Protection for contract workers

A recent case involving a local authority and its arms length management organisation has established that protection for contract workers under the Race Relations Act 1976 will be given a broad interpretation and will focus on the facts of any claim, writes Sally Andrews.

In Leeds City Council v Woodhouse & Anor [2010] EWCA Civ 410, the local authority brought an appeal against the Employment Appeal Tribunal’s decision not to strike out a claim of racial discrimination brought under section 7 Race Relations Act 1976 (RRA), which protects contract workers against discrimination by a principal. The claimant, Mr Woodhouse, worked for West North West Homes Leeds, an Arms Length Management Organisation (ALMO) set up by the council to manage its stock of residential property.

The ALMO was set up to be an independent organisation but its staff, many of whom (including the claimant) transferred from the council under TUPE, used the same facilities set up for the council’s staff, were listed on the council’s website and were generally treated as council employees.

The claimant alleged that he suffered racial discrimination from one of the council’s employees and subsequently issued a claim against the council under section 7 RRA. The council sought to have this claim struck out on the grounds that there was no jurisdiction to bring a claim. It argued that the claimant was not a contract worker for the purposes of section 7 and that the ALMO, not the council, was the claimant’s employer.

The Court of Appeal decided that the claimant was a contract worker of the council for the following reasons, based on a factual reading of the relationship between the ALMO and the council:

• The ALMO was set up as an independent organisation, but it was a wholly-owned subsidiary of the council
• It was clear from the facts that the ALMO only existed to provide management services to the council. It had no other clients. The claimant was employed solely for the carrying out of those services and therefore it was the council who ultimately benefited from the work
• Following the binding authority of Harrods v Remick, the court found that the work undertaken by the claimant did not have to have an element which bestowed managerial powers to the council as principal. In fact, it was not necessary that the council exercise any degree of control or influence over the claimant.

Comment

This case demonstrates that a broad reading of section 7 will be adopted by employment tribunals so as not to restrict the protection for contract workers under the RRA. Claims made under this section will be determined on a factual basis and will consider the contractual relationship between the agent and the principal and how in practice any individual operated under that contract.

Principals who are therefore parties to such agreements will have to consider the nature of the relationship it has with its agent, and how the agent’s employees operate under such agreements. If it becomes clear that the employee’s duties are for the sole benefit of that principal, it will have to ensure that those employees are afforded the same employment protections given to staff directly employed by the principal.

Sally Andrews is a legal executive in the employment team at Steeles (www.steeleslaw.com). She can be contacted on 01603 598 000 and via This email address is being protected from spambots. You need JavaScript enabled to view it..