the first place, and is probably not allowed to discriminate by unjustifiably limiting the companies to which, or the jobs for which, it is prepared to offer the disabled employee. (I qualify this by saying "probably" because one always needs to fit the discrimination within s.4(2) of the DDA.)
- The employer and principal also have the normal obligation to make reasonable adjustments, subject to the "justification" defence. For certain situations, regulations define which of them is under the obligation to make a particular adjustment.
- In the normal way, an employer or principal with less than 15 employees (including contract workers in the total) would not be liable.
What if the intermediary acts as an agent rather than an employer?
- The contact worker provisions only apply where the intemediary is the employer of the individual. In other cases the intermediary may only act as an agent or facilitator (eg a recruitment agency), so that an employment contact is formed directly between the employee and the end-user.
- In this case, if the agency discriminates the employee may have a claim against it under the goods and services provisions in Part III of the DDA. An employer's agent knowingly aiding discrimination may be liable as well as the employer under section 57 #. The employee will of course have DDA rights against the end-user in the normal way as his actual or prospective employer.
- It may be unclear in a particular case (so you may need advice on) whether legally your employer is the agency or the person you actually work for.
Further information
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© Allan Tyrer 2001
Last updated 7th June, 2001
