Agency workers make up a significant proportion of the UK workforce and are used in many different industries. UK companies regularly take on agency staff to cover for their own permanent employees when they are off sick or on holiday or to cope with increased or sudden demand. The flexibility that agency workers bring is one of the main attractions of using them. However, from the start of this month, new legislation came into effect that will have a significant impact on the way in which UK businesses engage with agency workers.

The Agency Worker Regulations 2010 came into force on 1 October 2011 and are intended to give agency workers – after a 12 week qualifying period - the same basic working and employment conditions, including pay and holidays, as if they had been employed directly by the end-user hirer. Furthermore, from “day one” of each assignment, agency workers will be entitled to be informed of suitable vacancies at the hirer and have access to collective facilities such as a staff canteen and car parking facilities.

For hirers the most significant impact of these changes is likely to be in relation to pay. The AWR gives agency workers not just the right to equal basic pay, but also to overtime and unsocial hours payments and bonuses to the extent that they are linked to individual performance. But it is worth noting that the definition of “pay” does not include company sick pay, pension or enhanced maternity/paternity entitlements.

The AWR impose tough penalties. Hirers will be liable for any failure to offer the “day one” rights mentioned above. With regard to the other AWR rights, agencies will be first in the firing line, but liability could pass to hirers if they supply insufficient or inaccurate information about their basic working and employment conditions.

To the extent they have not already done so, hirers should take the following steps to minimise the scope for claims under the AWR:

  • Carry out an audit of how, when and for how long agency workers are currently deployed in their business. Maintain and update this data with the name of the agency worker, the dates of the assignment and the nature of their duties.
  • Perform a detailed comparison of what their employees are entitled to in respect of pay, annual leave, rest breaks, night work and duration of working time and how this compares with what an agency worker in the same role receives. This assessment will allow hirers to calculate the potential financial impact of the AWR if they maintain their current arrangements.
  • Speak to the agencies they currently work with to determine what additional costs, if any, they might be faced with upon reaching the 12-week qualifying period.
  • Ensure the relevant data protection and confidentiality provisions are in their contracts with agencies.
  • Consider employing some agency workers directly.  

Going forward, all businesses need to be mindful of their new obligations and be ready to accommodate them, minimising any liability whilst at the same time attempting to retain the business flexibility that only agency workers can bring.