Despite last-minute leaks about a possible change of heart, the Agency Workers Regulations 2010 were implemented as planned on 1 October. They give workers certain rights from day one, such as access to the staff canteen and the right to be informed of relevant vacancies. They also confer the right to parity of basic pay and certain other benefits after a qualifying period of 12 weeks. The latter right is subject to a number of significant exclusions including entitlement to sick pay, maternity pay and pensions, as well as bonuses that are not directly attributable to the worker’s performance. In addition workers who are employed by the agency and paid a minimum amount between assignments (broadly 50 per cent of the average pay they could expect to get while working) do not qualify for pay parity, though they are still entitled to all other rights under the Regulations.

The Regulations are supplemented by detailed guidance, issued by the department of Business, Innovation and Skills (BIS) earlier this year, which has already been revised once. According to the British Chamber of Commerce, implementing the Regulations is set to cost British Business £1.6 billion a year. It is therefore not surprising that questions about the precise scope of the Regulations have been hotly debated in recent months.

What workers are covered?

An agency worker is defined as someone who is supplied by a temporary work agency (TWA) to work personally for a hirer. There must be a contact of some sort between the worker and the TWA. The “genuinely self employed” are excluded.

In most cases it will be clear whether a worker is in scope but there are a number of areas of uncertainty. Secondees will not normally be covered, nor will bank workers. In the first case the BIS guidance suggests this is because their supply, at least on an ad hoc basis, will be incidental to the business of their substantive employer, though the definition of TWA in the Regulations could be read more widely. In the case of bank workers the reason they are out of scope is that they will not normally be supplied to a third party, though difficulties could arise if a group company is in the habit of supplying bank workers to associated companies.

Another problem area is the treatment of workers engaged by personal service companies. Here the important question is likely to be whether this arrangement is merely adopted for tax reasons – in which case the worker concerned is likely to be within scope – or whether the worker is genuinely in business on his or her own account and is able to supply substitutes.

How is the qualifying period calculated?

Given the importance of the 12-week qualifying period, there is considerable detail on this topic. Any continuous period of work after 1 October 2011 for the same hirer potentially counts towards the qualifying period but there are a number of complications, mainly addressing how temporary absences are to be treated.

Some absences, such as sickness and annual leave, will merely pause the clock, while during others (eg, maternity) the clock will continue to run. In still other cases continuity will be broken and the clock will be reset back to zero. In this last category there are two main examples: when there is a break of more than six weeks between assignments, and when the worker starts a “substantively different” role for the same hirer. The Guidance suggests that “substantively different” means there must be a “genuine and real difference” between the two posts and that tribunals are likely to look at a range of factors to answer this question, including rates of pay, skills required and line management arrangements.

How are “week 13” rights determined?

After the 12-week qualifying period, agency workers are entitled to the same basic terms and conditions as they would have been entitled to had they been recruited directly by the hirer. But how are they determined?

The easiest way to answer the question is to find someone in the workforce who is directly engaged in the “same or broadly similar work”. In the absence of a direct comparator the employer’s standard employment terms and conditions for the grade of worker concerned will be the starting point. But there is no easy answer if the agency worker is a “one off” with no obvious counterpart in the workforce.

What about anti-avoidance provisions?

There have been concerns that the presence of a qualifying period may encourage unscrupulous employers to arrange matters so that agency workers never reach the end of the 12-week qualifying period. In order to address this, the Regulations include provisions that will deem the 12-week period to have been completed if certain arrangements are adopted which suggest that their purpose was to avoid the Regulations. These include hiring a worker for a series of assignments separated by a gap of six weeks or more, or in a series of different jobs. If a hirer is found to have breached these provisions, it will face a bill of up to £5000 in extra compensation, in addition to a declaration that the worker has completed the qualifying period.

As well as these specific provisions, the Regulations also include the same restrictions on contracting out that can be found in all legislation protecting workers’ rights. That means that if a hirer adopts other contractual arrangements which have no obvious commercial purpose, a tribunal may declare them void if it considers they are aimed at artificially removing a worker’s protection.

What is the impact on collective consultation?

Businesses will now need to specify the number of agency workers currently working for them and the type of work they are doing when supplying information to employee representatives in a number of situations. These include collective redundancies and TUPE transfers. It is questionable whether the provision of this information will be of any help to agency workers, who as nonemployees will have limited rights in either situation. Indeed it is arguable that this greater transparency will make their position even more precarious, since they will be the first to be targeted if overall headcounts need to be reduced.