Agency workers, also known as 'temps', are relied upon by many businesses, with an estimated 1.3 million on assignment in the UK at any given time. They will generally have either a contract of employment or contract to perform work or services with a temporary work agency that assigns them to work in another business. The rights of an agency worker, and the associated duties of the business to which they are assigned, depend on the relationship between them. The status of this relationship is not always clear cut and has on several occasions been disputed in the Employment Tribunal, often because agency workers gain greater rights if found to be an employee of the enduser business.
Businesses have long been entitled to treat agency workers less favourably than permanent full time employees, for example offering lower pay and no performance bonuses. It is often this together with the ease of dismissing an agency worker that has led to the employment relationship being disputed. With the implementation of the Agency Workers Regulations 2010, due to come into force on 1 October 2011 (the "Regulations"), it may be that such disputes and therefore the risks surrounding the status of agency workers, are reduced and the confidence of businesses in utilising them may increase.
What will the Regulations Change?
The key message of the Regulations is that agency workers should be treated in the same way as comparable permanent employees. This is achieved in two ways. Firstly, as a business which hires agency workers, from day one of an assignment with you, the agency workers will be entitled to access your collective facilities and amenities, including canteens, vending machines, child care facilities, transport services, prayer rooms, toilets, car parking and the like, to the extent that there are no objective justifications for not providing them. This right does not extend to all benefits, for example a season ticket loan or a company car allowance. You also need to keep them informed of any permanent employment opportunities that exist and afford them the same opportunities to find permanent work as a comparable workforce member would receive. This does not mean that the agency worker needs to be personally informed as the Regulations allow for a general announcement in a suitable place, such as a posting on a notice board or on the intranet.
Secondly, the agency will be responsible, with the hiring business, for ensuring that the agency worker receives the same basic working and employment conditions that they would have received had they been recruited by the hiring business directly. This relates to equality in pay, working time, night work, rest breaks, annual leave and paid time off for ante-natal appointments. Equal pay refers to equality in terms of basic salary, annual leave and overtime pay, shift and unsocial hours allowances, bonus and commission payments which are attributable to the amount or quality of work done. These rights only kick-in after 12 continuous calendar weeks spent working on an assignment. The clock begins to run from 1 October 2011 and no earlier. It should also be noted in this regard that there are antiavoidance measures in the Regulations which deter agencies and hiring businesses from structuring a deployment as a series of assignments to avoid the 12 continuous weeks from accruing. Such an avoidance measure may be met with a £5,000 fine.
These rights are about creating equality in the workforce. The right to basic working and employment conditions can be satisfied by the hiring business if it can point to a comparable employee with the same terms, or if it can be shown that the agency workers conditions are the same as are provided in your ordinary employment contracts and handbooks.
In order to comply with the new legislative framework, hiring businesses need to ensure that they provide details of relevant basic and employment conditions to the agency prior to an assignment commencing and should keep the agency informed of any changes to this information so that these conditions can be matched.
Whilst this may sound like it will necessitate additional costs and management time, there are simple, yet effective, measures to be taken to counteract this and ultimately, some of the rights may never materialise for a worker and any risk of a claim can be contractually mitigated with the agency.
What Will Stay the Same?
As previously, agency workers will not have the right to claim unfair dismissal, notice or redundancy pay and the right to the same basic pay also excludes the likes of occupational sick pay, maternity, paternity and adoption pay, occupational pensions, expenses and payments or rewards linked to financial participation schemes (including share, option or profit sharing schemes). It is thought that, given these exclusions, agency workers should remain a flexible workforce resource for hiring businesses. This is, of course, working on the basis that their status is actually agency worker and not employment if reviewed by an Employment Tribunal.
The Regulations do not affect existing entitlements and protections that agency workers have either (such as the right not to be discriminated against, the right to the national minimum wage etc.).
Also of note is the fact that some people fall out of the scope of the Regulations altogether, including those on secondment or loan, persons assigned from staffing banks, the genuinely self employed and people who work on outsourced contracts.
Who's Responsible for What?
Under the Regulations, where there is a failure to provide an agency worker with their day one rights, the end-user business will be liable. With respect to providing the agency worker with the same basic working and employment conditions after 12 weeks, liability rests jointly with the hirer and the agent. This liability is not joint and several but will be apportioned between them by the Employment Tribunal in accordance with the degree to which it deems each is responsible. Further, as a hirer, you should be aware that the agency will not be held liable if it has taken reasonable steps to obtain the relevant information and acted reasonably in applying it to the agency worker. The message is clear - you need to ensure you provide the agency with relevant information regarding basic working and employment conditions and any changes to them as soon as they occur.
With no cap on the award, there is a risk of the award being significant, but generally, the amount of compensation will be based on any loss of earnings and/or an amount appropriate to compensate for the denial of the rights.
It is in the interests of both agency and hiring business to ensure compliance with the Regulations, particularly given the apportionment of liabilities in accordance with responsibility. You should be thinking about taking the following practical steps to ensure compliance:
- consider whether you currently hire agency workers and whether you do so for periods in excess of 12 continuous weeks at a time;
- ensure you are proactive in information sharing on an ongoing basis with the agency and that there are appropriate information monitoring and gathering systems in place; and
- review your agency contracts with a view to apportioning liabilities contractually, in particular to seeking indemnities from the agencies with respect to any liabilities under the Regulations.
Given the additional rights of agency workers, the likelihood of an agency worker asserting that they are in fact employed by the hiring business may be reduced but employers need to remain on their guard to avoid agency workers being subsumed into their general workforce and ultimately claiming they are employees.
For further information, please see the guidance published by the Department for Business Innovation and Skills guidance on the Regulations (the "Guidance"). Whilst having no legal force, it may be of assistance in securing compliance.