This time the experts, Esther Smith and Martin Brewer give their advice on setting up service contracts overseas.
The question: Provision of services to temporary contractors overseas
If a company set up a service contract with an in-country service company to supply accommodation, transport to/from the airport etc. and other support overseas, is this blurring the line between contractor and staff employee too much? And running the risk of accepting the responsibility and becoming the employer rather than a client?
Legal advice:
Martin Brewer, partner, Mills & Reeve
Your question is a bit vague about how the contract will be run but essentially if you manage the contractual relations properly there should be no blurring of lines and the issue of who is the employer should not arise.
If your company (company A) has services provided to it by another company (company B) there are two key sets of arrangements that need to be in place. The agreement between company A and company B and the arrangements between company B and its employees/workers (the staff) actually providing the services to company A.
Assuming company B either employs or otherwise contracts with the staff to provide the services for which company A has contracted with company B then there is no reason why company A should ‘become’ or be deemed to be the employer of the staff from company B. For that to happen a court would have to either find or imply a direct contract between company A and the staff. Assuming no express contract between company A and the staff, a court will only imply a contract if necessary and if the original contractual arrangements are not a sham (company A contracts with company B and company B contracts with staff to provide the services to company A) there is no necessity to imply contractual relations between company A and the staff so no implication of an employment relationship. The key is to get the contractual relations clear from the outset so there is no ambiguity and no room to imply anything other than that which the parties intended.
Martin Brewer can be contacted at martin.brewer@mills-reeve.com. For further information, please visit Mills & Reeve.
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Esther Smith, partner, Thomas Eggar
I don’t mean to sound like a lawyer, but it is very difficult to answer your question without further information as I am not entirely clear of the situation you are describing!
However a matter of general principles, if you are trying to avoid a relation of employment existing, as appears to be the case I think, then you need to make sure that the relationship between the two companies is genuine, transparent and not personal to any particular individual. The provision of accommodation and transport to personnel from one company by the other company in itself should not give you an issue – what you are trying to avoid is the situation where an individual is personally contracting to provide their services, creating an obligation between them and the other party of mutual obligations (i.e. the obligation on one party to provide the individual with work and the obligation on the individual to undertake it).
Of course the issue of the existence of an employment relationship is much more complicated than that, but the above reflects a key point, and from your brief enquiry I don’t see that you have an issue on the facts provided.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
