Why are the Regulations being introduced?

To enact the EU Temporary Workers Directive in the UK. The main feature of the Regulations is the requirement that agency workers will be entitled to the same basic working and employment conditions as if they had been recruited directly by the hirer, once they have completed a 12 week qualifying period.  

When do the Regulations come into force in the UK?

1 October 2011.

Who do the Regulations apply to?

Agency workers, i.e. workers contracted to someone (normally a temporary work agency) in the business of supplying individuals to work temporarily under the supervision and direction of a hirer. This will include circumstances in which a worker is supplied through an intermediary agency, e.g. an umbrella company.

Who is excluded from the Regulations?

The Regulations do not apply to permanent employees, the genuinely self employed (including those working under a “managed service contract”), workers who have been employed/engaged directly by the hirer with no contractual relationship with anyone else (whether on a fixed term, casual or other basis), individuals who find direct employment with an employer through an agency or those on secondment or loan from one organisation to another.

What do the Regulations provide?

The Regulations state that the basic working and employment conditions of temporary agency workers must be the same as those individuals who were recruited directly for the job. In order to achieve equal treatment, the Regulations provide two types of rights to agency workers: (1) those which apply from day 1 of an assignment; and (2) those which only apply after a 12 week qualifying period.

  • (1) Rights from day 1:  
    • the right to be told of any relevant vacancies at the hirer during the assignment, in order to be given the same opportunity as a comparable worker to find permanent employment with the hirer; and  
    • the right to be treated no less favourably than a comparable worker in relation to collective facilities and amenities, e.g. canteen, child-care and transport services.  

The Regulations do allow for less favourable treatment in the provision of such facilities and amenities if this can be justified on objective grounds, for example if the hirer is seeking to achieve a genuine business objective and the treatment is a necessary and appropriate way of achieving that objective.  

  • (2) Rights from 12 weeks: The right to the same basic working and employment conditions as equivalent permanent employees (“equal treatment”). This covers terms and conditions relating to:  
    • pay related to work done on assignment (including basic pay, holiday pay, overtime pay, shift allowances, unsocial hours premiums, payments for undertaking difficult/dangerous duties, bonuses or commission payments linked directly to individual performance (e.g. if an individual sales target is met), certain “custom and practice payments” and vouchers or stamps with a monetary value, such as lunch and transport vouchers);  
    • duration of working time;  
    • length of night work;  
    • rest breaks and rest periods;  
    • paid time off for ante-natal appointments; and  
    • annual leave.

The right to equal treatment does not extend to a number of terms, including:  

  • bonuses which relate to the company’s performance rather than the work done by the agency worker or which reward longer term loyalty/service;  
  • financial participation schemes (including distribution of shares, share options and profit sharing);  
  • payment by way of a pension, allowance or gratuity in connection with a worker’s retirement or as compensation for loss of office;  
  • occupational sick pay;  
  • occupational pension schemes;  
  • non cash rewards (e.g. private medical insurance, private use of company car);  
  • redundancy pay (statutory and contractual);  
  • notice pay (statutory and contractual);  
  • occupational maternity/paternity/adoption pay;  
  • advances in pay or loans (e.g. season ticket loans);  
  • additional discretionary, non contractual payments (provided that they are not paid as a matter of “custom and practice”); and  
  • expenses.  

What do we need to know about the 12 week qualifying period for equal treatment rights?

An agency worker must have been working in the same role with the hirer for 12 continuous calendar weeks in order to be entitled to equal treatment. Guidance published yesterday makes clear that the Regulations are not intended to be retrospective. An agency worker will only be able to accrue the 12 week qualifying period after the Regulations come into force on 1 October 2011, even if the assignment began before 1 October 2011.  

If a worker starts a new assignment with a different hirer, or has a six week calendar break with the same hirer (either during or between assignments) or if the worker starts a new role with the same hirer that is substantively different from the previous role, these events will break continuity. However, absences including sickness absence of up to 28 weeks, statutory or contractual annual leave, jury service of up to 28 weeks, a break of less than six calendar weeks or strike/ other industrial action will only suspend continuity not break it, and the worker will be able to count the weeks that accrued before that absence towards the 12-week qualifying period. Periods of absence for statutory or contractual maternity, paternity or adoption leave, and absences connected to pregnancy, maternity or childbirth will count towards the qualifying period and continuity will therefore accrue.

Agency workers who believe they are not receiving equal treatment are entitled to a written statement which provides relevant information relating to the hirer’s working and employment conditions within 28 days of a written request to their temporary work agency. Such a request can only be made once the 12 week qualifying period has elapsed. If the agency does not provide this statement within 30 days, the agency worker can request the information from the hirer. The hirer must then provide the information within 28 days of a written request. Failure to respond to the request for a written statement will not, itself, be unlawful, but a tribunal will be entitled to draw adverse inferences against a party that refuses to respond to a request or provides a clearly inadequate response.

It is important to note that the Regulations also contain wide-ranging anti-avoidance provisions. Individuals with less than 12 weeks service are deemed to have qualified for equal treatment if they have been engaged using a “structure of assignments” put in place to avoid the Regulations, such as placing agency workers on a series of 11 week contracts or varying their roles every few weeks. A tribunal will also be able to make an award of up to £5,000 for breach of the anti-avoidance provisions.

What is our liability if we are in breach of the Regulations?

There are three primary claims in respect of the Regulations: (1) breach of/failure to provide day 1 rights; (2) breach of/failure to provide equal treatment (after the 12 week qualifying period); and (3) being subjected to a detriment on a “prescribed ground” (for example, for making allegations, giving evidence, asserting rights or bringing proceedings under or in connection with the Regulations).  

  • Breach of/failure to provide day 1 rights: The hirer is solely responsible for any breaches relating to rights available to the agency workers from day 1. There is no qualifying period to bring a claim for breach of these rights.  
  • Breach of/failure to provide equal treatment: Since the agency is responsible for setting the terms and conditions of an agency worker’s contract, it will be liable for any rights available from 12 weeks to the extent that it was responsible for the infringement. However, the agency worker is likely to sue both the agency and the hirer, as the hirer will be liable for any breach to the extent that it is responsible for a breach of the Regulations.  
  • Detriment claims: There is no qualifying period for detriment claims. Claims could be against either the hirer or the agency. In the case of agency workers who are employees (e.g. of the agency), there is also a right not to be dismissed on prescribed grounds. As with other types of claim for automatic unfair dismissal, there is no qualifying period for this right.  

The time limit for making any of the above claims to the tribunal will usually be three months from the date of the infringement or detriment, subject to a tribunal’s ability to accept a claim out of time where it is just and equitable to do so.

Where an agency worker is successful in bringing a claim, compensation payable by an agency or hirer will be a “ just and equitable” amount having regard to the extent of their responsibility. There is no maximum award, but there is a minimum award of two weeks’ pay regardless of the value of loss suffered (unless this minimum amount is reduced by the tribunal on the grounds that it considers that an agency worker has behaved unreasonably). Where there is more than one respondent to a successful claim, a tribunal can decide how to apportion an award of compensation between the respondents in accordance with its assessment of fault. In addition to a compensation award, a tribunal may make a declaration as to an agency worker’s rights and/or make recommendations for improvements required from the agency and/or hirer.

As before, hirers also need to be careful as to whether agency workers gain employee status such that they are entitled to claim employee rights against the hirer (e.g. unfair dismissal).