The Agency Workers Regulations 2010 (the “Regulations”) will come into force on 1 October 2011. The Regulations will ensure the United Kingdom’s compliance with the European Temporary Agency Workers Directive 2008. The UK Government announced on 19 October 2010 that it does not envisage making any changes to the Regulations before they come into force next year. This DechertOnPoint provides a brief summary of the legislation and the issues which it will present for employers as they prepare for compliance with its detailed provisions.

Overview

The Regulations apply to workers offered temporary work through an employment agency. The objective of the European Temporary Agency Workers Directive 2008 (which will be imported into UK law by the Regulations) is to harmonise certain basic working and employment conditions for temporary workers supplied through employment agencies such that they are in no worse position than if they had been recruited directly by the end user organisation for which they carry out work (the “hirer”).

Under the Regulations, temporary agency workers will enjoy the same basic working and employment conditions as if they had been employed directly by the hirer to perform the same or a similar role. This right will accrue after the agency worker has worked for the hirer for 12 weeks.

In addition, temporary agency workers will enjoy the right to access information about a hirer’s comparable permanent employment vacancies and the use of a hirer’s facilities and amenities. These rights will apply immediately from the outset of a temporary assignment.

To whom do the Regulations apply?

The Regulations will apply to workers who have a contract with a temporary work agency which is either a contract of employment with the agency or any other contract to perform work or services personally for the agency.

Importantly, the Regulations will not apply where the agency or the hirer is a client or customer of a professional business carried on by the individual in question or to individuals who are self-employed. In essence, the Regulations will not extend to the genuinely self-employed.

The right to equal working and employment conditions

Under the Regulations, following 12 weeks of service with the hirer, an agency worker will enjoy the same basic working and employment conditions to which he or she would have been entitled had he or she been engaged permanently by the hirer to do the same or a broadly similar job as the temporary assignment.

A hirer will be deemed to have complied with its obligations if it can show that an agency worker is working under the same terms and conditions as a comparable employee and those terms are ordinarily applied to comparable employees.

The agency worker will not be entitled to equal treatment in respect of all terms and conditions, but only to basic working and employment conditions, i.e. those which relate to pay, working time, night work, rest periods, rest breaks and annual leave.

For the purposes of the Regulations, “pay” will mean any sum payable in connection with the work carried out and includes:

  • salary or wages;  
  • commission;  
  • shift premia;  
  • holiday pay  
  • overtime pay;  
  • vouchers (providing they have a fixed monetary value);  
  • bonuses and incentive payments attributable to the amount or quality of work performed by the agency worker; and  
  • other money benefits referable to the work undertaken during the assignment.  

The following will not constitute “pay” and need not be extended to an agency worker:  

  • benefits in kind;  
  • occupational sick pay;  
  • pension payments;  
  • maternity, paternity and adoption pay;  
  • redundancy pay;  
  • share and option schemes;  
  • loyalty bonuses (such as a Christmas bonus) or any bonus payments which are not directly attributable to the amount or quality of the work performed by the worker;  
  • guarantee payments;  
  • company car; and  
  • health/life insurance.  

The 12-week qualifying period

An agency worker will become entitled to equal basic working conditions when he or she has undertaken the same role with the same hirer for 12 continuous calendar weeks. Continuity of this qualifying period will be broken if the agency worker starts a new and substantively different role with the same hirer for which a work description (effectively demonstrating that the job is substantively different) is provided in writing.

The following types of absence will not count towards completion of the 12-week continuity qualifying period, but do not break its continuity:

  • absence of up to six weeks;  
  • 28 weeks’ sick leave;  
  • statutory or contractual maternity, paternity or adoption leave;  
  • 28 weeks’ jury service;  
  • a planned temporary work shutdown (such as a Christmas closure); and  
  • a strike, lockout or other industrial stoppage.  

Anti-avoidance provisions

The Regulations include specific anti-avoidance provisions which will seek to prevent the hirer from structuring temporary work assignments in such a way so as to prevent an agency worker from acquiring the right to equal working conditions. An additional specific penalty award will be payable if a complaint on this basis succeeds before the tribunal.

The Regulations give employment tribunals free rein in terms of the factors which may be taken into account in deciding whether a “structure of assignments” has been developed to avoid the Regulations, but the following factors are highlighted as potentially relevant:

  • the length of the agency worker’s different assignments;  
  • the number of the assignments with one hirer;  
  • the number of times the agency worker has worked in a new role with the hirer;
  • the length of any break between assignments; and  
  • whether there is a connection between different hirers of the agency worker.  

Right to access hirer’s job vacancies

From the outset of a temporary work assignment (i.e. day one), an agency worker will be entitled to access information on the hirer’s vacant permanent roles such that the worker has the same opportunity as a comparable permanent employee or worker to apply. A hirer will be able to satisfy this requirement by providing the information in a general format such as on its intranet site, general notice board or by an all staff email.  

Right to use hirer’s facilities and amenities

Under the Regulations, an agency worker will be entitled from day one to enjoy access to the hirer’s collective facilities and amenities as though he or she were a permanent employee or worker. For these purposes, facilities will include a canteen, crèche and transport services.  

Less favourable treatment afforded to agency workers in respect of access to these sorts of facilities maybe justified but only on objective grounds.  

Hirer or agency – who is liable?

The agency which supplies the agency worker to the hirer will usually be responsible for breaches of an agency worker’s right to equal basic working and employment conditions. However, the agency will have a defence to a complaint if it can show that it took reasonable steps to obtain relevant information from the hirer and, when it received the information, that it acted reasonably in determining the conditions which would apply to the temporary worker. Liability will pass to the hirer if it provided inaccurate information to the agency or failed to update the agency of any changes to relevant employment conditions.

The hirer will be liable for any breach of the obligation to provide access to job vacancy information and/or collective facilities and amenities.

Right to information on equal treatment

An agency worker who considers that an agency has breached his or her right to equal basic working conditions will be able to make a request for information to the agency about his treatment compared with the hirer’s permanent employees. An agency has 28 days to respond to the information requested. If the agency worker does not receive a response from the agency, he or she will be able to request the information from the hirer.

An agency worker who believes his or her right to access to the hirer’s permanent employment vacancies and/or facilities has been breached will be able to make a written request to the hirer for a written statement outlining the rights of a comparable employee and the reasons for the alleged less favourable treatment. The hirer has 28 days to respond.

Where an agency or a hirer fails to respond or provides a clearly inadequate response to the request for information, the tribunal will be entitled to draw adverse inferences.

Tribunal complaints and remedies

An agency worker will be able to issue a complaint in the employment tribunal that a hirer has breached its obligation to provide access to permanent employment vacancy information and facilities and/or against an agency for breach of its obligation to provide equal basic working conditions. An agency worker will also be able to bring a complaint that he or she has been subjected to a detriment for asserting his or her rights under the Regulations.

If the agency worker succeeds in his or her complaint, the tribunal will be able to:

  • make a declaration as to the worker’s rights;  
  • award compensation for loss suffered by the worker (usually a minimum of two weeks’ pay for a breach of basic working and employment conditions); and  
  • recommend action to remove or reduce the adverse effect of the breach on the worker.  

The Regulations also provide specific protection in respect of dismissal relating to these new statutory rights. An agency worker who is an employee will be automatically unfairly dismissed if he or she can show that the reason for dismissal was that he or she asserted rights under the Regulations. The usual principles of unfair dismissal compensation will apply: the employee will be entitled to a basic award plus a compensatory award based upon his or her loss, currently capped at £65,300.

Penalty award

An employment tribunal will be able to make an additional award of up to £5,000 if it finds that “a structure of assignments” has been implemented so as to deprive an agency worker of his or her rights under the Regulations. The award may be made against the hirer or the agency or both according to the tribunal’s assessment of where responsibility lies.

Maternity protections

The Regulations will confer additional rights, following the 12 week qualifying period, on a temporary agency worker who is pregnant, breastfeeding or who has given birth within the previous six months providing she has notified the hirer and the agency of her situation.

A pregnant worker will be entitled to reasonable paid time off during her working hours to attend ante-natal appointments. In addition, hirers will be under a duty to alter the working conditions of workers who are pregnant, breastfeeding or who have recently given birth to avoid risks. If potential alterations are not reasonable or do not remove the relevant risks, the hirer must inform the agency which must, in turn, stop supplying the worker. The agency is then required to offer appropriate alternative work on terms which are not substantially less favourable than, and for the same period as, the original assignment. If no alternative work can be found, the agency will be required to pay the worker for the remainder of the original assignment unless she unreasonably refuses a suitable alternative assignment.

The Regulations in practice

The cost of implementing the Regulations will be significant for employers who routinely engage temporary staff via agencies. Some hirers who make heavy use of agency labour are looking at more cost effective ways of engaging temporary staff. Possible solutions include limiting agency workers to assignments of less than 12 weeks so that the equal treatment obligation with regard to pay does not arise, recruiting directly (with an eye to dismissal within a year before the employee accrues the right not to be unfairly dismissed), engaging self-employed contractors and setting up an in-house bank of casual workers.

To avoid liability under the Regulations, employers who regularly use temporary agency staff should review internal procedures for engaging agency staff. Specifically, hirers are advised to train managers who regularly book temporary agency staff on the scope and impact of the Regulations and to introduce clear procedures for communication with staffing agencies in relation to the terms and conditions applicable to each assignment.

In relation to temporary work assignments staffed by agency workers, employers should also consider taking steps to:

  • review current systems of advertising internal permanent employment vacancies and ensure they are made available to temporary agency workers on assignment;  
  • ensure that temporary agency staff have access to on-site facilities (unless refusal can be justified); 
  • consider how long any temporary agency assignment is likely to last before terms and conditions are agreed;  
  • audit the terms and conditions offered to permanent employees carrying out work which might be undertaken by agency staff in order to ensure awareness of the entitlement which a comparable agency worker could claim;  
  • identify which terms and conditions applicable to employees will fall within the scope of the Regulations;  
  • provide accurate information on terms and conditions of comparable employees to any agency through which staff are supplied; and  
  • ensure that agencies are updated of any changes to employee terms and conditions which may be caught by the Regulations.  

Finally, employers should keep an eye out for the Government guidance on the Regulations, which is likely to be issued in early 2011. The guidance will provide further analysis of how the Regulations are to be interpreted and complied with in practice.