THE AGENCY WORKERS REGULATIONS (AWR)

These came into force on 1st October 2011 and introduced the principle of equal treatment for agency workers once they have been on assignment with the same hiring company for 12 weeks.

This brief guide is based on the Government’s interpretation of the regulations. Before that, the main provisions include:

  • Agency Workers will be eligible for access to the same facilities as employees from day 1
  • After 12 weeks in post the worker is eligible to the same terms and conditions as employees
  • A six week break in employment signifies an interruption to the 12 week period and it starts again. However illness, maternity, lockouts and so on, do not constitute a break in continuity
  • If a Tribunal determines there has been deliberate manipulation to get around the 12 week qualifying period an award of up to £5,000 may be made.

Key points to look out for:

The principle of equal treatment will apply only to certain terms and conditions and Agency workers will be entitled to the relevant terms and conditions to which they would have been entitled had they been recruited directly by the hirer to carry out the same job.

As well as rate of pay, the right to equal treatment will extend to terms and conditions related to:

  • The duration of working time
  • Night work
  • Rest periods
  • Rest breaks
  • Annual leave.

Where the right to equal treatment grants an entitlement to annual leave in excess of the statutory minimum, there will be considerable scope for flexibility with respect to how this additional leave is provided, for example it might be ‘rolled up’ into the worker’s pay.

The Regulations’ definition of an agency worker is broad and only the genuinely self-employed are intended to fall outside its scope.

In practice, this is likely to mean that individuals who legitimately provide their services through their own limited company are exempt, but it is important to note that the Regulations do not expressly exclude from their scope an individual simply because a limited company is involved in the supply of the individual’s services. In every case, the test of genuine self-employment must be satisfied.

‘Umbrella companies’

Overall, the Regulations’ definitions are far-reaching and comprehensive. They aim to prevent agencies or hirers circumnavigating the Regulations through the creation of certain contractual arrangements.

Thus, workers may be engaged or employed not directly by an agency, but by a so-called ‘umbrella’ company. Sometimes the supply of agency workers is managed on behalf of a client by a master or neutral vendor that may or may not engage workers directly itself.

The Regulations make clear that an individual is not prevented from being an agency worker because of the existence of one of these additional links in the chain of supply between them and the hirer.

The meaning of “Pay”

The Regulations begin with a broad definition of pay that includes ‘…any sums payable to a worker … in connection with the worker’s employment, including any fee, bonus, commission, holiday pay, or other emolument, whether payable under the contract or otherwise…’.

Certain types of pay that would otherwise fall within this definition are then expressly taken out of scope. These are:

  • Occupational sick pay
  • Any payment related to a pension or compensation for loss of office
  • Maternity or paternity pay
  • Redundancy pay
  • Any payment made under a ‘financial participation scheme’ – a scheme that offers workers a share in an organisation’s profits through distribution of shares or cash
  • Any payment for time off work made in accordance with certain statutory rights (public duties, family reasons, to look for work or training [Part 6 ERA])
  • Guaranteed pay under the Employment Rights Act 1996
  • Any payment by way of an advance under a loan agreement
  • Any payment in respect of expenses
  • Any bonus or incentive payment ‘…which is not directly attributable to the amount or quality of work done by a worker and which is given to a worker for a reason other than the amount or quality of work done such as to encourage the worker’s loyalty or to reward long service’.

The Regulations expressly exclude non-cash rewards, so equal treatment will not apply to benefits such as private medical insurance or private use of a company car. The sole exception is vouchers or stamps that have a fixed monetary value and that can be exchanged for goods and services.

12 weeks in the same role

The right to equal treatment with respect to relevant terms and conditions will not apply until an agency worker has worked in the same role for a hirer for 12 continuous weeks. A change of agency during the 12-week period will not affect qualification.

There is no minimum amount of work that will need to be completed in order for a week to count as one of the 12 for qualification purposes.

Meaning of ‘the same role’

If a change in position is to require an agency worker to re-qualify for equal treatment, the Regulations state that the whole or the main part of the new role must be ‘substantively different’ from the previous role. A further requirement is that the agency must have notified the worker in writing of the type of work they will be required to carry out in the new role.

Breaks between assignments

The general rule under the Regulations is that any break between assignments of six weeks or less shall not break ‘continuity’ for qualification purposes. This means that if a worker returns to a role which is not substantively different with the same hirer within six weeks of their previous assignment, the previous assignment will count towards qualification.

Continuity between assignments is maintained beyond six weeks if the break results from:

  • Sickness up to a maximum of 28 weeks (subject to medical evidence if requested)
  • A temporary cessation of work provided it affects all the hirer’s relevant employees and accords with the hirer’s established practice
  • Time off that relates to a statutory or contractual entitlement
  • Jury service
  • A strike or lock-out.


Anti-avoidance

A specific provision of the Regulations is aimed at frustrating deliberate attempts at preventing agency workers from equal treatment by structuring assignments in certain ways. This provision may be relevant where one or more of the following applies:

  • The worker has completed two or more assignments with a hirer, and/or
  • The worker has completed one or more assignments with a hirer and one or more assignments with hirers associated with that hirer, and/or
  • The worker has worked in more than two different roles with the hirer.

If the worker presents a claim to an employment tribunal, it will be for the tribunal to decide whether the most likely explanation for the particular pattern of assignments is that it was a deliberate attempt on the part of the agency and/or the hirer to prevent the worker from qualifying for equal treatment.

If the tribunal finds that there was a deliberate attempt to frustrate or prevent qualification, it can award compensation of up to £5,000, which can be apportioned between hirer and agency. The worker will also be deemed to have qualified for equal treatment despite the attempt to prevent that.

Rights of access

From day one of an assignment agency workers will be entitled to equal access to ‘collective facilities and amenities’ provided by the hirer. Because it is not subject to any qualifying service, this right will apply from 1 October 2011.

The expression ‘collective facilities and amenities’ is not defined by the Regulations, but three examples are listed:

  • Canteen or other similar facilities
  • Child care facilities
  • Transport services.

It is not expected that ‘facilities’ that are more in the nature of discretionary benefits will be within scope, for example membership of a hirer’s on-site gym.

Transitional arrangements

Agency workers on an assignment when the Regulations come into effect will begin their 12 week qualifying period on 1 October 2011 and no credit is given for work undertaken before that date. This means that the earliest date for qualification will be the week commencing 25 December 2011(Christmas Day!).

A worker’s right is then; “to the relevant terms and conditions they would have been entitled to if hired directly on the first day of the qualifying period”.

Good Employee Relations

This guide concerns the operation of the Regulations. Employers are advised to factor in the impact on Employee Relations where workers carrying out identical tasks may be treated differently during the qualifying period.

One final thought!

The Swedish Derogation!

There is a general intro to the Agency Workers regulations elsewhere in these pages but its worth looking at this aspect in more detail.

For employers (hirers) the Swedish Derogation sounds like good news.  It relates to the opt-out clause negotiated by the Swedish delegation during the debate over the AWR. The opt out meant that the right to equal pay would no longer exist when agency workers are employed on a permanent basis by their umbrella company or temporary work agency and receive pay in-between assignments. As long as the agency worker has a robust contract of employment in place with their agency or umbrella before the first assignement with a hirer, then the responsibility for determining the appropriate rate of pay lies with the recruiter or umbrella.

However, this opt out is arguably unattractive because the conditions for applying it are potentially too costly and it relates only to pay not other matters. These conditions include:

  • The agency worker needs to be genuinely employed by the umbrella-company or agency with a permanent contract of employment in place; the contract must be entered into before the beginning of the worker’s first assignment.
  • Agencies or umbrella companies will have to pay agency workers during non-working periods, ensure reasonable steps are taken to seek suitable employment for the worker, and make sure that any available work is offered to the worker
  •   This condition must apply for a minimum period of four weeks before a contract can be terminated
  • Pay in non-working periods must be at least 50% of the workers basic pay while on assignment but not less than NMR.

 

The Agency Workers (Amendment) regulations 2011 have slightly altered the way in which the Swedish Derogation will work. The requirement to seek suitable employment and provide pay for non work periods will now arise only after the end of the first assignement.

The Swedish Derogation!

There is a general intro to the Agency Workers regulations elsewhere in these pages but its worth looking at this aspect in more detail.

For employers (hirers) the Swedish Derogation sounds like good news.  It relates to the opt-out clause negotiated by the Swedish delegation during the debate over the AWR. The opt out meant that the right to equal pay would no longer exist when agency workers are employed on a permanent basis by their umbrella company or temporary work agency and receive pay in-between assignments. As long as the agency worker has a robust contract of employment in place with their agency or umbrella before the first assignement with a hirer, then the responsibility for determining the appropriate rate of pay lies with the recruiter or umbrella.

However, this opt out is arguably unattractive because the conditions for applying it are potentially too costly and it relates only to pay not other matters. These conditions include:

  • The agency worker needs to be genuinely employed by the umbrella-company or agency with a permanent contract of employment in place; the contract must be entered into before the beginning of the worker’s first assignment.
  • Agencies or umbrella companies will have to pay agency workers during non-working periods, ensure reasonable steps are taken to seek suitable employment for the worker, and make sure that any available work is offered to the worker
  •   This condition must apply for a minimum period of four weeks before a contract can be terminated
  • Pay in non-working periods must be at least 50% of the workers basic pay while on assignment but not less than NMR.

 

The Agency Workers (Amendment) regulations 2011 have slightly altered the way in which the Swedish Derogation will work. The requirement to seek suitable employment and provide pay for non work periods will now arise only after the end of the first assignement.