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Change for agency workers - new regulations came into force on 1 October 2011

17 November 2011

The Agency Worker Regulations came into force on 1 October 2011 and introduced the following rights:

From the first day of an agency workers assignment they are entitled to treatment which is equal to that given to employees in the following respect:

  • equal access to collective facilities;
  • equal access to information about relevant vacancies; and
  • equal opportunities to apply for relevant vacancies

After 12 weeks of working in a particular role they are entitled to the same basic working and employment conditions as would be given to employees.

There are penalties for non compliance as well as the associated administrative burdens and potential additional costs of implementing the regulations.

Who is covered?

The regulations apply to agency workers who are assigned to do temporary work for hirers through temporary work agencies.

The use of intermediaries, who supply temporary workers and obtain them through other agencies, will not be outside the scope of the regulations. The regulations do not include:

  • the genuinely self employed who are in business on their own account;
  • managed service contracts where a company provides services, such as catering, together with all staff and supervision, so that the workers are not working under the direction or supervision of a hirer,
  • in house staffing banks where workers are employed directly by a business or service; and
  • permanent staff employed by group service companies.

Day one rights

From the start of an assignment, workers will be entitled to the same access to collective facilities and amenities as a worker directly employed by the hirer. This includes access to facilities such as canteens, childcare services and transport services. There is clearly scope for argument about what facilities should be included. The guidance (which is non statutory) suggests this would not extend to off site facilities or benefits in kind which are not provided by the hirer such as a subsidised off site gym. It may be possible to objectively justify less favourable treatment in certain circumstances although cost is unlikely to be able to justify this alone.

Day one rights also include the same access to information about, and opportunities to apply for, relevant employment vacancies as employees based at the same establishment who broadly similar work. The guidance states that employers still have the right to set service or qualification requirements or standards on how applications are treated. Liability for breach of either of these rights will rest with the hirer.

12-week rights

Where a worker has been in the same role with the same hirer for 12 continuous calendar weeks (not counting weeks before 1 October 2011) they are entitled to the same basic working and employment conditions as if they had been recruited directly by the hirer. This can include pay, night work, work time, annual leave, rest breaks and periods and these terms may be written, oral, express or implied.

Pay includes the following:

  • Basic salary;
  • Contractual holiday pay;
  • Overtime pay rates (only for time above the standard hours threshold);
  • Unsociable hours payments;
  • Exchangeable monetary vouchers;
  • Commission/bonus based on the amount or the quality of the work done.

It excludes the following:

  • Employer pension contributions (although the pension auto enrolment will apply to agency workers);
  • Company sick pay;
  • Payments for statutory paid time off;
  • Pay advances, loans or expenses;
  • Bonuses not attributable to the amount or quality of a workers work such as to encourage loyalty;
  • Company family related leave pay;
  • Other benefits or payments in kind;
  • Notice periods and redundancy pay.

The agency is responsible for any breaches in this respect but will have a defence if it can show it took "reasonable steps" to determine the workers working and employment conditions after the qualifying period. If the hirer is responsible for the breach it will be liable.

Continuity of the 12 weeks is broken if:

  • the worker has an absence or a break beyond 6 weeks,
  • the role of the worker is substantively changed or
  • the worker starts a new assignment with a new hirer.

However, it still continues if the agency changes but the hirer remains the same.

Continuity is paused during:

  • Breaks of absence up to 6 weeks;
  • Up to 28 weeks illness;
  • Any leave that the worker is entitled to;
  • Up to 28 weeks jury service;
  • A planned shutdown of the workplace;
  • Strike, lock out or industrial action at the hirer.

The clock continues for the likely or intended length of the assignment where the break is due to pregnancy, childbirth or maternity taking place while pregnant or up to 26 weeks after childbirth; or statutory or contractual maternity/adoption/ paternity leave.

A hirer will be able to defend a claim if it can show that someone else they employ to do the same or broadly similar work at the same or, if there is no one, at a different establishment, is treated similarly to the temporary worker.

What happens with a breach?

Workers will be able to bring claims in an Employment Tribunal within 3 months (or longer if it is considered just and equitable). They may request information about their rights from the agency and responses must be given within 28 days. If they are not provided with answers within 30 days they can make a written request to the hirer who has 28 days to respond. An Employment Tribunal can draw adverse inferences for an evasive response or a failure to supply one at all.

Avoiding the impact of the regulations

It may be possible to avoid agency workers clocking up 12 weeks service by ending assignments and restarting them after a 6-week break, or switching workers to different assignments, or transferring them to other group companies. However, the regulations contain some anti-avoidance provisions designed to prevent hirers from doing this. Under these provisions, if a hirer tries to prevent the worker clocking up 12 weeks by using any of these methods and a tribunal thinks the likely reason is to avoid the regulations, the worker will be treated as having accrued the 12 weeks, which could result in hirers and/ or agencies being order to pay an award of up to £5,000 in addition to any other compensation.

There is also provision called the "Swedish derogation" which provides an exemption with regard to pay only. This applies where an agency employs a worker on a permanent contract with minimum requirements and pays them a minimum amount between assignments. Workers will still be entitled to the remaining elements of equal treatment and entering into permanent contracts with workers will carry additional rights such as unfair dismissal protection, redundancy payments etc.

If employers have no employees carrying out the same or broadly similar work as agency workers then there is no comparator for the agency worker to point to in order to establish that they should be on better terms. A tribunal will then have to speculate what terms would have been given to the agency worker had they been directly employed. Consequently, some businesses have considered introducing lower paid positions for employees which are broadly similar to those agency workers fill in order to establish comparators on lower terms and conditions. This would be permissible as long as the agency worker would have been recruited directly at that level taking into account their skills.

Action to take now:

  • Compare the basic terms of any agency workers with employees and implement policies to ensure you are aware of all changes to pay rates and terms and conditions;
  • Develop and maintain a way of recording agency workers qualifying periods and assignments;
  • Consider engaging workers on assignments under 12 weeks but be mindful of the anti avoidance provisions as well as the cost implications and disruption this may cause;
  • Provide or ask agencies to provide temporary workers with details of any facilities or amenities as soon as they start work or before this;
  • Include indemnities in contracts to deal with situations where agencies fail to do what they have agreed;
  • Give agency workers access to electronic systems which provide them with updates on vacancies or posting lists in a place that is accessible to them;
  • Draw up skill sets for agency worker and employee roles so that you are able to identify whether there are actual comparators which mean you need to provide the same basic working and employment condition.

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