Monday 1st October sees the anniversary of the Agency Workers Regulations 2010, regulations aimed at improving employment terms and conditions for agency workers in the UK. Even one year on, however, many organisations continue to struggle with the practical effects or to understand how certain provisions are to be interpreted. A review by Government, planned for next year, is keenly awaited to provide much-needed clarification. Richard Sheldon, Senior Associate at international law firm Eversheds, comments:

“There is little doubt that the Agency Workers Regulations, introduced in the UK one year ago, have achieved their goal in a number of respects, improving the pay and conditions for many agency workers and allowing them access to better pay and to staff facilities, such as a canteen or childcare facilities. But what is also emerging is a picture of considerable misunderstanding and/or misinterpretation of the regulations, often due to the way in which the regulations themselves are drafted. For example, whilst our experience is that some hirers were ahead of the game and took steps to prepare for the regulations early on, many organisations have yet implement them properly or fully – frequently because they are unclear as to what is required. Others, on the same basis, have adopted an approach which exceeds requirements, often resulting from misunderstanding of the law and incurring additional, avoidable expense.

“Particular areas of concern for many organisations include the extent to which benefits, such as bonus pay, apply to agency workers, the regulations seemingly distinguishing between performance-related elements but leaving little indication of how this applies to the very many schemes which take into account both individual and corporate performance. Even calculating comparable pay rates is proving a real headache for some, faced with a comparison between annual pay rates for employees and hourly rates for agency staff. One of the most difficult aspects of the regulations is what are known as “pay between assignment contracts”. It is not at all clear at what stage these can be used or how seeming conflict with other provisions is to be resolved.

“Current uncertainty in these and other respects, is clearly proving a problem for organisations. There is much at stake, so one can see why some organisations are holding back if there is room for doubt: a pay differential of just £1 per hour for 100 agency workers would generate an additional cost of over £200,000 or more per year. Getting things wrong carries potentially high risks and may be stacking up huge liabilities for the future. Some of our clients have been so concerned that we found it appropriate to set up an Agency Workers Regulations audit process, to help them know if they are compliant with the regulations.

“Employment tribunal cases will no doubt provide clarification on these and other issues in due course but these have been slow to arise and will take considerable time to filter through. It remains to be seen, therefore, whether the Government will seize the initiative and intervene next year, to address those issues of greatest uncertainty. Were they to do so, this would be likely to prove beneficial to all, removing some of the barriers to compliance but also to more confident recruitment of agency workers.”