Case law concerning the Agency Worker Regulations (AWR) remains
limited. We recently advised a recruitment business involved in a
dispute with a "temp" and a hirer regarding who was
liable for an alleged breach of AWR Regulation 5 (failure to pay
the "temp" equal pay to that of a directly employed
individual, after the 12 week qualifying period).
The client had a long standing arrangement to place temps with
the hirer. All temp staff were paid according to the hirer's
internal graded pay scale. Prior to placing a temp with the hirer,
the recruitment business would request confirmation from the hirer
of the relevant grade for that assignment (the comparator
The temp was placed on assignment in January 2014 following
confirmation of the relevant grade via email from the hirer. The
temp was paid by the recruitment business according to their grade
and received pay increases in line with directly employed staff at
the same grade throughout the assignment.
In October 2014 the temp queried with the employment business
whether he was being paid at the correct grade as he considered
directly employed staff performing an identical role were being
paid at a higher grade. The recruitment business queried this with
the hirer who denied that the grade for the temp was incorrect. The
temp was informed of the hirer's response by the recruitment
In January 2016 the temp raised the same complaint. The
recruitment business acknowledged receipt of his complaint and once
again made prompt enquiries with the hirer. The hirer confirmed
that they would investigate the allegations and respond to the
recruitment business. Despite numerous requests, the hirer never
provided the employment business with a substantive response. In
the absence of any response upholding the temp's complaint, the
recruitment business was unable to increase the level of pay to the
The assignment ended in September 2015. The temp issued
Employment Tribunal (ET) proceedings shortly afterwards against the
recruitment business for breach of regulation 5. The compensation
claimed (for the difference in salary between grades throughout the
whole assignment) exceeded Ł14,000. It is common for such
claims to be issued against both the employment business and hirer
with the ET deciding who was responsible for any breach. Unusually
in this case, the hirer was considered to have statutory immunity
from any legal action so the ET claim was only issued against the
We issued a robust defence on behalf of the recruitment business
asserting that our client had taken all reasonable steps to obtain
relevant comparator information and would therefore be able to rely
on the "reasonable steps defence" under AWR regulation
14(3)(a). Following disclosure and discovery of documents, we
considered that the temps case had poor prospects of succeeding so
we issued a costs warning and on a without prejudice basis offered
a drop hands settlement. The offer was accepted and the matter
settled with modest costs to our client.
This case highlights the importance of employment businesses
carrying out enquiries with a hirer regarding comparator
information before the start of any assignment and dealing with any
queries regarding pay from the temp promptly. The recruitment
business had fortunately undertaken all enquires with the hirer in
writing so there was a clear paper trail to demonstrate that any
breach of AWR was not their fault.
This case also emphasises the value of well drafted terms of
business (TOB) between a recruitment business and hirer. TOB's
can emphasise the obligations of the parties to ensure compliance
with AWR by, for example, specifying a timescale for hirers to
respond to requests for information. Recruitment businesses can
also attempt to negotiate indemnities to cover where they are a
party to litigation due to the provision of incorrect comparator
information or (as in this case) the failure to provide a
substantive response to pay related queries.
This case also highlights the importance of recruitment
businesses carrying out due diligence on their clients and
understanding where there may be issues regarding immunity. This
could impact on the ability to recover outstanding fees or, as in
this case, mean that litigation must be defended in isolation.
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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In SSE Generation Limited v Hochtief Solutions AG and another decided on 21st December 2016, the Court of Session in Scotland considered a contractor's potential design liability under the NEC Form of Contract.
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