AWR Information for Clients

The Agency Workers Regulations came into force in England, Scotland and Wales on 1st October 2011.

It gives all agency workers who have been in a job for more than 12 weeks the same employment and working conditions as they would have if they had been directly recruited by the hirer.

Therefore, it is imperative that hirers:

• Understand the Regulations
• Assess the impact the Regulations will have on their business
• Start to work closely with their agencies to minimise the costs and limit the potential disruption the implementation of the Regulations may cause to their business
• Put effective systems into place to adhere to the Regulations

The Regulations stem from the EU Temporary Workers Directive 2008 which gives agency workers the right to the same pay and other working conditions benefited by a hirer’s own workers.

The Regulations do not alter agency workers’ employment status i.e. they do not make an agency worker an employee of either the hirer or the agency. Whilst in other parts of the EU, this right to equal treatment comes into effect from day one of an assignment, the UK has secured a derogation period of 12 weeks (this was agreed by the TUC and the CBI in May 2008). This means that an agency worker will only be entitled to equal treatment once s/he has completed 12 weeks of service in the same role with the same hirer with the exception of Day One rights.

The aim of the legislation is for agency workers to be provided with equal treatment in the workplace.

Who is an agency worker for the purposes of the Regulations?

The Regulations apply to agency workers regardless of whether they are on a contract of employment or a contract for services.
The definition of an agency worker in the Regulations stems from the Working Time Regulations 1998 and is intentionally widely defined to cover most temporary agency workers. However, workers who are genuinely in business on their own account (i.e. genuinely self-employed) will not be within scope. Workers engaged via umbrella companies or other intermediaries will be in scope unless they are genuinely self-employed.

The Regulations do not apply to workers who have found a permanent job with a client, even if they were introduced by an agency.

Workers working on managed service contracts (i.e. those where the supplier rather than the hirer, manages or directs staff such as in an outsourced IT contract or catering contract) are excluded. However, they will be within scope of the Regulations if either (1) in reality, the hirer, rather than the managed service supplier, supervises and directs the staff or (2) they are supplied by another agency to the managed service provider.

What is a ‘temporary work agency’ for the purposes of the Regulations?

The Regulations use the term ‘temporary work agency’ rather than employment agency or business which is used in other legislation. A temporary work agency includes the agency which supplies the

worker to the hirer, any umbrella companies and any master or neutral vendors in the supply chain. This is important for the purposes of liability under the Regulations and means that all those suppliers are responsible for ensuring that the agency worker receives his/her entitlements. It is important therefore that contracts between hirers and master or neutral vendors deal appropriately with the Regulations and in particular with the flow of information down the supply chain.

When does an agency worker qualify for equal treatment?

Except for the Day One rights (detailed below) the agency worker will be entitled to equal treatment once 12 weeks of employment in the same role at the same hirer has been completed. This is irrespective of the working pattern (e.g. full time or part time). It is also irrespective of which or how many agencies supplied the agency worker to do the same role at the hirer.

A new qualifying period will begin only if a new assignment with the same hirer is substantively different (and that does not mean simply changing a job title), or if there is a break of more than six weeks between assignments in the same role. The qualifying period will be paused (rather than stopped) if the worker takes:

• A break for any reason that is less than 6 weeks
• Sickness absence for up to 28 weeks
• Annual Leave
• Shutdown i.e. company closure, school holidays
• Jury service for up to 28 weeks
• Industrial action

Thus, it is clear that an agency worker does not have to work for 12 consecutive weeks via the same agency to qualify for the right to equal treatment. They can accrue the 12 weeks’ qualifying service over a much longer period of work and through more than one agency. There are concerns about how agencies will effectively monitor workers who have a series of ad hoc assignments with the same hirer and the REC will continue to engage with BIS for further guidance.

What does equal treatment mean?

After an agency worker has worked for 12 calendar weeks in the same role at the same company, he/she will be entitled to equal treatment, irrespective of the number of agencies that supplied the worker or whether employment is full or part-time. Any time worked during a week will be counted as ‘one week’– even if only a few hours are worked in that week.

The table below illustrates what is and isn’t included following the successful completion of a 12-week qualifying period.
Please note that this list is not exhaustive, but includes the key items.

Finally, many hirers worry that the Regulations mean that if an agency worker is paid more than their own employees, they will have to either decrease their rate of pay to that of employees or increase the rate of pay to employees. Neither of these is true. The Regulations provide for equal treatment for agency workers when their pay is lower and they do not enjoy the same level of working conditions as comparable employees or workers.

Please note that this list is not exhaustive, but includes the key items.

Day One rights

Agency workers are entitled to rights from day one of employment.  Hirer’s must provide agency workers information and access to existing vacancies in their organisation as well as maternity rights. Agency workers are entitled to onsite collective amenities such as canteen facilities and car parking. However, access to facilities can be refused if there are ‘objective grounds’ for doing so. In practice this means that if there is a waiting list for childcare facilities or a car park space, an agency worker is not automatically entitled to a place but can be subject to the same criteria to access the facility as someone directly recruited by the hirer. Amenities such as subsidised gym membership and season ticket loans are out of scope as they are considered to be a reflection of the long term relationship between an employee and a hirer which will not be appropriate for agency workers.

Who is liable for establishing equal treatment?

Equal treatment will need to be established in respect of the terms and conditions that apply to a comparable worker or a comparable employee engaged in the same role or broadly similar work. The responsibility lies with the hirer to provide day one- and 12-week qualifying entitlements.

Claims with regard to basic working and employment conditions could be against either the hirer, or the agency, or against both, depending on the nature of the breach and whether, for example, the hirer had failed to provide information to the agency. However, it is worth noting, the agency will have a defence if it has taken ‘reasonable steps’ to obtain the necessary information from the hirer, and has acted ‘reasonably’ in determining the agency worker’s basic working and employment conditions. Claims would be made to an Employment Tribunal if not resolved through grievance procedures.

The agency and the hirer must cooperate with each other to ensure that an agency worker receives his/her rights. An agency can assist the hirer by asking the right questions at the right time – whether this is on receipt of instructions to supply a worker or when it is clear that the assignment will last longer than 12 weeks. The REC has prepared an impact assessment form which REC member agencies can use with their clients to establish what constitutes equal treatment for any particular agency worker. As mentioned above, all intermediaries in the supply chain are responsible for ensuring the agency worker receive his/ her entitlement. Therefore, even if a worker issued a claim against their supplying agency only, the agency can join any other party to that claim if they have contributed to the breach.

Information likely to be requested by an Agency

To comply with these Regulations, agencies may need to collect certain information from the employer/hirer before an agency worker begins employment.

Where employment is likely to last for more than 12 weeks, an agency will ask for information on:

• Employer/hirer’s identity, business and location
• Start date and duration
• Role, responsibilities and hours
• Experience, training, qualifications etc.
• Health and safety risk
• Expenses

The details agencies now require to comply with the Agency Workers Regulations after the 12-week period are:

• Basic pay, overtime payments, shift/unsocial hours allowances and any risk payments
• Types of bonus schemes
• Vouchers with monetary value
• Annual leave entitlement

Agencies can also ask for information about any day one entitlements which may be available, even though they are the responsibility of the employer/hirer.

Pregnant agency workers
Pregnant agency workers will be entitled to paid time off to attend medical appointments and antenatal classes once they have achieved the 12 weeks’ qualifying service. In addition, if they can no longer carry out the duties of their original assignment, they will need to be found alternative sources of work. If no such alternative work is available from either the hirer or the agency, the agency should pay the pregnant woman for the remaining expected duration of the employment.

Agencies and hirers should ensure that an assignment is not terminated solely on the grounds of pregnancy as this would constitute direct sex discrimination against the pregnant agency worker. If the nature of the employment is such that there is a risk to the worker’s health and safety, the agency will ask the hirer to carry out a workplace risk assessment, which they will need to do.
The provisions of the Equality Act also apply, meaning that there is a risk that either an agency or the hirer could be guilty of discrimination if a worker were to receive less favourable treatment as a result of their pregnancy or maternity. Compensation for direct sex discrimination is unlimited.

Are there legitimate ways to derogate from the Regulations?

There is an exception called Regulation 10 (known as the Swedish Derogation) which would avoid having to provide equivalent pay and holiday pay, however all other day one rights would have to be provided as well as working conditions after completing 12 weeks of employment.

Importantly, where an employment has terminated, the agency must take reasonable steps to find suitable alternative employment for the agency worker.  Where the agency cannot find suitable alternative work, the agency must pay the agency worker at least 50% of what they were being paid in their previous assignment provided the amount is not less than the National Minimum Wage (NMW). The agency must do this for a minimum of 4 weeks before it can terminate the contract of employment. Therefore, this will be an expensive option where hirers cannot guarantee volume of work to the agency or where the basic rate of pay is close to the NMW.

Anti-avoidance measures

The Regulations contain anti-avoidance measures to prevent agencies and hirers from structuring employment in a way to prevent the agency workers from reaching the 12-week qualifying period. This includes supplying a worker to connected hirers, rotating workers or repeatedly terminating and recommencing employments. In the event that the Tribunal finds that the Regulations have been deliberately avoided they can award an agency worker compensation of up to £5000.

What is the compensation following a breach of the Regulations?

The Tribunal can award compensation to an agency worker where they have suffered as a result of a breach of the Regulations. The compensation will normally be based on their losses but will be not less than 2 weeks’ pay. In any event, the compensation will be just and equitable. The hirer and the agency will need to work together to ensure that the agency worker receives equal treatment after the 12-week qualifying period. The REC’s impact assessment form will assist our members and their clients implement the Regulations.