Outsourced working in the UK – a recipe for disaster?

It is commonplace in the UK for businesses to outsource services to other businesses, often for low paid work such as cleaning and security. The individuals carrying out the outsourced services are typically employed by the outsource company, rather than the business they provide services to.

In the US it has long been established that outsourced employees, in some circumstances, can legally compel client companies to enter into bargaining agreements in regards to their pay and hours of work. There is no such right in the UK, but a new claim lodged by the Independent Workers Union of Great Britain (“IWGB”) against the University of London could change this.

The claim

Currently, outsourced staff who work at the University have no power to negotiate the terms and conditions of their employment, including their pay with the University. This is because they are employed by an outsourced company, rather than the University, even though the University benefits from their services.

The IWGB are bringing this claim in the Employment Tribunal (“ET”) on behalf of 75 outsourced employees. Their argument is that the employees should have the right to collectively bargain the terms of conditions of their employment with the University, as they would be able to if they were in the US. The IWGB’s arguments could give rise to the prospect of “joint employment” between the outsourced company and the University. “Joint employment” is an unfamiliar concept in the UK, but is common in the US.

The IWGB argue that to deny this right is a breach of Article 11 of the European Convention on Human Rights, which is the right to freedom of assembly and association, including the right to form Trade Unions.

What if the claim is successful?

It is estimated that around 3.3 million people in the UK are outsourced employees, so if the claim is successful, the implications will be huge.

The positive implications:

Joint employers – the decision may, on the face of it, seem beneficial for employees employed under these arrangements, as they will have a legal right to have a contract that expressly creates employment rights against two entities.

The negative implications:

Weakened terms – by allowing outsourced employees to join the unit for bargaining, the terms and conditions of the directly employed employees may actually be weakened, as a middle ground is likely to be reached between their terms and conditions, and those of the outsourced employees.

Implications for the public – if businesses who currently use the outsourced staff are required to comply with the demands of the IWGB, the increased cost of employing people directly may ultimately be passed on to the public in the form of higher prices.

Undermining of the key principle of outsourcing – one of the main attractions of outsourcing is that the client can avoid employee liabilities. Therefore, if the IWGB was successful, it would render the concept of outsourcing pointless.

Existing case law clearly establishes the tri-partite relationship between an agency, worker, and end-client, and supports the University’s argument that if there is already a contract of employment between the worker and agency, then one is not required between the worker and end-client. Therefore, in order to succeed, the IWGB will need to distinguish this case from the considerable case law that comes before it

If you are concerned about any of the issues discussed in this blog, please get in touch with a member of our Employment, HR and Business Immigration team by emailing employment@mlplaw.co.uk. Alternatively, call 0161 926 9969.

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