Temp or Perm?

The term “The Shamrock Organisation” was coined by the management guru (and son of an Irish Pastor) Charles Handy. (http://daithaic.blogspot.com/2007/08/can-management-gurus-lead-us-to-nirvana.html ) This is a form of organisational structure with three bases on which people can be employed and on which organisations can be linked to each other. The three bases or groups are professional managers; contracted specialists such as advertising, computing, or catering personnel; and a flexible labour force discharging part-time, temporary, or seasonal roles. Since Handy outlined the more flexible, responsive alternative to the traditional hierarchical organisational structure the “Shamrock Organisation” has become the norm. In 2002 the Temp Agency Manpower became the biggest single employer in the USA with over 2 M employees.



Over the last decade, the use of temporary agency work has increased markedly. Outsourcing of public services to the private and voluntary sectors has almost doubled to close to £80bn in little more than a decade and makes up a far larger part of the economy than previously thought.” (Financial Times 09.07.08) A third of all public services – far more than previously thought – are now delivered by the private and voluntary sectors, according to this report commissioned by the government. Estimates by the European Confederation of Private Employment Agencies for the UK suggest that in 2005 there were some 6,000 officially designated employment agencies operating through 14,400 branches and sourcing 1.2 million workers a day (5% of the national workforce). And these figures themselves are likely to be an under-estimate of the number of agencies and the size of their GDP. In general it is only the larger, well-established agencies that join the employment agency federations. Small agencies are much less likely to take up membership of bodies like the Recruitment and Employment Confederation (REC), but their presence is increasingly evident in the High Streets of most UK towns. Their growth can also be evidenced by the available VAT data, which shows that over 17,000 bodies operating as employment agencies are VAT registered, suggesting that the number of agencies and consequently the numbers of agency workers is much higher than the official figures demonstrate. This growth in agency work in the UK has depended on a variety of dynamics, ranging from the nature of national regulation to changes in the labour process and industrial structure. In December 2007 the Employment Minister, Pat McFadden was unable to say how many agency workers there are in the UK. The ONS does not record Temporary and Agency workers and many more workers are thought to be working on an “agency” basis in the black economy.

According to the DTI, the UK has the third highest use of temporary agency labour in Europe, just behind France and The Netherlands, but has the highest number in absolute terms. There is mounting concern amongst UK Trade Unions that the trend is part of an increasing casualisation of the UK Labour Force and is being used both to replace permanent employees and that employees are using agency staff to negate their responsibilities to comply with established terms and conditions as workers are squeezed as part of a “race to the bottom.” The truth is probably more complex with many agency workers being “Knowledge Workers” who have taken a conscious decision to control their own careers because their services have a scarcity value. The opposite argument is that most agency workers don’t have a choice and would much prefer to be in more secure employment to allow them to plan their lives and finances better.


The UK is committed to agency working as a key element of a flexible labour force and economy but for individual employers it is no panacea. Often, it can be used to disguise poor management and planning, be wasteful and uneconomic and expose an organisation to significant Reputational and business risk. Managers and decision makers need to be properly informed as the enthusiastic amateurism which has often characterised the use of temporary resource in the past will come unstuck as legal and compliance changes increase the consequences of bad decision making and poor management. Here is some guidance on the issues;

DIFFERENCES BETWEEN A WORKER AND AGENCY STAFF

What is an agency worker?

• An agency worker is somebody supplied by an intermediary (Employment Agency) to perform services on behalf of the user company.

What is a worker?

• A worker is an employee and someone who works under a contract where they are required to provide a personal service.

Holiday Pay and Holidays

• All workers are entitled to holiday pay.
• Agency is responsible for paying holidays for agency workers , Ainsworth & Others v Inland Revenue (2005)
• Holidays should be agreed with the agency and not the end user.

Disciplinary and Grievance

• Statutory disciplinary and grievance procedures only apply to employees but
• A worker has the right to be accompanied and
• A Worker has protection against discrimination
•
This is an anomaly but could, in certain cases, lead to discrimination claims. Note that a failure to follow procedures will result in an uplift (i.e.; An agency worker acquiring the rights of an employee) if it is proved that there is an implied contract of employment.

Sickness Absence

• Employees are entitled to SSP
• Workers are not entitled to SSP
• Agency workers are entitled to SSP but this is paid by the agency

Redundancy and TUPE (Transfer of Undertaking, Protection of Earnings)

• Only employees have the right to be consulted under TUPE and collective redundancy obligations.
• Only employees are entitled to redundancy pay
• Implied contracts could affect the number of employees to be consulted (see implied contracts).

DDA

• Not required to ‘make reasonable adjustments’ for agency workers but they have a right to claim under DDA regulations.

Discrimination

• Protection covers “employment under a contract of service or of apprenticeship or a contract to do any work or labour”.

Applies to those in business on their own account provided they provide personal service. Note; It is unlawful for a principal to discriminate against a contract worker. (Abbey Life Assurance Co. Ltd v Tansell 2000).


Employment Status

“Worker’ or ‘employee”?

Consider if the following apply:

• The Control test
• The integration test
• The economic reality test
• Mutuality of obligation


Latest Case Law relating to Agency Workers

James v London Borough of Greenwich (2008)

The decision of the Court of Appeal in this case was reported on 5th February 2008. The leading judgment was delivered by Lord Justice Mummery, who is a former President of the Employment Appeal Tribunal [EAT]. Whilst many legal commentators were expecting that the Court in this case would arbitrate on the conflicting decisions in earlier cases, Lord Justice Mummery denied that any real conflict exists. In the James case, the Court They held that there was no express contract of employment between James and the Council and there were insufficient grounds for requiring the implication of a contract [an implied contract of employment]. So, no contract = no basis for a claim of unfair dismissal. Provided the Employment Tribunal applies the correct legal test, then that should be the end of the matter said the Court of Appeal.

Lord Justice Mummery added a postscript to his judgment, in which he emphasised that the job of the tribunals and courts is to interpret and deal with the law as it stands. There may well be social and economic arguments in favour of changing the law in relation to the rights of agency workers – but it is for Parliament to effect such change, not the Courts.

How to avoid creating implied contracts

• Aligning HR procedures to deal with grievances, dismissals, misconduct, redundancy, sickness and holiday
• Discussing the treatment of temporary workers in the workplace: The dos and don’ts in exercising best practice
• Understanding the main differences concerning contract workers and the self-employed
• Using indemnity clauses in the employment contract and examining prevention strategies and risk mitigation

• Implications of TUPE and the new service provision rule: In some cases Agency Workers can be transferred. One of the main changes introduced by TUPE 2006 was to widen the definition of a “relevant transfer” to specifically include service provision changes, ie. The relationship between contractors and clients who hire their services. A “service provision change” can take three principal forms:
1. Where a service previously undertaken by the client is awarded to a contractor (a process known as 'contracting out' or 'outsourcing') ( http://daithaic.blogspot.com/2007/10/outsourcing-or-ouch-sourcing.html )
2. Where a contract is assigned to a new contractor on a re-tendering (as per the case of Hunt v Storm (http://www.emplaw.co.uk/researchfree-redirector.aspx?StartPage=data%2f200707041.htm )) above)
3. Where a contract ends with the service being performed 'in-house' by the former client ('contracting in' or 'insourcing')

For a service provision change to take place there must also be an "organised grouping of employees whose 'principal purpose' is carrying on the services for the client".

Issues of continuity of employment.

What are the implications of the Court of Appeal decision in Cornwall County Council v Prater? (2006)

Prater was asking for a statement of her terms and it was considered that there was no mutuality of obligation as they didn’t have to offer her work and she didn’t have to accept it. However, the Court of Appeal found that she was a worker as she had to do the work the County Council gave her and they paid her for it.

There are also pending Legislative developments: The implications of the EU Agency Workers Directive and the Temporary Workers Bill for the UK but there is still no agreement on the contents of this proposed bill.

Avoiding Implied Contracts of Employment – What are the DO’S?

• Distinguish between employees and contractors and agency staff on your email system
• Have a clear contract in place with the agency or worker
• Make sue the terms of the contract are followed
• Be careful when transferring employees on to contracts for services
• Consider a policy on length of engagement
• Ensure holidays, termination of engagement and other admin relating to an agency worker is dealt with by the agency.

Avoiding Implied Contracts of Employment – What are the DON’TS?

• Give agency workers, workers or self-employed people a staff handbook, welcome pack or invite to induction events.
• Treat workers and self-employed personas as if they were employees.
• List workers as employees on group structures, Muscat v Cable & Wireless (2006)
• Give workers a contract of employment

Operational Changes to effect possible solutions

• Change the way in which the contractors operate (i.e. lump sum payments for a piece of work)
• Agree holidays with the agency
• Ensure that contractors do not manage employees
• Bring in a policy of review for length of contract term. Cannot rely on the one year rule anymore.

Move to employment status

• Offer employment contracts to contractors who are managing staff
• Ensure difference in treatment between time as a contractor and employee.
• Use an agency which employs the contractors
• Be aware of discrimination and Fair Employment practices – Open advertising of vacancies (internally and/ or externally), objective assessment and appointment on harmonised terms and conditions

Other options

• Source directly and contract directly with personal service companies
• Recruit temporary resources directly and put through an “agency payroll”.


CONTRACTORS

Can fall into the following categories

• Contractor (worker)
• Contractor (self-employed) - DO NOT ENGAGE - HRMC (IR35) implications
• Contractor (limited company)

• Contractors can be workers but need a right of substitution, to “carry” the risk of work themselves, be appropriately insured and not be “controlled”.

HOW CAN WE “MANAGE” AN AGENCY WORKFORCE

What should an employer expect of the Agency?

• Knowing the importance of briefing their workers
• Do they understand the relationship?
• Do they ‘identify’ with the agency?
• Do they know that the agency will deal with grievances etc?

Reasons for using Agency workers
Numerical flexibility –

• Peaks and troughs in demand
• Projects of limited duration

Short-term ad hoc cover –

• Temporary replacements for permanent staff absence
• Pending recruitment of permanent staff

Strategic

• Outsourcing
• Managed services

AGENCY RESPONSIBILITIES

• End assignments
• Decide disciplinary issues
• Manage grievances
• Career management

Not for prolonged use – think about resource requirements!

CLIENT SUPERVISION – DO’S AND DON’TS

DO
• Refer any disciplinary problems to the agency
• Report any problems promptly
• Inform agency of changes to assignment duration
• Refer worker to agency if pay / benefits are queried
• Understand the relationship and the risks
• Remember the rights of the ‘contract worker’ (SDA, DDA, RRA etc)

DO NOT

• Interview candidates
• Negotiate pay or benefits
• End an individual’s assignment
• Administer disciplinary warnings
• Conduct career management discussions
• Formally agree requests for annual leave

MOVING FORWARD……………………….

Need to consider the following:

AGENCY STAFF

• Tackle long Term use of agency staff.
• Engaging with managers to develop an effective resourcing plan – should those on long term engagement be employees
• Link this to wider resource planning
• Check that contracts are robust

NON EMPLOYEES (incl. SOLE TRADERS)

• Determine what the total resource capability is within the business
• Are sole traders being used and processed directly by your Management Accountants?
• Headcount will be inaccurate
• Check categorisation within your personnel management system – are the current ones correct

TRANSFER TO EMPLOYMENT STATUS

• If so – how do we transfer them – need to develop policy that addresses both HR and revenue implications – especially Fair Employment and Discrimination considerations.



STAKEHOLDERS

• Work with finance function to develop the solution in terms of revenue implications.
• Make sure that procurement teams understand the impact of what they are dealing with, particularly HMRC compliance.
• Resourcing team to develop strategy for engagement of temporary / agency staff. Look at contracts for hire and length of assignment.
• Procurement team to refer issues to correct line Managers / Directors so that all risks are assessed.

BUSINESS RISK

Given the latest case law Employers could ‘carry’ the risk and do nothing but this is unadvisable on several counts:

1. They may not know the real headcount – Often these are wrongly categorised in HR system.
2. HR / Procurement systems often don’t properly track lengths of employment e.g. go back to “Zero” when contracts / assignments are renewed.
3. Managers are confused about the meaning of:
a. Sole traders
b. Contractors
c. Fixed term etc
4. There are various contracts in use for contractors – lack of consistency means an increased risk.
5. The use of Managed Service Companies and Umbrella Companies should be stopped – definitely high risk, especially if fulfilment is by non-residents.
6. Loss of Key Knowledge - What is your Knowledge Management Strategy?

And last, but not least, employers should have appropriate strategies in place that address both legislative requirements and support the needs of their business; rather than relying on the ever changing results from case law.

Temp or Perm?

The term “The Shamrock Organisation” was coined by the management guru (and son of an Irish Pastor) Charles Handy. (http://daithaic.blogspot.com/2007/08/can-management-gurus-lead-us-to-nirvana.html ) This is a form of organisational structure with three bases on which people can be employed and on which organisations can be linked to each other. The three bases or groups are professional managers; contracted specialists such as advertising, computing, or catering personnel; and a flexible labour force discharging part-time, temporary, or seasonal roles. Since Handy outlined the more flexible, responsive alternative to the traditional hierarchical organisational structure the “Shamrock Organisation” has become the norm. In 2002 the Temp Agency Manpower became the biggest single employer in the USA with over 2 M employees.



Over the last decade, the use of temporary agency work has increased markedly. Outsourcing of public services to the private and voluntary sectors has almost doubled to close to £80bn in little more than a decade and makes up a far larger part of the economy than previously thought.” (Financial Times 09.07.08) A third of all public services – far more than previously thought – are now delivered by the private and voluntary sectors, according to this report commissioned by the government. Estimates by the European Confederation of Private Employment Agencies for the UK suggest that in 2005 there were some 6,000 officially designated employment agencies operating through 14,400 branches and sourcing 1.2 million workers a day (5% of the national workforce). And these figures themselves are likely to be an under-estimate of the number of agencies and the size of their GDP. In general it is only the larger, well-established agencies that join the employment agency federations. Small agencies are much less likely to take up membership of bodies like the Recruitment and Employment Confederation (REC), but their presence is increasingly evident in the High Streets of most UK towns. Their growth can also be evidenced by the available VAT data, which shows that over 17,000 bodies operating as employment agencies are VAT registered, suggesting that the number of agencies and consequently the numbers of agency workers is much higher than the official figures demonstrate. This growth in agency work in the UK has depended on a variety of dynamics, ranging from the nature of national regulation to changes in the labour process and industrial structure. In December 2007 the Employment Minister, Pat McFadden was unable to say how many agency workers there are in the UK. The ONS does not record Temporary and Agency workers and many more workers are thought to be working on an “agency” basis in the black economy.

According to the DTI, the UK has the third highest use of temporary agency labour in Europe, just behind France and The Netherlands, but has the highest number in absolute terms. There is mounting concern amongst UK Trade Unions that the trend is part of an increasing casualisation of the UK Labour Force and is being used both to replace permanent employees and that employees are using agency staff to negate their responsibilities to comply with established terms and conditions as workers are squeezed as part of a “race to the bottom.” The truth is probably more complex with many agency workers being “Knowledge Workers” who have taken a conscious decision to control their own careers because their services have a scarcity value. The opposite argument is that most agency workers don’t have a choice and would much prefer to be in more secure employment to allow them to plan their lives and finances better.


The UK is committed to agency working as a key element of a flexible labour force and economy but for individual employers it is no panacea. Often, it can be used to disguise poor management and planning, be wasteful and uneconomic and expose an organisation to significant Reputational and business risk. Managers and decision makers need to be properly informed as the enthusiastic amateurism which has often characterised the use of temporary resource in the past will come unstuck as legal and compliance changes increase the consequences of bad decision making and poor management. Here is some guidance on the issues;

DIFFERENCES BETWEEN A WORKER AND AGENCY STAFF

What is an agency worker?

• An agency worker is somebody supplied by an intermediary (Employment Agency) to perform services on behalf of the user company.

What is a worker?

• A worker is an employee and someone who works under a contract where they are required to provide a personal service.

Holiday Pay and Holidays

• All workers are entitled to holiday pay.
• Agency is responsible for paying holidays for agency workers , Ainsworth & Others v Inland Revenue (2005)
• Holidays should be agreed with the agency and not the end user.

Disciplinary and Grievance

• Statutory disciplinary and grievance procedures only apply to employees but
• A worker has the right to be accompanied and
• A Worker has protection against discrimination
•
This is an anomaly but could, in certain cases, lead to discrimination claims. Note that a failure to follow procedures will result in an uplift (i.e.; An agency worker acquiring the rights of an employee) if it is proved that there is an implied contract of employment.

Sickness Absence

• Employees are entitled to SSP
• Workers are not entitled to SSP
• Agency workers are entitled to SSP but this is paid by the agency

Redundancy and TUPE (Transfer of Undertaking, Protection of Earnings)

• Only employees have the right to be consulted under TUPE and collective redundancy obligations.
• Only employees are entitled to redundancy pay
• Implied contracts could affect the number of employees to be consulted (see implied contracts).

DDA

• Not required to ‘make reasonable adjustments’ for agency workers but they have a right to claim under DDA regulations.

Discrimination

• Protection covers “employment under a contract of service or of apprenticeship or a contract to do any work or labour”.

Applies to those in business on their own account provided they provide personal service. Note; It is unlawful for a principal to discriminate against a contract worker. (Abbey Life Assurance Co. Ltd v Tansell 2000).


Employment Status

“Worker’ or ‘employee”?

Consider if the following apply:

• The Control test
• The integration test
• The economic reality test
• Mutuality of obligation


Latest Case Law relating to Agency Workers

James v London Borough of Greenwich (2008)

The decision of the Court of Appeal in this case was reported on 5th February 2008. The leading judgment was delivered by Lord Justice Mummery, who is a former President of the Employment Appeal Tribunal [EAT]. Whilst many legal commentators were expecting that the Court in this case would arbitrate on the conflicting decisions in earlier cases, Lord Justice Mummery denied that any real conflict exists. In the James case, the Court They held that there was no express contract of employment between James and the Council and there were insufficient grounds for requiring the implication of a contract [an implied contract of employment]. So, no contract = no basis for a claim of unfair dismissal. Provided the Employment Tribunal applies the correct legal test, then that should be the end of the matter said the Court of Appeal.

Lord Justice Mummery added a postscript to his judgment, in which he emphasised that the job of the tribunals and courts is to interpret and deal with the law as it stands. There may well be social and economic arguments in favour of changing the law in relation to the rights of agency workers – but it is for Parliament to effect such change, not the Courts.

How to avoid creating implied contracts

• Aligning HR procedures to deal with grievances, dismissals, misconduct, redundancy, sickness and holiday
• Discussing the treatment of temporary workers in the workplace: The dos and don’ts in exercising best practice
• Understanding the main differences concerning contract workers and the self-employed
• Using indemnity clauses in the employment contract and examining prevention strategies and risk mitigation

• Implications of TUPE and the new service provision rule: In some cases Agency Workers can be transferred. One of the main changes introduced by TUPE 2006 was to widen the definition of a “relevant transfer” to specifically include service provision changes, ie. The relationship between contractors and clients who hire their services. A “service provision change” can take three principal forms:
1. Where a service previously undertaken by the client is awarded to a contractor (a process known as 'contracting out' or 'outsourcing') ( http://daithaic.blogspot.com/2007/10/outsourcing-or-ouch-sourcing.html )
2. Where a contract is assigned to a new contractor on a re-tendering (as per the case of Hunt v Storm (http://www.emplaw.co.uk/researchfree-redirector.aspx?StartPage=data%2f200707041.htm )) above)
3. Where a contract ends with the service being performed 'in-house' by the former client ('contracting in' or 'insourcing')

For a service provision change to take place there must also be an "organised grouping of employees whose 'principal purpose' is carrying on the services for the client".

Issues of continuity of employment.

What are the implications of the Court of Appeal decision in Cornwall County Council v Prater? (2006)

Prater was asking for a statement of her terms and it was considered that there was no mutuality of obligation as they didn’t have to offer her work and she didn’t have to accept it. However, the Court of Appeal found that she was a worker as she had to do the work the County Council gave her and they paid her for it.

There are also pending Legislative developments: The implications of the EU Agency Workers Directive and the Temporary Workers Bill for the UK but there is still no agreement on the contents of this proposed bill.

Avoiding Implied Contracts of Employment – What are the DO’S?

• Distinguish between employees and contractors and agency staff on your email system
• Have a clear contract in place with the agency or worker
• Make sue the terms of the contract are followed
• Be careful when transferring employees on to contracts for services
• Consider a policy on length of engagement
• Ensure holidays, termination of engagement and other admin relating to an agency worker is dealt with by the agency.

Avoiding Implied Contracts of Employment – What are the DON’TS?

• Give agency workers, workers or self-employed people a staff handbook, welcome pack or invite to induction events.
• Treat workers and self-employed personas as if they were employees.
• List workers as employees on group structures, Muscat v Cable & Wireless (2006)
• Give workers a contract of employment

Operational Changes to effect possible solutions

• Change the way in which the contractors operate (i.e. lump sum payments for a piece of work)
• Agree holidays with the agency
• Ensure that contractors do not manage employees
• Bring in a policy of review for length of contract term. Cannot rely on the one year rule anymore.

Move to employment status

• Offer employment contracts to contractors who are managing staff
• Ensure difference in treatment between time as a contractor and employee.
• Use an agency which employs the contractors
• Be aware of discrimination and Fair Employment practices – Open advertising of vacancies (internally and/ or externally), objective assessment and appointment on harmonised terms and conditions

Other options

• Source directly and contract directly with personal service companies
• Recruit temporary resources directly and put through an “agency payroll”.


CONTRACTORS

Can fall into the following categories

• Contractor (worker)
• Contractor (self-employed) - DO NOT ENGAGE - HRMC (IR35) implications
• Contractor (limited company)

• Contractors can be workers but need a right of substitution, to “carry” the risk of work themselves, be appropriately insured and not be “controlled”.

HOW CAN WE “MANAGE” AN AGENCY WORKFORCE

What should an employer expect of the Agency?

• Knowing the importance of briefing their workers
• Do they understand the relationship?
• Do they ‘identify’ with the agency?
• Do they know that the agency will deal with grievances etc?

Reasons for using Agency workers
Numerical flexibility –

• Peaks and troughs in demand
• Projects of limited duration

Short-term ad hoc cover –

• Temporary replacements for permanent staff absence
• Pending recruitment of permanent staff

Strategic

• Outsourcing
• Managed services

AGENCY RESPONSIBILITIES

• End assignments
• Decide disciplinary issues
• Manage grievances
• Career management

Not for prolonged use – think about resource requirements!

CLIENT SUPERVISION – DO’S AND DON’TS

DO
• Refer any disciplinary problems to the agency
• Report any problems promptly
• Inform agency of changes to assignment duration
• Refer worker to agency if pay / benefits are queried
• Understand the relationship and the risks
• Remember the rights of the ‘contract worker’ (SDA, DDA, RRA etc)

DO NOT

• Interview candidates
• Negotiate pay or benefits
• End an individual’s assignment
• Administer disciplinary warnings
• Conduct career management discussions
• Formally agree requests for annual leave

MOVING FORWARD……………………….

Need to consider the following:

AGENCY STAFF

• Tackle long Term use of agency staff.
• Engaging with managers to develop an effective resourcing plan – should those on long term engagement be employees
• Link this to wider resource planning
• Check that contracts are robust

NON EMPLOYEES (incl. SOLE TRADERS)

• Determine what the total resource capability is within the business
• Are sole traders being used and processed directly by your Management Accountants?
• Headcount will be inaccurate
• Check categorisation within your personnel management system – are the current ones correct

TRANSFER TO EMPLOYMENT STATUS

• If so – how do we transfer them – need to develop policy that addresses both HR and revenue implications – especially Fair Employment and Discrimination considerations.



STAKEHOLDERS

• Work with finance function to develop the solution in terms of revenue implications.
• Make sure that procurement teams understand the impact of what they are dealing with, particularly HMRC compliance.
• Resourcing team to develop strategy for engagement of temporary / agency staff. Look at contracts for hire and length of assignment.
• Procurement team to refer issues to correct line Managers / Directors so that all risks are assessed.

BUSINESS RISK

Given the latest case law Employers could ‘carry’ the risk and do nothing but this is unadvisable on several counts:

1. They may not know the real headcount – Often these are wrongly categorised in HR system.
2. HR / Procurement systems often don’t properly track lengths of employment e.g. go back to “Zero” when contracts / assignments are renewed.
3. Managers are confused about the meaning of:
a. Sole traders
b. Contractors
c. Fixed term etc
4. There are various contracts in use for contractors – lack of consistency means an increased risk.
5. The use of Managed Service Companies and Umbrella Companies should be stopped – definitely high risk, especially if fulfilment is by non-residents.
6. Loss of Key Knowledge - What is your Knowledge Management Strategy?

And last, but not least, employers should have appropriate strategies in place that address both legislative requirements and support the needs of their business; rather than relying on the ever changing results from case law.

Toxic Blacklist

The BBC has reported that Employers have begun a blacklist of “bad” employees who have been dismissed or those who have left before disciplinary proceedings can be commenced. To critics it sounds like a scenario from some Orwellian nightmare. An online database of workers accused of theft and dishonesty, regardless of whether they have been convicted of any crime, which bosses can access when vetting potential employees. But this is no dystopian fantasy. Later this month, the National Staff Dismissal Register (NSDR) is expected to go live.

Harrods and Selfridges are among two of Britain's best known high street businesses to have signed up to a controversial database for blacklisted staff that could affect the careers of three million workers. Under the privately run scheme, the names and personal details of former employees whose behaviour has offended the companies will be placed on the newly created National Staff Dismissal Register.

While some employees whose crimes are prosecuted in court will have a chance to defend themselves, other staff may never know their behaviour has found its way on to the register or that they have become a blacklisted worker. Workers sacked for these offences will be included on the register, regardless of whether police had enough evidence to convict them. Also on the list will be employees who resigned before they could face disciplinary proceedings at work. Seven businesses have so far signed up to the register, which went live last month, according to the scheme's organiser, Action Against Business Crime. They include Mothercare and Reed Managed Services.




Politicians and lawyers condemned the database and called on the Government to bring in immediate safeguards to protect employees. The Liberal Democrat home affairs spokesman in the House of Lords, Baroness Sue Miller, said it was "a disgrace that the Government has ignored the rights of employees while private businesses have established a blacklist with no safeguards for the employees put on it".

Baroness Miller added: "A website run for profit is trying to take the place of police, prosecution, judge and jury. There need to be stringent safeguards put in place on this blacklist. "Employees should not be placed on the register until they have been given the opportunity to object. The burden must be on employers to prove an employee's guilt before they are entered on the register."

But Action Against Business Crime says the register will comply with data protection legislation and will hold details of individuals who have been under investigation for acts of dishonesty. "This information is shared with other members of the register who are able to access the national system to search for details of an applicant, ensuring both cost saving through reduction in losses, and a more efficient recruitment process," said Action Against Business Crime.

Selfridges said that any offence that was sent to the register would be properly investigated and that appropriate efforts would be made to notify the former member of staff. A spokeswoman for Harrods, which is owned by Mohamed Al Fayed, said the company had agreed in principle to sign up to the National Staff Dismissal Register. She added: "Our existing internal disciplinary procedures ensure that no person subject to a frivolous or malevolent allegation would find themselves on the register.”We believe that our involvement with the scheme will give extra reassurance to current staff and customers alike."



Well these PR words pale against the proven, documented track record of Mohamed Al Fayed which demonstrates the great danger of the scheme and the damage to employees from this covert Kangaroo Court where no ACAS guidelines need be followed, no employee has a right of representation or appeal and where in Defamation Law malice and an intention to cause harm to the individuals listed can be assumed, for why else have this database other than to stop people being successful in applying for jobs? There is not just the Department of Trade inquiry which found "We are satisfied the image they created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus." He was later accused by his business rival Tiny Rowland of breaking into a safety deposit box at the store. Without admitting responsibility, Mr Al Fayed settled the dispute with Rowland's wife after his death. Al Fayed had been arrested during the dispute and sued the Metropolitan Police for false arrest in 2002. He lost the case. He has been refused a British Passport by no less than four Home Secretary’s on character grounds, a decision upheld by the Court of Appeal. Mohamed Fayed was also involved in the cash for questions scandal, having offered money for questions in the commons to the Conservative MPs Neil Hamilton and Tim Smith. Both left the government in disgrace. Fayed also revealed that the cabinet minister Jonathan Aitken had stayed for free at the Ritz Hotel in Paris at the same time as a group of Saudi arms dealers leading to Aitken's subsequent unsuccessful libel case and imprisonment for perjury.

His record as an employer and as a reliable witness begs scrutiny and includes:

• The substantial number of out of court settlements by Fayed for sexual harassment by Harrods and Fayair (His executive jet business) employees
• Fayed's recorded quotation that the reason he wanted British citizenship was that he didn't like queuing up with the Pakis at Heathrow
• The number of occasions upon which Harrods employees have successfully obtained a finding of racial discrimination at an employment tribunal
• The resignation of the managing director of Harrods Bank, citing improper practices instructed to him by Fayed, leading to the interest taken in the probity of the arrangements there by the Bank of England, which led to Harrods subcontracting the operation of the bank to a reputable bank
• The opening of a safe deposit box belonging to a customer of Harrods Bank, being a person Fayed was known to have an interest in
• The DTI's conclusion that he lied to the Monopolies and Mergers Commission in its investigation of the take-over of Harrods
• His bribe to a member of parliament to facilitate his getting citizenship
• His subsequent admission of that bribe to embarrass the MP when he failed to deliver it
• His apparent almost daily handling of very large sums of cash which get handed out to people
• His loss of an Employment Tribunal case taken by the former Fulham Manager in Fulham Football Club (1987) Ltd V Jean Tigana. (£3m award against Al Fayed)
• Diana’s Bodyguard Trevor Rees-Jones V Al Fayed (County Court 2000, Breach of Contract).

The main source for much of the above is Tom Bower's book "Fayed", which itself has very detailed sources. Bower is very careful in what he says, and no one has successfully sued Bower for libel, despite frequent threats to do so. So no doubting the quality of the entries on the Toxic Blacklist then!

But Kerry Waters, an employment rights expert at Clarions Solicitors, said that the register was potentially "wide open to abuse, with little detail being provided by the Action Against Business Crime Group as to how (or even whether at all) the register will be policed or monitored." She warned that one "minor blip" on someone's record "could wreak havoc with their career".

There is a dilemma here. When firms detect dishonesty it certainly reflects on the employee but it also reflects on the control systems and oversight in the company. For this reason companies rarely prosecute - it exposes weakness in their systems and inadequate management. It is the first principle of Justice that it should be public and open - If companies feel they have been the victims of fraud and dishonesty they should have the courage of their convictions to prosecute with all that entails, including reputational risk.


Otherwise a blacklist is unethical and guaranteed to lead to successful actions for defamation and breach of Data Protection legislation - it is a poltroonerish way of having your cake and eating it? So this Toxic Blacklist is a clear breach of the rules of natural justice and the Human Rights, can be negated by requests under the Data Protection Act to remove individual subject data and it is a ready made grudge weapon for every inept and incompetent employer who does not follow due process and ACAS guidelines and has grudges against employees including whistleblowers who are protected by statute. Nor is there any possible equity with employees suing employers and a "Bad Employer Database" being created. As an analogy customers sue and get judgements against Banks all the time. Effect on Bank; virtually zero. Bank gets judgement against customer; effect on customer? Catastrophic!

So what is the sound of sharpening wood and laughter you hear in the background? Why it is the lawyers of Britain sharpening their pencils and laughing their heads off that the National Staff Dismissal Register (NSDR) has made proving malice and seeking damages so easy! I predict writs at dawn!

Toxic Blacklist

The BBC has reported that Employers have begun a blacklist of “bad” employees who have been dismissed or those who have left before disciplinary proceedings can be commenced. To critics it sounds like a scenario from some Orwellian nightmare. An online database of workers accused of theft and dishonesty, regardless of whether they have been convicted of any crime, which bosses can access when vetting potential employees. But this is no dystopian fantasy. Later this month, the National Staff Dismissal Register (NSDR) is expected to go live.

Harrods and Selfridges are among two of Britain's best known high street businesses to have signed up to a controversial database for blacklisted staff that could affect the careers of three million workers. Under the privately run scheme, the names and personal details of former employees whose behaviour has offended the companies will be placed on the newly created National Staff Dismissal Register.

While some employees whose crimes are prosecuted in court will have a chance to defend themselves, other staff may never know their behaviour has found its way on to the register or that they have become a blacklisted worker. Workers sacked for these offences will be included on the register, regardless of whether police had enough evidence to convict them. Also on the list will be employees who resigned before they could face disciplinary proceedings at work. Seven businesses have so far signed up to the register, which went live last month, according to the scheme's organiser, Action Against Business Crime. They include Mothercare and Reed Managed Services.




Politicians and lawyers condemned the database and called on the Government to bring in immediate safeguards to protect employees. The Liberal Democrat home affairs spokesman in the House of Lords, Baroness Sue Miller, said it was "a disgrace that the Government has ignored the rights of employees while private businesses have established a blacklist with no safeguards for the employees put on it".

Baroness Miller added: "A website run for profit is trying to take the place of police, prosecution, judge and jury. There need to be stringent safeguards put in place on this blacklist. "Employees should not be placed on the register until they have been given the opportunity to object. The burden must be on employers to prove an employee's guilt before they are entered on the register."

But Action Against Business Crime says the register will comply with data protection legislation and will hold details of individuals who have been under investigation for acts of dishonesty. "This information is shared with other members of the register who are able to access the national system to search for details of an applicant, ensuring both cost saving through reduction in losses, and a more efficient recruitment process," said Action Against Business Crime.

Selfridges said that any offence that was sent to the register would be properly investigated and that appropriate efforts would be made to notify the former member of staff. A spokeswoman for Harrods, which is owned by Mohamed Al Fayed, said the company had agreed in principle to sign up to the National Staff Dismissal Register. She added: "Our existing internal disciplinary procedures ensure that no person subject to a frivolous or malevolent allegation would find themselves on the register.”We believe that our involvement with the scheme will give extra reassurance to current staff and customers alike."



Well these PR words pale against the proven, documented track record of Mohamed Al Fayed which demonstrates the great danger of the scheme and the damage to employees from this covert Kangaroo Court where no ACAS guidelines need be followed, no employee has a right of representation or appeal and where in Defamation Law malice and an intention to cause harm to the individuals listed can be assumed, for why else have this database other than to stop people being successful in applying for jobs? There is not just the Department of Trade inquiry which found "We are satisfied the image they created between November 1984 and March 1985 of their wealthy Egyptian ancestors was completely bogus." He was later accused by his business rival Tiny Rowland of breaking into a safety deposit box at the store. Without admitting responsibility, Mr Al Fayed settled the dispute with Rowland's wife after his death. Al Fayed had been arrested during the dispute and sued the Metropolitan Police for false arrest in 2002. He lost the case. He has been refused a British Passport by no less than four Home Secretary’s on character grounds, a decision upheld by the Court of Appeal. Mohamed Fayed was also involved in the cash for questions scandal, having offered money for questions in the commons to the Conservative MPs Neil Hamilton and Tim Smith. Both left the government in disgrace. Fayed also revealed that the cabinet minister Jonathan Aitken had stayed for free at the Ritz Hotel in Paris at the same time as a group of Saudi arms dealers leading to Aitken's subsequent unsuccessful libel case and imprisonment for perjury.

His record as an employer and as a reliable witness begs scrutiny and includes:

• The substantial number of out of court settlements by Fayed for sexual harassment by Harrods and Fayair (His executive jet business) employees
• Fayed's recorded quotation that the reason he wanted British citizenship was that he didn't like queuing up with the Pakis at Heathrow
• The number of occasions upon which Harrods employees have successfully obtained a finding of racial discrimination at an employment tribunal
• The resignation of the managing director of Harrods Bank, citing improper practices instructed to him by Fayed, leading to the interest taken in the probity of the arrangements there by the Bank of England, which led to Harrods subcontracting the operation of the bank to a reputable bank
• The opening of a safe deposit box belonging to a customer of Harrods Bank, being a person Fayed was known to have an interest in
• The DTI's conclusion that he lied to the Monopolies and Mergers Commission in its investigation of the take-over of Harrods
• His bribe to a member of parliament to facilitate his getting citizenship
• His subsequent admission of that bribe to embarrass the MP when he failed to deliver it
• His apparent almost daily handling of very large sums of cash which get handed out to people
• His loss of an Employment Tribunal case taken by the former Fulham Manager in Fulham Football Club (1987) Ltd V Jean Tigana. (£3m award against Al Fayed)
• Diana’s Bodyguard Trevor Rees-Jones V Al Fayed (County Court 2000, Breach of Contract).

The main source for much of the above is Tom Bower's book "Fayed", which itself has very detailed sources. Bower is very careful in what he says, and no one has successfully sued Bower for libel, despite frequent threats to do so. So no doubting the quality of the entries on the Toxic Blacklist then!

But Kerry Waters, an employment rights expert at Clarions Solicitors, said that the register was potentially "wide open to abuse, with little detail being provided by the Action Against Business Crime Group as to how (or even whether at all) the register will be policed or monitored." She warned that one "minor blip" on someone's record "could wreak havoc with their career".

There is a dilemma here. When firms detect dishonesty it certainly reflects on the employee but it also reflects on the control systems and oversight in the company. For this reason companies rarely prosecute - it exposes weakness in their systems and inadequate management. It is the first principle of Justice that it should be public and open - If companies feel they have been the victims of fraud and dishonesty they should have the courage of their convictions to prosecute with all that entails, including reputational risk.


Otherwise a blacklist is unethical and guaranteed to lead to successful actions for defamation and breach of Data Protection legislation - it is a poltroonerish way of having your cake and eating it? So this Toxic Blacklist is a clear breach of the rules of natural justice and the Human Rights, can be negated by requests under the Data Protection Act to remove individual subject data and it is a ready made grudge weapon for every inept and incompetent employer who does not follow due process and ACAS guidelines and has grudges against employees including whistleblowers who are protected by statute. Nor is there any possible equity with employees suing employers and a "Bad Employer Database" being created. As an analogy customers sue and get judgements against Banks all the time. Effect on Bank; virtually zero. Bank gets judgement against customer; effect on customer? Catastrophic!

So what is the sound of sharpening wood and laughter you hear in the background? Why it is the lawyers of Britain sharpening their pencils and laughing their heads off that the National Staff Dismissal Register (NSDR) has made proving malice and seeking damages so easy! I predict writs at dawn!