One Man, Two Guvnors – outsourcing and employment law

by Laurie Anstis on April 24, 2013

When work is outsourced, an employee will often be accountable both to their employer and to the client they are working for.

For instance, a chef might work at a canteen which his or her employer runs for one of its clients. The contract that the employer has with its clients is likely to give the client a right of veto over who carries out the work. Even if it doesn’t, the employer will be under commercial pressure to do what its client wants.

If the chef offends the client, the client might tell the employer to remove him or her from their work.

That’s what happened in Bancroft v Interserve. After a “misunderstanding over margarine“, the chef’s employer gave him a formal warning, but the client told the employer to remove him from their work.

The employer did as their client wanted, and took the chef off the work. They tried to redeploy him on work for other clients, but there wasn’t any other work available, and they dismissed him.

This raises an employment law problem. What the chef did wasn’t bad enough to justify losing his job, but despite that he lost his job.

A dismissal of this kind can be for “some other substantial reason”, but is it fair? It certainly isn’t going to seem fair to the employee.

Mrs Justice Slade addressed this point in Bancroft. She found that the employment tribunal had not properly considered what the employer did and did not do after the client told them they wanted the chef removed. The tribunal had been too quick to come to the conclusion that the dismissal was fair, and the case was sent back to the tribunal for reconsideration.

In the course of her judgment, she said:

“In another case the question of whether an employer has taken adequate steps to mitigate injustice to an employee as a result of his removal at the behest of a third party may engage the broader question of whether avoiding injustice would require a consideration of whether the employer should have taken steps earlier in the employment history to seek to remedy a problem before it became an insuperable problem leading to dismissal.”

This leads to many questions. For instance, could this go so far as requiring an employer to arrange mediation between a client and one of its employees? What if the employer was unaware of the problem before it came to the point where the client required the removal of the employee? Should employers now require their clients to report any problems as soon as they arise?

These questions, and more, will have to be answered in later cases.


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