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Agency Workers Regulations - an overview

29 March 2010 #Employment


The final form of the Agency Workers Regulations 2010 ("the Regulations") was laid before Parliament on 21 January 2010.  David Cameron has recently "prayed against" the Regulations to request that they be revoked, which will trigger a time-limited debate by Parliament and a ‘stand or fall` vote.  There is no scope to amend the regulations during this process.

Despite the actions of the opposition party, we are expecting the Regulations to ultimately be pushed through with guidance to be written post-May 2010.  There may be, however, scope for re-opening the final form regulations should a new Government come into power after the General Election this year.

The Regulations are due to come into force on 1 October 2011.

Who is covered by the Regulations?

The Regulations only apply to agency workers, i.e. a worker contracted to someone (normally an employment agency) in the business of supplying individuals to work temporarily under the supervision and direction of a hirer.  The Regulations will not apply to:

  • Casual workers (if a company employs or engages workers directly with no contractual relationship with anyone else (whether on a fixed term, casual or other basis), they cannot be subject to the Regulations); or
  • The genuinely self-employed  (the definition of agency worker is wide enough to cover workers supplied through one or more intermediaries or workers providing services through an umbrella company, but it would not include the genuinely self-employed).

The qualifying period

The Regulations provide a right to "equal treatment" which does not apply until an agency worker has undertaken the same role, whether on one or more assignments, with the same hirer for 12 continuous weeks. 
As part of its second consultation period over the Regulations, the Government invited views on how abuse of the qualifying period could be prevented.  Consequently, the Government decided to introduce a specific anti-avoidance provision and agencies and hirers may have to prove they were not seeking to restart the 12 week time period if, for example, agency workers are rotated around different assignments.  Agency workers have the right to bring a claim if assignments are structured so as to avoid the scope of the Regulations.  Breach of this aspect of the Regulations will attract a fine of up to £5,000.

A break of at least 6 weeks between assignments may be necessary to restart the 12 week clock.

What is "Equal treatment"?

This means the same "basic working and employment conditions" as the agency worker would have been entitled to if recruited by the hirer under a contract of employment to do the same job.  The test is therefore looking at a hypothetical situation, although the comparator has to be a "flesh and blood" employee of the hirer.

"Basic working and employment conditions"

After 12 weeks in the job, agency workers become entitled to the same:

  • Pay;
  • Maximum working time protection;
  • Length of night work protection;
  • Rest periods;
  • Rest breaks; and        
  • Annual leave entitlement

as the hirer`s employees are entitled to under their contracts of employment (including relevant provisions of collective agreements and likely employee handbooks too). 

In simple terms, agency workers become entitled to the same pay and working time protections, but not the same hours of work. 

The definition of "pay"

The approach to the definition of "pay" continues to be based on the principle of "equal pay for work done", i.e. basic pay plus other contractual entitlements directly linked to the work undertaken by the agency worker on an assignment.  This will include shift allowances, overtime pay and premiums for unsocial hours.  Bonuses will be included provided that they are directly attributable to the quality or quantity of work done by an agency worker.  

Specific payments (usually associated with employment status) are excluded, namely, occupational pension contributions, occupational sick pay, maternity, paternity or adoption leave payments, redundancy pay and membership of financial participation share schemes.  

Enforcement

The employment agency will be primarily responsible for breach of the equal treatment principle.  However, it will have a defence if it can show that it took "reasonable steps" to obtain relevant information from the hirer about its basic working and employment conditions. Second, when it received such information, it acted "reasonably" in determining the agency worker`s basic working and employment conditions after the qualifying period and for the remainder of the assignment.   

The hirer will be responsible for any breach to the extent that it is responsible for the infringement, having regard to the steps it has taken to enable the agency to provide information to the agency worker. 

The Government decided against making temporary work agencies and hirers jointly and severally liable for breaches.  However, it has suggested that the tribunal could decide to join the hirer and, where appropriate, release an employment agency from a claim. 

Preparation is key

Although the Regulations are not due to come into force until October 2011, prudent employers will wish to obtain a head start prior to their introduction.  Therefore employers should consider:

  • Reviewing the use of agency workers within their own organisation and consider how the Regulations will affect their entitlement to pay and benefits; and 
  • Improving record-keeping to assist not only with the provision of relevant information to agencies (when requested), but also to monitor when individuals have satisfied the qualifying 12 week period.

It has recently been announced that thousands of temporary workers at firms supplying Asda will get pay rates equal to permanent workers after a deal was struck on working conditions. It is likely that other employers will follow suit over the coming months and adopt a proactive approach ahead of the Regulations being introduced.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Alison Flett

Alison Flett
Associate

E: aflett@clarkslegal.com
T: 0118 960 4688
M: 0771 784 1822

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