Current News
27 Jun 2007
Court of Appeal rules that sick pay is not payable for short term agency workers
Court of Appeal rules that sick pay is not payable for short term agency workers
The Court of Appeal has today (27.06.07) ruled in the case of Taylor (Officer of the Commissioners of HMRC) –v- Thorn Baker Limited and Ors that agency workers engaged for a period of less than three months are not eligible to claim statutory sick pay (SSP).
HMRC appealed decisions of the General Commissioners of HM Customs and Revenue and the High Court following the refusal of Thorn Baker, an employment business, to pay SSP to two agency workers, Mr Paradise and Mr Middleton who had worked for them for one month and two months respectively before falling ill and claiming sick pay. Their challenge was on the wording of the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 which, while specifically excluding agency workers, purported to change the law relating to eligibility for all workers to claim SSP under the Social Security Contributions and Benefits Act 1992.
Under the 1992 Act employees engaged on contracts for less than 3 months are not entitled to claim SSP from their employer. ‘Employee’ in this context includes anyone who is paid subject to PAYE and National Insurance Contributions and therefore includes agency workers. However the 2002 Regulations purported to remove this exclusion from the Act thus changing the law in respect of all employees, including agency workers, even though the Regulations were not intended to apply to agency workers.The case turned on a point of construction although counsel for Thorn Baker also raised the question whether the removal of the exclusion for all employees was ultra vires i.e. without jurisdiction. As these Regulations were based on the European Framework Directive which specifically excludes agency workers and as it was accepted that the substantive rights introduced by the Regulations would not apply to agency workers it was illogical for amendments brought about by this legislation to also apply to agency workers.
In the event though the Court of Appeal did not have to deal with this point because they held that the wording of Regulation 19 of the 2002 Regulations had the effect of excluding agency workers from any of the legal rights introduced by the 2002 Regulations, including the consequential right to claim SSP from day one of their employment.
Regulation 19 states that “These Regulations shall not have effect in relation to employment under a fixed-term contract where the employee is an agency worker”. The Court made it clear that this applied to all categories of agency worker regardless of the terms of their engagement with the employment business. This meant that the repeal of that part of the Social Security Contributions and Benefits Act 1992, which excluded anyone with a contract for less than three months from claiming SSP, did not extend to anyone supplied by an employment business to do work for another person.
The effect of this judgment is that agency workers will only be eligible for SSP after working for a period of 3 months for their employment business i.e. the position before the introduction of the 2002 Regulations. This is also the case for other classes of worker who were specifically excluded from the 2002 Regulations, namely apprentices and those undertaking Government Training schemes or work experience as part of a higher education course.
27th June 2007
