UK: The Agency Worker Regulations: "A Business Must Be Entitled To Arrange Its Workforce To Comply"

Last Updated: 28 March 2017
Article by Anna Fletcher

Since coming into force on 1 October 2011, there has been surprisingly little reported case law concerning the provisions of the Agency Workers Regulations (AWR) 2010. Recently, the Bury St Edmunds Employment Tribunal handed down a decision addressing three important issues:

  1. Were agency workers working 'temporarily' for the end-user?
  2. Did the agency workers receive the same basic working and employment conditions as a comparative permanent employee of the end user?
  3. Was the comparator permanent employee role an avoidance mechanism or sham?

In Mr T Jones and others v Birds Eye Limited and others, the tribunal found in favour of the end-user on all three questions. Notably, a business arranging its workforce to ensure compliance with the AWR was not creating an avoidance device. Here, where the business had undertaken a genuine restructuring of its workforce to meet business needs while ensuring compliance with the introduction of new legislation the tribunal was satisfied that there was no sham or abusive practice.

Here, Anna Fletcher, employment specialist at Gowling WLG who led the firm's team on behalf of Birds Eye, takes a look at this notable decision.

The Agency Worker Regulations: a quick recap

Under the AWR, temporary agency workers are entitled:

  • to equal treatment on basic working and employment condition after 12 weeks in a given job;
  • to information about vacancies with the hirer to give them the same opportunity as other workers to find permanent employment and equal access to on-site facilities, such as childcare and transport services from the first day of their assignment; and
  • to additional rights for new and expectant mothers.

The case of Birds Eye

Birds Eye has operated a frozen food factory at Lowestoft since 1949, with demand for its products constantly fluctuating with peaks and troughs throughout the year. The Lowestoft site is divided into four different manufacturing "denes". Birds Eye supplemented its permanent workforce with agency workers who provided the much needed workforce flexibility, as the agency workers were not tied to a particular factory or shift pattern.

By 2011, Birds Eye was using approximately 250 agency staff. Many of those agency workers had worked exclusively for Birds Eye for many years, in some cases over 10 years. Prior to the introduction of the AWR coming into force, Birds Eye introduced a new 'flexible worker' permanent employee role which created much needed flexibility within Birds Eye's permanent workforce. This was in all senses a real role which was subsequently recognised by the tribunal.

All of the agency workers at the Lowestoft factory continue to carry out the same role as a flexible worker and were subject to the same terms and conditions with regard to pay and annual leave as the flexible worker.

Birds Eye faced claims for breach of the AWR by 88 agency workers unhappy with the introduction of the 'flexible worker' permanent employee role.

What did the tribunal find?

Dismissing all the claims the Employment Tribunal found:

Issue 1 - Were the Claimants working "temporarily" for Birds Eye?

No they weren't.

Regulation 3 of the Agency Workers Regulations 2010 (AWR) defines an 'agency worker' as an individual who:

"(a)is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer; and (b) has a contract with a temporary work agency which is - (i) a contract of employment with the agency or (ii) any other contract with the agency to perform work or services personally."

It is safe to say those who drafted the regulations wanted to emphasise that the AWR only apply to 'temporary' work. But what is 'temporary' in this context?

In December 2013, the Employment Appeal Tribunal (EAT) in Moran and others v Ideal Cleaning Services Ltd held that the AWR only apply to workers supplied by a temporary work agency to work temporarily for the end user. A temporary contract will be terminable upon a condition being satisfied, for example the expiry of a fixed period or the completion of a specific project. Therefore, those placed indefinitely (meaning open-ended in duration), are not placed 'temporarily' and are outside the scope of the AWR.

Following the EAT judgment in Moran, the tribunal found the agency workers in this case were not temporary workers within the meaning of the AWR. The tribunal was satisfied on the facts of this case: that the arrangement with all of the agency workers was open-ended.

While this finding was sufficient in itself to dispose of the claims, helpfully the tribunal went on to consider two further issues.

Issue 2 - Have the agency workers been afforded the same basic working and employment conditions as they would have been entitled to had they been recruited by Birds Eye at the time their qualifying periods commenced?

Yes they have.

Even if the AWR did apply, the claims would still have failed. The agency workers had indeed been afforded the same basic working and employment conditions as if they had been recruited by Birds Eye. They would have been recruited as 'flexible workers' who are paid exactly the same as the agency workers. Now for the really interesting issue...

Issue 3 - Was the introduction of the flexible worker role a device/avoidance mechanism/an abusive practice or a sham designed to avoid the application of the Regulations?

No it wasn't.

On the facts of the case, the tribunal was satisfied that there was no sham or abusive practice. The flexible worker was a real role. It is filled by real employees performing genuine work that is required by Birds Eye. It is not a 'mere device'. The tribunal concluded that businesses must be entitled to arrange its workforce to comply with the AWR and to do so cannot be said to be a device and be disregarded.

What does this mean for end-users of agency workers?

It should be noted that this is a tribunal level decision and therefore non-binding on other tribunals. Nevertheless, it is notable as the first case to consider a genuine workforce reorganisation introduced in the run up to the introduction of the AWR to ensure compliance with the AWR.

Employers should not be criticised for arranging their workforce to ensure compliance with changes to legislative requirements. A 'sham' suggests an arrangement created to give the appearance that the rights and obligations as between the parties are different to the reality of the situation. The establishment of a role filled by real people to fulfill a genuine business need does not equate to a 'sham'.

This decision also serves as a reminder that the number of agency workers potentially falling within the provisions of the AWR is significantly less than anticipated by many when the AWR first came into force. As previously held by the EAT in Moran, not all agency workers are covered by the AWR. It is only those supplied to work temporarily. Those placed indefinitely (meaning open-ended in duration) are not placed 'temporarily' and therefore outside the scope of the AWR.

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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