Agency workers – apportionment of liability for underpayment

United Kingdom

In London Underground Ltd v Amissah and ors, the Court of Appeal held that a company being supplied with temporary agency workers from an agency (the "end user") had to pay compensation as a result of a breach of the workers' entitlement to equal pay under the Agency Workers Regulations 2010 (the "Regulations") even though this would amount to the end user paying twice.

Facts

A group of agency workers were engaged by London Underground Ltd ("LUL") through an agency, Trainpeople.co.uk Ltd ("TL"). For a period, both LUL and TL did not consider that Regulation 5 of the Regulations, entitling the agency workers to the same pay and benefits as permanent staff, was applicable. However, LUL subsequently determined Regulation 5 did apply and paid TL for the future supply of workers on equalised rates, as well as an amount covering the underpayment over the previous period. Going forward, TL paid the supplied workers the correct rates (from October 2012 until the termination of the agreement between LUL and TL in January 2013) but did not pay the workers the difference of the earlier period. TL went into voluntary liquidation in November 2013.

The Regulations

The key regulations considered were:

  • Regulation 5, which entitles agency workers to the same basic working and employment conditions as they would be entitled to if they were permanent staff.
  • Regulation 14, which provides that each party (either the agency or the end user) shall be liable for any breach of Regulation 5 to the extent that that party is responsible for the breach.
  • Regulation 18, which details the remedies available to the employment tribunal if it finds a complaint to be well-founded and states the tribunal shall take steps as it considers just and equitable which include (1) making a declaration as to the rights of the complainant and/or (2) ordering the respondent to pay compensation. If there is more than one respondent, the amount of compensation payable by each respondent shall be such as may be found by the tribunal to be just and equitable having regard to the extent of each of the respondent's responsibility for the infringement.

Decision in the employment tribunal

The claimants brought proceedings against both TL and LUL for breach of Regulation 5. The employment judge determined that their claims were well founded for the period of their engagement prior to October 2012 and that liability would be apportioned 50% to LUL (in part due to the time taken to repay the unpaid portion). However, the judge determined that LUL was not liable to pay any compensation. The loss of pay was not attributable to the failure to equalise terms but rather to TL's failure to pay what it owed the claimants. In any event, despite LUL's equal liability, it would not have been just or equitable under the Regulations to order LUL to pay 50% because it had already made a payment to TL to cover the period during which the claimants were underpaid.

The claimants successfully appealed to the EAT which ordered the issue of remedy to be remitted. LUL subsequently appealed to the Court of Appeal.

Court of Appeal decision

The Court of Appeal determined that the employment tribunal had been wrong in assessing that it was not 'just or equitable' to order LUL to pay 50% of the compensation even though it had already paid money to the agency to cover the period of underpayment. As the tribunal had apportioned liability at 50/50 between the parties, it would not be just and equitable for the claimants not to receive the amount owed to them as a result of TL's failure to pass it on. The judge noted that although in effect LUL had to pay twice, that did not render it just and equitable to deprive the claimants of the compensation they were due. LUL had chosen to do business with TL and therefore should be the party to bear the burden of TL's dishonesty in the circumstances.

In relation to apportionment, the court determined that in principle, it would be possible for a tribunal to find that it would be just and equitable to require a respondent to pay a claimant less than the amount of compensation for which it is responsible, but this would be exceptional, such as in the case of serious misconduct by the claimants.

Impact

This decision confirms that end users could find themselves potentially liable to make payments over and above what they originally owed due to dealings with untrustworthy agencies. As a result, end users should ensure they:

  • do sufficient due diligence on agencies they work with;
  • act promptly in:
    • providing the necessary information to the agency to ensure that it is aware of what benefits and pay are owed to the agency workers; and
    • ensuring the correct amounts and/or benefits are being paid to the agency workers via the agency; and
  • are proactive in this obligation and do not rely on the agency taking positive steps to ensure the correct measures are in place.