UK: Agency Worker Regulations

Last Updated: 9 August 2011
Article by Michael Bradshaw

The Agency Workers Regulations 2010 (the Regulations) will come into force on 1 October 2011. Despite the long lead in time for these Regulations (the legislation process effectively started in 2008) many organisations have not yet prepared themselves for the new rules. This is not least because the Government guidance was not finalised until May 2011.

The Regulations will apply to the supply of temporary agency workers by agencies but not the supply of candidates for permanent employment. The definition of "agency" covers the classic temporary work agency – an "employment business". It also covers other third parties who provide temporary workers and whether acting as intermediaries where an "agency" is involved or not. It will therefore cover umbrella contract arrangements.

The definition of a temporary agency worker is a worker who is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer; and has a contract with the agency that is a contract of employment or a contract to perform work or services for the agency.

Workers who are genuinely self-employed will be outside the scope of the Regulations. Determining who is genuinely self-employed will involve the usual employment law analysis and having a personal services company will not in itself be sufficient.

Direct hires by the hirer will not be covered by the Regulations and that is whether they are temporary workers, casual staff or contractors (without a personal services company). However, if a third party is involved in providing such workers then the arrangement is likely to be caught by the Regulations.

The Regulations provide for equal treatment in certain respects after a 12 week qualifying period, as well as other rights from day one. However, there is no general protection against "less favourable treatment" under the Regulations, as with the part-time worker and fixed term employees regulations. The Regulations also do not change the status of agency workers or give them more general employment rights.

Right to equal treatment

After a 12 week qualifying period, agency workers will be entitled to the same basic working and employment conditions as they would have enjoyed if hired directly by the hirer. The principle of equal treatment is limited to: pay, duration of working time, length of night work, rest periods, rest breaks and annual leave. "Pay" has a wide definition and will include commission, bonuses attributable to the amount or quality of work done, and holiday pay. Exclusions from the definition of pay include: sick pay, pension arrangements, maternity, paternity or adoption leave pay, redundancy payments and financial participation schemes.

An agency worker and the temporary work agency may also enter into a "derogation contract" which would have the effect of disapplying the right to equal treatment to pay (but only pay and not working time). Such a contract must comply with certain rules and, for example, must provide for at least 4 weeks pay at a prescribed minimum level, between assignments.

The 12 week qualifying period

The right to equal treatment does not apply until an agency worker has undertaken the same role, whether on one or more assignments, with the same hirer over a period of 12 "continuous" calendar weeks.

There are certain breaks in the assignment where continuity will be "suspended" so that the agency worker will be able to count the period prior to the absence towards the qualifying period (although not the period of absence). These are:

  • where the break is not more than six weeks;
  • sickness absence of up to 28 weeks (other than related to pregnancy – see below);
  • statutory/contractual time off – for example annual leave;
  • jury service of up to 28 weeks;
  • where there is a temporary break in the need for
  • workers for a set period, such as teachers during school holidays;
  • if there is a strike, or other industrial action at the place of work.

In other cases, continuity will continue to accrue during the absence. This is if:

  • the worker is absent for reasons related to
  • pregnancy or childbirth, for a protected period of up to 26 weeks after the birth of the child; or
  • if the worker is absent on contractual or statutory maternity, paternity or adoption leave.

In these cases the assignment is deemed to continue during the absence, for the intended duration of the assignment or the likely duration.

Subject to anti-avoidance provisions, any other break of more than 6 calendar weeks will break the 12 weeks required and restart the clock.

The time that counts towards the qualifying period can also be broken if the agency worker starts a new assignment with the same hirer where the "work or duties that make up the whole or the main part of that new role are substantively different from the work or duties that made up the whole or main part of the previous role". In order for this to apply, the hirer must inform the agency that there is a new role and provide written details of it.

Anti-avoidance provisions seek to prevent abuse. These will apply where the hirer or agency structure 2 or more assignments in a way to avoid the equal treatment provisions applying – or at least that it is satisfied that this is the most likely explanation. An employment tribunal will be able to make an additional award of up to Ł5000 where a hirer and/or agency have been found to be in breach.

Applicable terms

Subject to the qualifying period, the agency worker will be entitled to the basic working and employment conditions ordinarily included in contracts of employment with the hirer for such employment. These might be found in standard terms of employment, a staff handbook or a collective agreement, or even through custom and practice. Alternatively, if the agency worker is employed on the same basic working and employment conditions of a directly recruited comparator then the Regulations may be "deemed" to have been complied with. The comparator here is an actual comparator who is still in employment at the time of the breach. The comparator's terms must also be terms that are ordinarily included in the contracts for such employment.

Day 1 rights

Agency workers will also have certain "day 1" rights which are not subject to the 12 week qualifying period. Liability for these rights will lie with the hirer.

The agency worker will have the right to be treated no less favourably than a comparable employee (or worker) in relation to access to collective facilities and amenities, such as a canteen, childcare facilities and the provisions of transport services. It may be possible for a hirer to objectively justify a failure to comply with this. The agency worker will also have the right to be informed of vacancies in the hirer's organisation as per a comparable employee (or worker).

Pregnancy and maternity

There will also be particular equal treatment rights for agency workers who are pregnant or are new mothers. They will have the right to temporary changes to a role or alternative work, as well as paid suspensions, due to health and safety risks identified through a risk assessment. There will also be the right to reasonable paid time off for antenatal appointments. These rights only apply after the 12 week qualifying period.

Liability and information

Claims under the Regulations will be brought in the employment tribunals. The hirer will be liable for a failure in respect of day 1 right and may also be liable for equal treatment liability, to the extent it is responsible. This is because a tribunal can make awards against both the hirer and the agency. An agency will have a defence if it took reasonable steps to obtain the necessary information from the hirer and acted reasonably in determining the agency worker's rights. The hirer may be liable where it is found to be responsible for the infringement, for example by failing to provide the required information on comparable terms and conditions.

A tribunal may make an award of compensation and also make recommendations as to steps to be taken to overcome an adverse effect on the worker. Compensation for detriment (or dismissal) is also available.

An important practical aspect of the Regulations will be the requirement for information to be passed between the hirer, the agency and the worker. In particular the agency worker can make written requests for information relating to basic working and employment conditions and comparators from the agency (or the hirer in respect of day 1 rights). The agency will have 28 days to provide the information and if it is not provided, the agency worker can then request information from the hirer. Inferences can be drawn from a failure to respond or an inadequate response.

A requirement to provide information on agency workers will also be included in existing legislation on TUPE, collective redundancies and collective bargaining.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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