Businesses and organisations may on occasion find it necessary to supplement their workforce with individuals sourced from agency services. When these circumstances arise, the individuals supplied via the agency are likely to hold the status of “worker” with the end-user (business utilising the agency services). Although the end-user has not entered into a direct contract of service (employment contract) with the worker, it is still possible that the end-user might be viewed as the “employer” of the agency worker.

Being deemed as an employer may then give rise to potential risks and liabilities, especially if the working relationship later deteriorates and ends unlawfully.  Although workers’ rights are limited in nature, some of the claims that can be pursued have uncapped compensatory awards. One such right which employers should be weary of is the right to raise a protected disclosure (whistle blow) in relation to any serious wrong doing which is in the public interest.

In July 2012, Shrewsbury and Telford Hospital Trust (“the Trust”) terminated the engagement of an agency worker, Mr Small after just 2 months service. This action was subsequently found to be unlawful because the decision to end the working relationship was connected to Mr Small raising a protected disclosure with the Trust.

The background

Small’s services were sourced by the Trust through an agency. The Trust expected him to work for an interim period as a project manager in their estate management department and possibly only until November 2013, the time which the predecessor of Small worked until. Small successfully argued before a Tribunal that his untimely departure in 2012 occurred because the Trust were unhappy that he had suggested they should advise individuals who had worked in some of the Trust properties or vicinities nearby, that their health was at potential risk of asbestos exposure. The Tribunal agreed with Small that his working relationship did indeed end because he had raised a protected disclosure which was in the public interest.

The Trust subsequently refused to provide Small with a reference for future employment. This then caused Small to suffer further detriment, in that finding another similar role in the public sector became near impossible. The Tribunal accepted evidence from Small that he had applied for 576 vacancies but only secured 6 interviews. And of these interviews only one resulted in a temporary 7 week contract, as that employer did not follow up his references.

When considering liability, the Tribunal considered the above amongst other evidence. It formed the view that had the Trust not terminated the agency contract, Small would have remained engaged under this arrangement until November 2013. Consequently, the Tribunal awarded Small compensation for loss of earnings calculated on this end point. Small received a total of £54,126, which included £33,976 for loss of earnings, £15,150 for injury to feelings and £5,000 by way of “aggravated damages”.  During its assessment of the evidence the Tribunal remarked:

“As an interim worker, we accept that his career is dependant, on the outcome of his last job, he is only as good as his last reference, … The outcome of the dismissal has it appears, been career ending for the claimant. “

Although, the Tribunal recognised that the Trust’s actions were career ending and made Small’s future employability prospects in the public sector possibly non-existent, it did not consider making any award in respect of stigma damages. It was this issue that was appealed by Small firstly before the Employment Appeal Tribunal (which dismissed his appeal) and then again before the Court of Appeal.

The decision 

The Court of Appeal (CA) overturned the decision of the Employment Appeal Tribunal and upheld Small’s appeal. The CA held that the original Tribunal ought to have awarded Small stigma damages even in circumstances where he has not raised the issue in his claim.  It ruled that from past cases the principles had now been well established that:

“a claimant can recover for the consequences of any disadvantage he suffers on the labour market, by reason not only of having been dismissed by his previous employer but also of his having brought proceedings against that employer (so-called “stigma loss”)”

This meant that it was wrong for the Tribunal to simply look at the period of November 2013 as the cut off point for assessment. Consequently, the CA ordered that the case should be sent back to the Tribunal for an assessment of the stigma damages to be awarded to Small. The Appellate Court gave a strong indication to the Trust that it would serve well for the Trust to try and reach an agreement with Small before the next tribunal hearing.

Reflective thought

When employing agency workers, employers should be mindful that any concerns which they raise should not be treated with any less regard than an employee. Training and guidance of managers and supervisors of what amounts to a protected disclosure is advisable. Making employees aware of the financial consequences which could flow from ignoring protected disclosures makes good business sense. Flagging up potential risks is always better than trying to manage the damages after the risk has come to fruition.

There was no legal requirement for the Trust to provide a written reference to Mr Small but clearly it would have been better to do so. It is very unlikely that any future employer would wish to employ someone whom they perceive to be a troublemaker and by not providing a reference you may well be attaching that stigma to an ex-employee or worker. If, as in the case of Mr Small, that person has previously raised a protected disclosure, you may possibly find yourself defending a tribunal complaint. On this basis it is recommended that unless there is a prohibitive legal reason stopping an employer from making reference, a basic reference confirming a job title and dates of employment is advisable.

If you require further advice on business law matters, you may wish to join our community; on elXtr we have guides and documents to help you navigate everyday business issues, including employment and health and safety issues.

If you have access to the legal helpline and want to discuss your specific circumstances with a qualified solicitor or barrister, please get in touch with them.

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