When can a hirer be liable for acts of discrimination by an agency worker?

Wed, 28 Jul 2010 | By Kevin Barrow, partner, Osborne Clarke

The recent case of May & Baker Ltd v Okerago is welcome news for employers who engage agency workers. The Employment Appeal Tribunal (EAT) held that a hirer cannot be held liable for acts of discrimination committed by an agency worker against one of its employees, save where the worker is found to be an employee or an agent of the hirer. 

In the case, Ms Okerago worked for May & Baker from April 2001 until she was dismissed, allegedly for misconduct, in March 2007. After her dismissal she claimed race discrimination in the Employment Tribunal. Ms Okerago alleged that during the 2006 World Cup she had indicated her intention not to support England to an agency worker engaged by May & Baker and was told to “go back to her own country”. She claimed that May & Baker had been complicit “in allowing an environment to continue where such conduct could take place” and that they had aided and abetted the discrimination by failing to promptly or fully investigate her subsequent grievance about the remark. 

The EAT found the fact that the agency worker behaved and was treated like an employee was insufficient to support a finding that she was in fact an employee, and in the absence of any evidence to suggest that the agency worker was May & Baker’s agent, the company could not be liable for the agency worker’s alleged discriminatory behaviour towards Ms Okerago. It was held that failing to investigate the incident did not amount to May & Baker aiding or abetting discrimination since the alleged discriminatory incident had already occurred and May & Baker had no knowledge of it until a grievance was raised. Furthermore allowing an environment to continue where such conduct could take place did not amount to aiding such conduct. 

It is significant in this case that the agency worker was not considered to be an employee. Had she been so, the outcome would obviously have been very different. It is therefore always best practice to ensure that up-to-date equal opportunity and harassment policies are in place and being followed to avoid potential claims.

The case can be seen as a loop-hole in anti-discrimination law which is currently not addressed in the Equality Act 2010 (which is due in the main to come into force in October 2010) or the Agency Workers Regulations 2010 (which are due to come into force in October 2011). There are no reported plans to make any legislative changes - however it may be that case law will develop to bridge the gap.

Points to note

·     The case shows it will be very difficult to bring a successful discrimination claim against a hirer on the basis of the actions of one of its agency workers. 

·     To bring a successful claim the individual will need to demonstrate that the agency worker is an employee or an agent of the hirer. To be an agent of the hirer, the individual must be able to show that the hirer authorised the discriminatory act of the agency worker. In all but a few cases this will be difficult to prove.

·     Employers should be aware that they could potentially still be liable for claims brought against them by employees on the basis of harassment by an agency worker rather than on the basis of direct discrimination. Case law indicates that an employer may be held liable for harassment even in the absence of control over the third party. The point was not addressed in this case since Ms Okerago’s claim for harassment failed at the Employment Tribunal and was not appealed. 

·     Finally, the case emphasises to employers the issues of harassment and discrimination that may also arise during the World Cup this year. Employers should remind employees of standards of acceptable behaviour, encourage them to show sensitivity to one another and offer to speak to any employee who has concerns. 

Kevin Barrow is a partner in Osborne Clarke and leads its recruitment sector team.

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