The Agency Workers Regulations (the Regulations) were published by the Government on 21 January 2010. The intention is that they will come into force on 1 October 2011. The Regulations provide all agency workers with the right to equal treatment with their directly recruited colleagues after 12 weeks in a given job. This edition of Employment Highlights considers the impact of the Regulations on employers who employ agency workers and what they should be doing to prepare for the introduction of the Regulations.

Introduction

The Regulations implement the EU Directive 2008/104/EC dated 19 November 2008 which provides a general framework for the protection of temporary agency workers (the Directive). Member States have until 5 December 2011 to implement the Directive. The Government conducted consultation on the draft Regulations between 15 October and 11 December 2009. The aim of the Directive is to ensure protection by applying the principle of equal treatment which provides that the basic working conditions of temporary agency workers (for example, regarding working time, overtime, holidays, rest periods, holidays and pay) should be, for the duration of their assignment at the hirer, at least equivalent to those which would apply if they had been recruited directly by the hirer for the same job. There are also other entitlements in the Directive, including access to permanent employment and training. In May 2008 the TUC and the CBI reached an agreement about the method of implementing the Directive which would seek to protect temporary agency workers, while still providing the flexibility in the marketplace which the Government was keen to continue to exploit with the use of agency workers. This included, in particular, a 12-week qualifying period for entitlement to the protection (see below). There are other derogations and areas in which Member States have discretion and it was on those areas that the consultation was based.

Who is covered?

An agency worker for the purposes of the Regulations is an individual who is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer. This excludes individuals who are genuinely operating business on their own account: the genuinely self-employed or those who work through their own limited liability companies or those employed on managed service contracts. The definition does, however, include those who operate through a chain of intermediaries or “umbrella” companies. It will be for employment tribunals to determine whether any arrangements are a “sham” put in place to avoid the Regulations.

What is equal treatment?

Subject to Regulation 7 (the qualifying period) the rights of agency workers in relation to the basic working and employment conditions are set out in Regulation 5. This states that agency workers must be afforded the same basic working and employment conditions as they would have received if they had been directly recruited by the hirer as an employee or a worker. Regulation 6 lists the “relevant terms and conditions” as:

  • Pay
  • The duration of working time
  • Night work
  • Rest periods
  • Rest breaks
  • Annual leave.

Pay for this purpose means any sums payable to a worker of the hirer in connection with the worker’s employment and will therefore include any fee, bonus, commission, holiday pay or other emolument referable to the employment. The definition is effectively “pay for work done”. Certain payments which are normally associated with employment status are excluded, namely, occupational sick pay, pension payments, maternity, paternity or adoption leave payments, redundancy pay, and any bonus which is not directly attributable to the amount or quality of the work done but is given to the worker to encourage loyalty or to reward long term service. It would also exclude profit sharing and share ownership.

The Regulations provide that agency workers should be given the same entitlement to annual leave as a directly recruited colleague, including the right to time off for bank and public holidays. However, there are practical problems which would arise if agencies had to carry forward different contractual leave entitlements from a variety of hirers. Therefore, it will be possible for the worker to be paid in lieu of any amount of holiday above the statutory minimum. Exactly how this is to be calculated has yet to be determined.

What is the Qualifying Period?

The Directive allows for derogations from the basis of equal treatment where agreement is reached between representatives of employers and employees. One such derogation allows for the introduction of a qualifying period. The CBI and TUC reached an agreement in May 2008 for a qualifying period of 12 weeks and this is now included in the Regulations.

To complete the qualifying period the agency worker must work in the same role with the same hirer for 12 continuous calendar weeks during one or more assignments. A new qualifying period would only begin if a new assignment with the same employer was substantively different. In addition, continuity is broken if there is a break of six calendar weeks during assignments in the same job. However, there are anti-avoidance provisions included in Regulation 9 to ensure that unscrupulous hirers do not avoid the Regulations by rotating the workers to ensure that a qualifying period is never satisfied. The Regulation gives the agency worker the right to be protected if a structure of assignments develops.

The Regulations also provide that absence from work should not be taken into account to break continuity of the qualifying period where the individual is absent due to sickness and returns to work within 28 weeks. In addition, continuity would not be broken where there is a temporary cessation of work because of a shut down for seasonal reasons or where the individual is on jury service or unable to work due to a strike or lock out. In all such situations the qualifying period would resume after the period of absence.

There may be difficulty where particular types of workers (such as lorry drivers or hospital workers) are on very short term placements. They may be placed with the same hirer by different agencies. If they work during a 12 week period for that hirer then they will have satisfied the qualifying period. It will therefore be even more important for an agency to ask an agency worker for their recent employment history and to ensure that adequate records are kept to alert an agency that a worker may be near to achieving the qualifying period with a hirer.

Access to employment and collective facilities

In addition to basic employment conditions, an agency worker has, during the assignment, the right to be informed by the hirer of any relevant vacant posts with the hirer to give him the same opportunity as a directly hired employee to employment with the hirer (Regulation 13). This will therefore mean that agency workers must be able to see all vacancies and so, if such vacancies are currently posted in areas not usually accessible to agency workers, then this will need to be changed. This right applies immediately and is not subject to the qualifying period. The right is, however, limited to providing information where there is a comparable worker. This means that it is not necessary for a hirer to provide information on vacancies which may be geographically remote or on the basis of comparison with a predecessor. Further information in the form of guidance is to be published which the Government indicates will make it clear that there will be no breach in situations where a hirer is carrying out an internal reorganisation and there is a headcount freeze.

Another right which an agency worker will acquire from day one will be access to collective facilities such as the use of a canteen or childcare facilities. Less favourable treatment on this basis can be justified on objective grounds. Therefore, if there is currently a waiting list for childcare facilities, there could be no liability for failure to provide the benefit itself as long as the worker was placed on the waiting list.

What liability will an employer suffer?

Pursuant to Regulation 14 the temporary work agency will initially be liable for any failure to provide comparable benefits. However, the agency will have a defence if it can show that:

  • It obtained or took reasonable steps to obtain relevant information from the hirer about the basic working conditions in force at the hirer;
  • Where it received such information, it acted reasonably in determining the agency workers conditions; and
  • Where it had responsibility for applying those basic working and employment conditions to the agency worker, it had ensured that agency worker had been treated accordingly.

If the temporary work agency has taken all these steps, then liability is likely to rest with the hirer. The tribunal can apportion blame where there is more than one agency or party to the proceedings.

In relation to access to collective facilities and vacancies the hirer will be solely responsible for breach of the Regulations.

An agency worker who considers that the hirer or the agency may have breached the Regulations may make a written request to the agency for a written statement containing information relating to the treatment in question. The agency has 28 days to reply to the request. If the agency worker is not provided with the information within 30 days then the request should be made to the hirer. Alternatively, the request should be made directly to the hirer in relation to the rights conferred on day one. Again the hirer has a period of 28 days in which to reply.

If a worker goes on to make a complaint to a tribunal then the tribunal may draw inference from any failings on the part of the agency or hirer to provide the relevant requested information.

A worker has three months to bring a complaint to an employment tribunal. The tribunal can make a declaration, recommend steps that the respondent should take and order compensation. There is no maximum limit to any compensation awarded to successful claimants, but a minimum of two weeks pay should normally be awarded by the tribunal in relation to failure to provide equal terms and conditions.

Where a tribunal makes a finding under the anti-avoidance measures for the qualifying period the tribunal may make an additional award of compensation which shall not be more than £5,000.

Are there any other changes in relation to agency workers?

Amendments will be made to other legislation which will give agency workers the right to information in particular employment situations, such as on collective redundancy or the transfer of an undertaking

What steps should employers take?

  • While waiting for the Regulations to be implemented, employers should do the following:
  • Consider the use of agency workers within their organisation and how the Regulations will affect the pay and benefits to which they are entitled.
  • Consider what changes may need to be made to the other relevant working conditions of agency workers.

Consider record keeping processes and decide what information needs to be requested from the agency workers to make it clear when they have satisfied the qualifying period.