The Agency Workers Regulations 2010 (“the Regulations”) are due to come into force on 1 October 2011. They give agency workers important new rights and will have a significant impact in practice because there are an estimated 1.3 million agency workers in the UK, and the UK economy depends on agency workers to a much greater extent than most other European economies. The Government estimate that the average annual cost of the new Regulations to the private and public sectors will be around £1.9 billion.  

In May the Government published official guidance on the Regulations for agencies and employers. Whilst the guidance does not have direct legal effect it will be referred to in test cases and is intended to assist agencies and employers with compliance.  

The basic purpose of the Regulations is to give agency workers the right to the same basic working and employment conditions, as if they had been recruited directly by the hiring employer, rather than engaged through an agency. They don’t address the complex issue of the employment status of agency workers though - recent cases have clarified that agency workers will rarely benefit from an implied employment contract and it is unlikely these regulations will change that position. 

Basic working and employment conditions are defined as being terms and conditions dealing with pay, most aspects of working time, and annual leave. “Pay” is defined to include any fee, bonus, commission, holiday pay, overtime pay, shift allowances, and unsocial hours payments. However, not all bonuses are included: bonuses that are directly linked to individual performance will be covered; but bonuses that are used to encourage loyalty or reward long-term service such as profit share or share or option schemes will not. Employers will need to introduce more rigorous systems for monitoring the performance of their agency workers.

There are various exceptions from the definition of “basic” conditions to which agency workers will be entitled: for example occupational sick pay, occupational pension schemes, enhanced redundancy payments, and enhanced maternity, paternity and adoption leave payments are excluded. There is no reference in the Regulations to benefits such as health insurance.  

There will be a qualifying period of 12 weeks in the same post before the agency worker is entitled to equality of treatment with comparable employees of the hiring employer. There are detailed rules surrounding the accrual of the necessary 12 week qualifying period – it will not always be the case that someone has to work for a 12 week period in one position without a break to qualify. For example, short breaks of less than six weeks will merely suspend accrual of the qualifying period, as will breaks for sickness absence of up to 28 weeks and on statutory family friendly leave.  

The Regulations include anti-avoidance provisions. Tribunals will be able to award penalty compensation of up to £5,000 per agency worker if they find employers have deliberately used artificial schemes to try to prevent their agency workers from acquiring the new rights, for example by rotating them between different jobs.  

Some of the new rights are not subject to the 12 week qualifying period. For example, the Regulations require the end users of agency workers to give them information about relevant vacant posts in their organisation. Similarly a right to equal access to things like canteens, child care facilities and transport services will also kick in from the start. The Government guidance indicates that “transport services” should be interpreted restrictively, and will not include things like season ticket loans and company car allowances which are more properly part of a longer-term relationship.  

There will be a range of potential employment tribunal claims under the Regulations.  Agency workers will be able to claim breach of the right to equal treatment. If there is a failure to provide the same basic employment conditions to agency workers as comparable permanent ones, then unlimited compensation can be awarded. Agency workers will also be able to claim breach of a right not to be subjected to a detriment on prescribed grounds, for example for making allegations or asserting rights under the Regulations. Terminating a contract for a prescribed reason such as asserting the right to equal treatment is likely to amount to a detriment, so this will mean there will be strong victimisation protection for agency workers who assert their rights. Depending on the circumstances, liability for claims can rest with the agency, the hiring company, or both parties.   

Employers who use agency workers, as well as agencies themselves, need to review their arrangements for compliance with the Regulations. The relevant documents will typically need amendment. There are also practical issues to consider, such as the need to ensure agency workers are informed about permanent vacancies, for improved monitoring and record keeping, staff training and so on.  In addition, agencies and employers will need to be much more pro-active about sharing relevant information between them.

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The Government has published last-minute amendments to correct drafting errors in the Agency Workers Regulations 2010. Click to see a summary of the key amendments to the Agency Workers Regulatsions 2010.