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In the case of Mr D Smith vs Carillion (JM) Ltd and Schal International Management Ltd Respondents (JM) Limited, David Smith, engineer by trade, was aggrieved that neither the Employment Tribunal nor the Employment Appeal Tribunal found in his favour.

Despite the fact that he appears to have been a victim of blacklisting by the now infamous The Consulting Association (TCA), it was judged that he has no right of action and is not entitled to compensation. This is because he was not directly employed by the construction companies, but rather was engaged via employment agencies.

Smith had to demonstrate that he was directly employed by John Mowlem and Schal in order to qualify to bring against them claims that he was unfairly dismissed by reason of his trade union or health and safety activities.

Smith had been an active member of UCATT and it was normal for him to take on the role of UCATT shop steward or safety representative at sites he worked on. His skill as an engineer meant that he was often working as part of the main contractor鈥檚 management team and would sometimes sign off work on behalf of the main contractor. He cited this and a number of other factors to try to persuade the courts that he had a direct contract with the main contractors and not the employment agencies that paid him.

Smith was employed on sites run by John Mowlem from October 1997 to May 1998 and again in September 2000. He was also employed on a site run by main contractor, Schal. However in each case Smith was hired via employment agencies Chanton and Heffo. Smith had been terminated on all these relevant projects but it was only when TCA was closed down following a raid in 2009 that Smith found out that subscribing main contractor construction companies had contributed to, or relied on records about his trade union/health and safety activities. From this he formed a reasonable view that his employment had been terminated owing to these records and that he had no doubt been rejected for work over a number of years because of what was written in these records.

There have been some successful blacklisting claims since TCA was discovered, so why has Smith been unfortunate in seeking redress through the tribunals?

First, it was a question of timing. Smith was terminated on John Mowlem and Schal projects in the period 1997-2000. The law at that time only protected 鈥渆mployees鈥� from suffering detriment in relation to trade union/health and safety activities. It was not until a change in the law made by the Employment Relations Act 2004 which took effect on 1 October 2004 that it was possible for not just 鈥渆mployees鈥� but also 鈥渨orkers鈥� to enjoy such rights.

Second, the tribunals had to assess Smith against the backdrop of the law prior to 1 October 2004 and, as he was not able to demonstrate a contract of employment between himself and the relevant main contractors, he was not eligible to bring the relevant claims, despite the fact he was a 鈥渨orker鈥�.

So what lessons are to be learned from this case for employers right now?

• If you are facing blacklisting claims presently in relation to historic acts of alleged discrimination, where the claimant was not a direct hire but engaged via an employment agency, there may be a defence to the claim if the alleged misconduct occurred prior to the 1 October 2004 change in the law;
• HR managers today could not condone blacklisting as it is now illegal. Some perfectly 鈥渞eputable鈥� companies subscribed to the TCA before the law was changed to make such blacklisting illegal, as they felt that certain individuals threatened to undermine productivity on projects. Also, they worried that militants might, for no legitimate reason, call colleagues out on unlawful industrial action costing them their wages. Because most employers shy away from writing anything other than a standard reference, references are commonly trivialised as 鈥渘ot worth the paper they are written on鈥�. Employers today might therefore profit from requiring direct hires to complete employer application forms (in favour of accepting CVs) setting out their employment history and reasons for leaving previous projects so that employers can audit employment history more accurately and follow up references with more direct and specific enquiries.
• Although employers have more control over direct hires, there is a benefit to recruiting via employment agencies. This is so the main contractor can demand that agencies properly vet individuals hired onto site and can stipulate that the agencies have hired them for a prior minimum period, therefore a known quantity, in order to minimise the prospect of hiring someone who has moved from site to site causing problems.

Madeleine Thomson is a partner and head of employment at Hamlins law firm