Facts of the case:
Talent Systems Europe Ltd (trading as Spotlight) operates an online directory through which performers, such as actors and musicians, can pay to upload and maintain their profiles for casting directors to view. Spotlight describes itself as a “Software as a Service” (SaaS) business, offering a digital platform that enables actors and other performers to publish their personal details and work history in order to advertise themselves for work.
A claim was brought against Spotlight by Equity (a trade union for performers and other creative professionals) as well as several individual performers, seeking a declaration that Spotlight is an employment agency for the purposes of the Employment Agencies Act 1973 (EAA) and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (Conduct Regulations).
The dispute:
The dispute related to the reasonableness of the fees charged to performers by Spotlight for inclusion in the online platform, and the scope of performers’ access to the platform.
The charging of fees by an employment agency to work-seekers is limited and controlled by the EAA and the Conduct Regulations, so it was necessary for the Court to determine first of all whether Spotlight was an employment agency or not.
The Law:
Under the EAA, an employment agency is defined as:
“a business…of providing services (whether by the provision of information or otherwise) for the purpose of finding persons employment with employers or of supplying employers with persons for employment by them”.
It has already been established through previous case law that “employment” for these purposes can include self-employment. Essentially, the question was whether Spotlight provided work-finding services, irrespective of whether the performers were employed or self-employed.
Spotlight argued that their online directory did not exist to find work for performers, but to enable performers to promote themselves. The claimants contended that the platform was a service provided for the purposes of finding people employment with employers.
Decision of the Court:
The High Court found in favour of Spotlight, ruling that the directory is “a number of steps away from” a service for the purpose of finding people employment. Although the ability of performers to find employment might have been enhanced by the use of the platform, the directory’s role was narrow, and it was found to simply host the details of performers on its platform for others to peruse and consider.
As Spotlight does not vet, edit performers’ profiles, make recommendations to casting directors, act as a “middleman” in negotiations or manage money on behalf of performers, it was found not to be finding individuals employment and therefore not an employment agency. The Judge drew similarities to other directory services like Checkatrade, Yell (formerly Yellow Pages) and LinkedIn, which all allow users to advertise their services but which are not considered to be employment agencies.
The Judge also noted that no regulatory enforcement agencies (such as the Employment Agency Standards Inspectorate) had ever taken action against Spotlight, despite its business model being well-known and remaining unchanged for decades, which indicated a commonly-held view that it was not an employment agency under the EAA.
Comments:
This case provides helpful clarification of what constitutes an employment agency under the EAA. It was emphasised by the Court that passive facilitation does not equate to active job-finding, and that Spotlight’s purpose was marketing, not job placement.
This is a useful indicator that a platform that facilitates visibility for people but does not actively place or match potential candidates with employers is unlikely to be regulated as an agency.
That said, this decision is significant for digital platforms operating in the recruitment and employment space. As the tech-driven labour market and the gig economy continue to evolve, there are more disruptors and facilitators than ever providing digital and app-based services with the aim of connecting workers and contractors with employers and hirers. Whilst Spotlight was found not to be an employment agency, businesses operating a slightly different model could inadvertently find themselves being classed as an employment agency or employment business, meaning their activities would be caught by the provisions of the Conduct Regulations and would be subject to scrutiny by the Employment Agency Standards Inspectorate (soon to be subsumed into the Fair Work Agency). As novel, tech-based business models evolve, the definition of a traditional employment agency becomes blurred. Businesses offer work-related solutions such as this should seek legal advice, to avoid unpleasant surprises and ensure that their operating model is compliant.
