What is a recruitment company?

Reading the recent EAT judgment in the case of Brooknight Guarding Ltd v Matei, I was reminded of a phone call I had some ten years ago.

Having a special interest in the law as it affects the recruitment industry, I had sent out a marketing mailing to prospective new clients, offering my expert services in navigating the legislation that applies to the sector. In response, I received a call from a well-known modelling agency, who told me in exasperated terms not to write to them again as they were “____ Model Agency, not a recruitment company. The clue is in the title.”

The caller was not the first I had met who worked for an employment business as defined by the Employment Agencies Act 1973 (“the Act”) but didn’t know it. And to some extent, that is unsurprising as the definition of an employment business in the Act is broad:

…“employment business” means the business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity.

For these purposes, the term “employment” includes engagement under a contract for services.

Similarly, in the Agency Workers Regulations 2010 (“AWRs”):

“temporary work agency” means a person engaged in the economic activity, public or private, whether or not operating for profit, and whether or not carrying on such activity in conjunction with others, of—

(a)supplying individuals to work temporarily for and under the supervision and direction of hirers; or

(b)paying for, or receiving or forwarding payment for, the services of individuals who are supplied to work temporarily for and under the supervision and direction of hirers.

It is entirely possible given the breadth of these definitions that a person may be acting as an employment business but is not aware of that fact and does not identify itself as such.

The Matei case illustrates this.

Brooknight Guarding Limited is a company offering various types of security services. It does not consider itself to be a recruitment company.

Mr Matei was a security guard engaged by Brooknight on a zero-hours contract. He was contractually obliged to provide his service on such clients’ sites as Brooknight may determine and was referred to as a “cover” security guard. He was primarily supplied to Mitie Security Limited which based him at the Citi Group site in London. He was also, on occasion, placed at other sites for other clients of Brooknight.

Whether it intended to or not, Brooknight fulfilled the definitions of an employment business and a temporary work agency in this case, as it engaged in the economic activity of supplying Mr Matei to work temporarily for and under the supervision and direction of Mitie.

Mr Matei worked for Brooknight for 21 months before being dismissed. If he was classed as an agency worker, he was able to claim additional remuneration, as the AWRs require that agency workers receive equality of pay, hours and holiday as a comparable permanent worker of Mitie after completing a 12-week qualifying period of service. That was the reason for his claim.

Note that not all security guards supplied via a subcontractor would necessarily be classed as agency workers as a result of this case. Mr Matei’s position as a “cover” security guard was a key point, meaning that the EAT found that his placements with Mitie were necessarily temporary in nature. In general terms, where an individual is supplied by one entity to work for another on an indefinite or permanent basis, then the individual does not meet the definition of an agency worker. As always, each case turns on its own facts.

However, any company which supplies individuals to work temporarily for and under the supervision and direction of a third party could be a temporary work agency and/or an employment business, to which the AWRs, the Act and other recruitment industry specific legislation applies, whether they like it or not. For them, the Matei case should make interesting reading. In theory, any individual so supplied may have legal rights which the company is not aware of, pursuant to the AWRs.