It Ain't Necessarily So: A Legal Realist Perspective on the Law of Agency Work

AuthorAmir Paz‐Fuchs
Date01 May 2020
Published date01 May 2020
Modern Law Review
DOI: 10.1111/1468-2230.12522
It Ain’t Necessarily So: A Legal Realist Perspective on
the Law of Agency Work
Amir Paz-Fuchs
Analysis of UK employment and labour law is often characterised by a curious dissonance. The
overarching narrative mandates that labour law is a countervailing force to the inequality of
bargaining power,embedded with values and assumptions concerning the nature of employment
relations and the role of labour law. And yet, labour law jurisprudence tends to treat with respect,
and seeks to decipher, abstract statutory concepts and tests derived from judicial pronouncements
as if they were,indeed, a ‘brooding omnipresence in the sky’. This paper seeks to bridge that gap,
by offering a legal realist account of the legal doctrine that governs the employment of agency
workers, focusing on the ‘necessity’ and ‘sham’ tests. It assesses the legitimacy of importing legal
tests from one (commercial) context to another (employment) context; questions the courts’
protestations that their use is mandated by precedent; and outlines the real implications for the
status and rights of agency workers in the UK.
Open-ended concepts are sometimes used in law as helpful guidelines in re-
solving legal problems, but they may also lead to troublesome consequences in
real, social and economic, life. The use of two concepts – sham and necessity –
in the context of agency work, serves as a case in point. This paper employs
insights and tools from Legal Realism to question the courts’ methodology and
conclusions, and to offer alternatives.
Agency work holds a significant place in the UK labour market and labour
law jurisprudence.1In 2017, the Taylor Review estimated that the number
of agency workers in the UK is between 800,000 and 1.2 million,2afigure
that, even at the bottom end, represents an increase of 30 per cent in five
year s.3Other estimates suggest (based on a different methodology) that this
watermark – of over a million agency workers – was surpassed over a decade
ago.4A Resolution Foundation Report found that whilst the stereotype is that
Professor of Law and Social Justice, University of Sussex. I’m grateful to Lizzie Barmes, Hanoch
Dagan, Ruth Dukes, Ewan McGaughey and the members of the Sussex Law and Society Research
Development Team for their thoughtful comments on earlier drafts. The usual caveats apply.
1 P. Elias, ‘Changes and Challenges to the Contract of Employment’ (2018) 38 OJLS 869, 880.
2 M. Taylor, Good Work: The Taylor Review of Modern Employment Practices (London: Department
for Business, Energy and Industrial Strategy, 2017) 24.
3 L. Judge, Secret Agents: Agency Work in the New World of Work (London: Resolution Foundation,
2016) 17.
4 E. McGaughey, ‘Should Agency Workersbe Treated Differently?’ LSE WorkingPapers 07/2010,
C2020 The Author.The Moder n Law Review C2020 The Modern Law Review Limited. (2020) 83(3) MLR 558–582
Amir Paz-Fuchs
agency work is short and temporary, the number of permanent agency staff
is ‘startling’. At times, years have passed, agencies were replaced, while the
worker held her position and responsibilities throughout.
The motivation for employing workers through agencies is clear: the use
of personnel who are normally not unionised and do not have job security
offers an employer a good degree of flexibility to suit production and service
needs; for some, savings on employment costs are an important concer n.5To
these one may add that a political ideology that favours privatisation has led to
regulatory requirements in the public sector that have mandated, over the past
three decades, outsourcing of public services. We return to this aspect below.
Looking abroad, workers employed by agencies approached the courts in
many jurisdictions with a legal challenge: to ascertain whether the triangular
relationship is ‘authentic’ or ‘fictitious’. In the former case, the worker will
be deemed employed by the agency.6In the latter case, the court will unveil
the ‘implied contract’ that the worker had with the end-user. In contrast,
agency workers in Britain have a more formidable challenge, since they are
routinely denied employment status, and consequently denied statutory labour
rights, with courts regularly asserting that the individuals involved are employed
neither by the agency nor by the end- user.7
While the plight of agency workers has been subject to a wide range of
criticisms, from courts through academia to media coverage, this paper sheds
light on the mechanisms that have created a legal route to a dire result. In
particular, it shows that the courts have developed two doctrines that have often
proven almost insurmountable (the exceptions are few and far between) to the
claims of agency workers. These are the test of necessity, and the sham doctrine.
Questioning the applicability and legitimacy of these doctrines through the
deployment of the legal realist paradigm, this paper seeks to ‘demystify’8them
and argues that, notwithstanding their protestations to the contrary, tribunals
and courts had, and have, different options at their disposal, and their decision
to deny agency workers employment status and rights is a controversial policy
decision, rather than a necessary legal one.
The legal predicament of agency workers in general, and the contribution
of courts in their development of the two doctrines of sham and necessity, have
5 S. McKay, ‘Employer Motivations for Using Agency Labour: Hard Work, Hidden Lives: The
Full Report of the TUC Commission on Vulnerable Employment’(2008) Industr ial Law Journal
296, 297.
6 G. Davidov, ‘Joint Employer Status in Triangular Employment Relations’ (2004) 42 British
Journal of Industrial Relations 727.
7 H. Collins, ‘Independent Contractors and the Challenge of Vertical Disintegration to Employ-
ment Protection Laws’ (1990) 10 OJLS 353; A.C.L. Davies, EU Labour Law (Cheltenham:
Edward Elgar, 2012) 195; J. Prassl, The Concept of the Employer (Oxford: OUP, 2016) 87-90,
171; L. Barmes, ‘Learning from Case Law Accounts of Marginalized Working’ in J. Fudge, S.
McCrystal and K. Sankaran (eds), Challenging the Legal Boundaries of Work Regulation (Oxford:
Hart, 2012) 303, 308; E. McGaughey, ‘Social Rights and the Function of Employing Entities’
(2017) 37 OJLS 482, 487; J. Riley, ‘The Definition of the Contract of Employment and its
Differentiation from Other Contracts and Other Work Relations’ in M. Freedland et al (eds),
The Contract of Employment (Oxford: OUP, 2016) 321, 335.
8 M. Fischl, ‘Teaching Law as a Vocation: Local 1330, Promissory Estoppel, and the Critical
Tradition in Labour Scholarship’ (2017) 33 International Journal of Comparative Labor Law and
Industrial Relations 145, 147.
C2020 The Author. The Modern Law Review C2020 The Modern Law Review Limited.
(2020) 83(3) MLR 558–582 559

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