The Agency Workers Regulations 2010 (AWR) state that, after a 12 week qualifying period, agency workers are entitled to the same basic working and employment conditions as the hirer’s permanent staff.

However, in relation to pay only, there is an exception to this principle of equal treatment if agency workers enter into a permanent contract of employment with a temporary work agency under which they are paid a minimum amount between assignments for at least four weeks. Broadly, the minimum amount is the greater of half pay or the national minimum wage. This is known as the Swedish derogation because it was negotiated by the Swedish government for inclusion in the EU Agency Workers Directive.

There has been uncertainty over whether agency workers can be transferred onto a Swedish derogation contract even where they have been working for the same hirer for some time, or whether the derogation can only apply to a completely new assignment. In Bray and others v Monarch Personnel Refuelling (UK) Ltd, an Employment Tribunal has now confirmed that a new contract issued to agency workers complied with the derogation in circumstances where those workers had already had a longstanding relationship with the hirer.

The claim was brought by a group of tanker drivers who worked for an agency which contracted to provide their services to BP. All the drivers had worked continuously for BP on a series of assignments over a number of years. When the AWR were introduced, BP asked the agency to employ the drivers under Swedish derogation contracts rather than equalising their pay to the higher hourly rate paid to comparable BP employees. The drivers began working on their next assignment with BP after agreeing the new derogation contract. However, they subsequently claimed that the Swedish derogation could only apply in relation to the first ever assignment with a particular hirer.

The Employment Tribunal rejected the drivers’ claim, concluding that the Swedish derogation can apply where agency workers have already been working for a particular hirer provided that the new derogated contract is agreed with the workers prior to the date on which the derogation needs to take effect. Although this is only a first instance decision, it provides useful clarification for temporary work agencies and hirers. It should be noted that a Swedish derogation contract must also comply with various formalities required by the AWR.