UK: Agency Workers Regulations - Frequently Asked Questions

Last Updated: 25 November 2011
Article by Christopher Middleton
  1. Does an agency worker need to point to an actual comparator to enforce their rights under the Regulations?

    Confusingly, the answer to this question differs depending on whether you are looking at the right to equal treatment in respect of basic working and employment conditions (which applies after the agency workers has completed the 12 week qualifying period) or the right to be treated no less favourably in relation to access to a hirer's collective facilities and amenities and access to information about job vacancies (which applies from day 1 of an assignment).

    Basic working and employment conditions

    This right involves asking what "basic working and employment conditions" would have applied had the agency worker been recruited directly to do the same job. The Guidance states that there is no need to look for a comparator because the focus should be on establishing what the agency worker would have received had they been recruited directly to do the same role.

    That said, under the Regulations a hirer is deemed to have complied with the equal treatment provisions if it can show that an agency worker receives the same basic working and employment conditions as an actual employee comparator. An actual comparator for these purposes is someone engaged (normally at the same establishment) in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualification and skills. The comparator is not therefore limited to someone doing exactly the same work as an agency worker, but there must be some similarity in duties.

    Access to hirer's collective facilities and amenities / access to information about job vacancies

    This right involves comparing the agency worker with an actual comparable employee. A comparator for these purposes will be someone engaged in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualifications and skills. In the case of access to collective facilities, this will normally be someone based at the same establishment as the agency worker. In the case of access to job vacancies, the comparator must be based at the same establishment as the agency worker.
  2. Are agency workers entitled to be considered for a bonus?

    Agency workers are entitled to the same opportunity to participate in some (but not all) bonus schemes as if they had been recruited to the same job directly.

    This will catch bonuses that are directly attributable to the amount and quality of work done by an individual – typically bonuses based on personal performance.

    Bonuses that are not directly attributable to the contribution of the individual are not within scope of the equal treatment provisions. For example, agency workers do not have the right to equal treatment in respect of bonuses based on loyalty or long-term service awards, or bonuses based exclusively on company performance.

    The position in relation to hybrid bonus schemes (where bonuses are dependent on a mixture of company and personal performance) is not immediately clear from the Regulations. Similarly, there is a question as to whether rewards such as introduction fees and project based bonuses are caught by the Regulations. In theory, such items are capable of falling within the equal treatment provisions, but a definitive answer is only likely to arrive once there has been case law on the subject.
  3. Are agency workers entitled to receive equal treatment in respect of all basic working and employment conditions, or can this be avoided under the Regulations if they enjoy a better overall package than comparable direct recruits?

    Subject to the 12 week qualifying period, the Regulations require that an agency worker will be entitled to the "same basic working and employment conditions" as they would have enjoyed had they been recruited for the same job directly by the hirer (the equal treatment principle).

    Basic working and employment conditions includes terms relating to certain aspects of pay, duration of working time, and annual leave.

    There is no provision in the Regulations allowing an agency or hirer to deviate from the equal treatment principle in respect of any of the basic working and employment conditions, even if they can show that the value of the agency worker's overall package is at least equal to or better than the package enjoyed by comparable direct recruits.

    Therefore, agencies and hirers will need to ensure that they adopt a term-by-term approach when considering an agency worker's entitlements under the Regulations.
  4. Are independent contractors caught by the Regulations?

    Genuine self-employed independent contractors are not caught by the Regulations.

    However, if the individual is not a genuinely self-employed independent contractor (i.e. the relationship between the individual and the company is not akin to a consultancy arrangement), it is likely that the individual will be deemed an agency worker for the purposes of the Regulations. In these circumstances, that individual would be entitled to enjoy the same basic working and employment conditions as if they had been recruited directly by the hirer as an employee.

    In determining whether an individual is a genuine independent contractor, the Guidance emphasises that simply putting earnings through a limited company is not determinative. There are various factors which are important in assessing whether or not an individual is a genuine independent consultant (see question 5 below). The overarching consideration is whether in practice the individual (either alone or via their personal services company) is in business on their own account, where the status of the company acquiring the individual's services is that of a client or customer.

  5. How do you tell whether an individual is an employee or a genuine independent consultant?

    The distinction between an employee and independent contractor is important. This is because employees enjoy a greater degree of rights and protections than contractors (such as the right not to be unfairly dismissed after 51 weeks' service), and also because of the different tax treatment. Further, an individual who is assumed to be operating on a consultancy basis but who is in fact not an independent consultant, may actually benefit from the rights conferred on agency workers by the Regulations.

    Determining whether an individual is an employee or independent consultant is determined on a case by case basis. A common misunderstanding is that the label the parties apply to the relationship (for example, in the contract) is determinative. In fact, the courts tend to concentrate more on examining how the arrangement works in practice when deciding an individual's status for employment law purposes. This involves weighing up a number of factors.

    The most important questions to ask are whether:

    • the company is obliged to offer work to the individual and the individual is obliged to perform any work offered;
    • the individual is obliged to perform the work personally and cannot provide a substitute;
    • the company exercises sufficient control over how, when and where the work is done.

    The more of these factors that are present in the practical operation of the relationship, the more likely it is that the individual will be considered an employee of the company and not a genuine independent consultant. Other factors to be considered include the following:

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