Regulation of Agency Workers

The Agency Workers Regulations 2010 come into force on 1 October 2011 in order to enact the EU’s Agency Workers Directive in the UK.  They have been lectured on and written about to death – so here’s the quick guide.

You need to know that the main feature of the Directive is the requirement that agency workers engaged on assignments lasting 12 weeks or more receive equal treatment when compared to permanent employees. The aim being to give agency workers the same basic employment and working conditions as if they had been recruited directly.

The Guidance published to help people understand the Agency Workers Regulations provides some useful clarity but has no legal force in its own right. Practical and helpful as many of its recommendations are, ultimately it will be for a court to determine the correct interpretation of the Regulations (and here’s the geeky bit) the extent to which they properly implement the Agency Workers Directive.

Who is covered by the Regulations?

In order to qualify for protection under the Agency Worker Regulations, a worker will need to show that:

  • there is a contract between the worker and a Temporary Work Agency;
  • the worker is temporarily supplied to the “hirer” and works under the supervision of the “hirer”; and
  • the worker is not self-employed.

This is a broad definition and as a result, with limited exceptions, most agency workers will be covered.

The Guidance lists those “likely to be outside” the Regulations as including:

  • the self-employed;
  • those working on genuine Managed Service Contracts;
  • those employed via in-house temporary staffing banks (where the company employs the workers directly);
  • individuals finding permanent employment through recruitment agencies; and
  • individuals on secondment or loan from one organisation to another.

In relation to Managed Service Contracts, the Guidance reiterates that to fall outside the scope of the Regulations there must be genuine direction and supervision of workers by the contractor, and not the hirer. Having a named supervisor, on site, from the contractor is not enough!

For staffing banks, the Guidance warns that in order to fall outside the Regulations scope, the arrangement must involve direct employment by the relevant legal entity. Setting up a company to provide temporary workers to other associated or group companies is likely to constitute a temporary work agency and will be in scope of the Regulations.

Equal treatment

With effect from their first day of work, an agency worker should therefore receive “equal treatment” and therefore be able to access relevant facilities provided by the hirer to permanent staff.  This includes benefits such as car parking, staff canteen and childcare facilities (the Guidance provides a non-exhaustive list of these facilities); and access to vacancies within the hirer.

This is the only element of the Agency Worker Regulations where there is a defence of objective justification for less favourable treatment of agency workers. According to the Guidance, hirers should ask themselves “is there any good reason for treating the agency worker less favourably”.  Whilst the Guidance does not give detailed examples of what may be an appropriate justification, it does state that cost alone is unlikely to be sufficient to justify different treatment.

After 12 weeks of work in the same role, an agency worker will be entitled to receive the same terms and conditions as a comparable permanent employee.  These will include:

  • key elements of pay;
  • duration of working time;
  • provisions in relation to night work;
  • entitlement to rest periods;
  • annual leave entitlement; and
  • paid time off for ante natal appointments.

Even if the agency worker is on assignment for only a couple of hours a week, it will still count as a week and they will still be entitled to equal treatment after 12 weeks.

Qualifying Service

In order to establish whether an agency worker has accrued qualifying service, the Guidance states that agencies would be “well-advised” to ask workers about their work history to reduce their exposure to equal treatment liabilities. Whilst there is no legal obligation on the worker to provide this information, the failure by the worker to disclose periods of previous work with the hirer in the last 6 weeks may be taken into account by a Tribunal in any subsequent equal treatment claim. A break between assignments of 6 weeks or more will reset the qualifying “clock”.

When the claims start flowing, a key question will undoubtedly be whether qualifying service is lost when a worker moves between related companies? Arguably, by virtue of the protection of the corporate veil, where a hirer is part of a larger group and each company has its own legal identity, then the qualifying period will restart when an agency worker moves between different legal entities. However, hirers deliberately adopting this approach to prevent agency workers qualifying for equal treatment run the risk of breaching the anti-avoidance provisions.

The qualifying period is also re-started where there is a substantive change to the agency worker’s role. Two key factors will determine whether a job is substantively different; changes in

  1. the skill set required to do the job; and
  2. in the nature of the work and duties carried out.

A combination of factors, including change of location, manager, pay rate, etc will be taken into account in the event of any dispute.  The guidance imposes an obligation on hirers to notify the agency in writing when a role is substantively different.

Comparators

In identifying the basic working and employment conditions to which an agency worker will be entitled if they qualify under these Regulations, the Guidance emphasises the importance of proper comparison, so that distinctions in working hours, qualifications, etc., are appropriately taken in to account.

The Guidance highlights possible issues arising from attempts at avoidance, such as the creation by a hirer of “artificial starter grade”, with the intention of suppressing terms and conditions. That is not to say that a junior or entry-level grade salary will not be applicable to agency workers in some cases, but this should reflect the level at which the agency worker would have been recruited directly with regard to his or her skills, experience, etc.

Actual comparator employees are not required to identify inequality of treatment in relation to terms and conditions (a “what if” test being applicable).  However, in the context of access to facilities, an agency worker must identify an actual comparator. The Guidance suggests that hirers identify relevant facilities (possibly with reference to staff handbooks, etc) and, for the sake of clarity, refer to these in an induction pack for agency workers or in the information provided at the outset to the agency.

Avoidance by “structure of assignments”

The Guidance says little about attempts by hirers to avoid the Regulations by offering 11 week assignments. Nonetheless, the language used does suggest a slightly more flexible approach than originally appeared from the Agency Worker Regulations. The Regulations make clear that consecutive use of two or more short assignments intended to avoid the qualifying period (or where this is the most likely explanation) will be caught within the Regulations. Whilst similarly recognising the relevance of the hirer’s intention, the Guidance appears to place greater emphasis on establishing a deliberate act by the hirer and regular pattern designed to avoid the Regulations. In any event, hirers will need to be very cautious in offering more than two short-term consecutive assignments to the same agency worker.

Conclusion

Hirers may be encouraged by the more relaxed language in the Guidance which suggests a greater degree of flexibility than previously envisaged.  However, there would be considerable risk in applying such an interpretation and we would encourage strict adherence to the Regulations themselves until such time as the courts suggest otherwise.  Employers should carefully consider their position in relation to agency workers and proceed with caution – that or employ everyone via an agency!