A major judgement by the High Court will have a substantial impact on middlemen businesses that make introductions from individuals to end service users.
Such businesses should now urgently assess the risk to their operations due to the High court decision in Simply Learning Tutors Agency Ltd and others v Secretary of State for the Department for Business, Energy & Industrial Strategy 2020.
Employment Agencies Act 1973
The company introduced tutors to parents requiring tuition for their children’s education. The High Court considered the judicial review and decided that such introductions fell within the definition of employment business as per the Employment Agencies Act 1973. It was also therefore subject to the Conduct of Employment Agencies and Employment Business Regulations 2003. The High Court rejected the company’s argument that no individual was actually employed and that the company acted only as an introducing middle party for the tutors and parents.
The High Court said that the definition of employment is not limited to the traditional notion and that section 13 of the Employment Agencies Act 1973 not only covered employees and workers but also encompassed the self-employed. The definition of an employee is therefore much broader than the traditional common law definition. The High Court interpreted the act to cover any arrangement by a business to supply individuals to personally perform services for any intermediary. This was regardless of what the supplier called the arranged service employment or self-employment. The Employment Agencies Act 1973 protected individual in search of work and those who received the service, in this case the parents and the children.
The High Court also stressed the demanding nature of both the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Business Regulations 2003. Contracts are regulated between individuals looking for work and employment and agencies and businesses. Individuals looking for work should not be charged a fee, but the hirer may be charged a fee. That an agency or employment business must carry out background checks on the individual’s identity and credentials. The agency or employment business must provide individuals with prescribed information. The Secretary of State has power to inspect agencies and employment businesses to ensure complacence. Any agency or employment business falling foul of the regulations may be served a prohibition notice to prevent them from operating and a breach of such a notice would amount to a criminal offence and result in large fine.
If you are unsure of your company’s position, please speak to Quest for advice and guidance on this matter on 01455 852028.
