November 21, 2017

Good Law Project statement on IWGB’s Joint Employer Case

The law is not a game to be played by the powerful with the lives of others. For it to have legitimacy it must operate in the real world, serving a real purpose.

The tax profession, for a time, forgot this. It thought it saw, in artificial contractual arrangements, a skeleton key with which to unlock real life tax liabilities. But the judiciary, in a string of cases culminating with UBS AG, said no. It would not tolerate what the Supreme Court described as the “sophisticated attempts of the Houdini taxpayer to escape from the manacles of tax.”

But tax avoidance is merely one species of a broader genus of rule avoidance. Another is employment rights avoidance.

And here, too, judges are responding. The landmark decision of Autoclenz concerned 20 individuals hired by an auctioneer to clean cars. The auctioneer didn’t want to suffer the cost of giving them basic employment protections. And drew up artificial contracts to try and avoid them. But, again, the Supreme Court was having none of it. “The true agreement,” it said, “will often have to be gleaned from all the circumstances of the case, of which the written agreement is only a part.”

But money is cunning when it wants not to be spent. There are many ways bad employers dodge the cost of workers’ rights. And there are better ways; politer ways. And outsourcing can be one of them.

Suppose you are an employer with a prestige brand. It enables you to generate large profits. But it also imposes a burden: you must appear to behave well for fear of damaging your brand. How, then, do you reduce your employment costs?

By outsourcing. Engage another company. Your staff become its staff. They still pack your parcels, clean your toilets and assemble your products. But if that other company treats them poorly, if it refuses basic employment rights? How is that, any longer, your concern?

You will have outsourced two things. Both legal responsibilities to your workers and moral responsibility for how they are treated.

Moral responsibility is for the court of public opinion. That court has proven a powerful ally of tax campaigners and of employment rights campaigners too. But legal responsibility is for courts of law.

The Independent Workers’ Union of Great Britain is today bringing a case to establish that the University of London is a joint employer – along with Cordant Security, an outsourcing company – of some of the staff who provide security for and man the receptions desks of the University. It builds on some legal notions of “joint employer” status from US law and adds measures from our own common law and the European Convention on Human Rights. Notionally, it concerns the question who has the right collectively to bargain on behalf of those staff. But the joint employer principle, if established in UK law, has the potential to apply much more broadly than that. It could fundamentally change the legal regime which protects outsourced workers.

The treatment of workers engaged by faceless outsourcing companies, often with marginal skillsets and modest bargaining power and little influence, can be hidden from view. It is difficult to apply moral pressure to companies who do not have brands to protect. But the law? The law, as I have said, must operate in the real world. And if, in the real world, the brand can also be said to be the employer, it will not be able so easily to shuck off its responsibilities.

As founder of the Good Law Project, I am proud to be supporting the IWGB in this case.

Jo Maugham QC


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