Agency Workers Regulations Briefing (May 2011)

CONTENTS
1. Background
2. What are the Agency Worker Regulations?
3. Who is an agency worker for the purposes of the Regulations?
4. What is a temporary work agency for the purposes of the Regulations?
5. When does an agency worker qualify for equal treatment?
6. What does equal treatment mean?
7. Day One rights
8. Who is liable for establishing equal treatment?
9. Pregnant agency workers
10. Anti-avoidance measures
11. What are the financial penalties for breach of the Regulations?
12. Next steps

1. Background
The Agency Workers Regulations 2010 (‘The Regulations’) will come into force in England, Scotland and
Wales on 1st October 2011. The Department of Business, Innovation and Skills (BIS) has just issued final guidance on the 6th May 2011 to assist clients and agencies to implement the Regulations correctly.

Therefore it is imperative that hirers (and that’s you the Client):
• understand the Regulations,
• assess the impact the Regulations will have on their business,
• start to work closely with their agencies to minimise any potential disruption the implementation of the
Regulations may cause to their business, and
• put effective systems in place to adhere to the Regulations.

We are here to help.

2. What are the Agency Worker Regulations?
The Regulations stem from the EU Temporary Workers Directive 2008 which gives agency workers the right
to the same pay and other working conditions enjoyed by a hirer’s own workers. Importantly however, the
Regulations do not alter agency workers’ employment status.

3. Who is an agency worker for the purposes of the Regulations?
The Regulations do not apply to workers who have found a ‘perm’ job with a client, even if they were
introduced by an agency.

The Regulations apply to agency workers regardless of whether they are on a contract of employment or a
contract for services. The definition of an agency worker in the Regulations stems from the Working Time
Regulations 1998 and is intentionally widely defined to cover most temporary agency workers. However,
workers who are genuinely in business on their own account (i.e. genuinely self-employed) will not be within
scope. Workers engaged via umbrella companies or other intermediaries will be in scope unless they are
genuinely self employed.

4. What is a ‘temporary work agency’ for the purposes of the Regulations?
The Regulations use the term ‘temporary work agency’ rather than employment agency or business which
is used in other legislation. A temporary work agency includes the agency which supplies the worker to the
hirer, any umbrella companies and any master or neutral vendors in the supply chain. This is important for
the purposes of liability under the Regulations and means that all those suppliers are responsible for ensuring that the agency worker receives his/her entitlements. It is important therefore that contracts between hirers and master or neutral vendors deal appropriately with the Regulations and in particular with the flow of information down the supply chain.

5. When does an agency worker qualify for equal treatment?
Except for the Day One rights (detailed below) the agency worker will be entitled to equal treatment once
s/he has worked for 12 weeks in the same role at the same hirer. This is irrespective of the working pattern
(E.g. full time or part time). It is also irrespective of which or how many agencies supplied the agency worker
to do the same role at the hirer.

A new qualifying period will begin only if a new assignment with the same hirer is substantively different
(and that does not mean simply changing a job title), or if there is a break of more than six weeks between
assignments in the same role. The qualifying period will be paused (rather than stopped) if the worker takes:

• a break of less than 6 weeks,
• certified sick leave for no more than 28 weeks,
• a break related to pregnancy childbirth or maternity and the agency worker is within
a ‘protected period’ (i.e. from the beginning of pregnancy to 26 weeks from childbirth),
• statutory/ contractual maternity, adoption or paternity leave, or
• time off for public duties (including jury service).

Thus it is clear that an agency worker does not have to work for 12 consecutive weeks via
the same agency to qualify for the right to equal treatment. They can accrue the 12 weeks’
qualifying service over a much longer period of work and through more than one agency.

Pier Consulting will continue to work with the REC and the BIS for further guidance on how best to monitor work patterns and ad hoc assignments for hirers using more than one agency.

6. What does equal treatment mean?
Agency workers will be entitled to the same basic working and employment conditions after 12 weeks of service in the same role with the same hirer.

The entitlements include pay, duration of working time, night work, rest periods, rest breaks and annual leave. Pay has been specifically defined as ‘any sums payable to a worker of the hirer in connection with the worker’s employment including any fees, bonus, commission, holiday pay or other emolument referable to the employment, whether payable under a contract or otherwise…’ The definition of pay includes holiday pay, shift allowances, unsociable hours premia, overtime rates, vouchers with a fixed monetary value,
stamps and bonuses directly related to quantity and quality of the work carried out.

Pier Consulting are aware that the REC has stressed the need for detailed guidance on the issue of pay and bonuses in particular and will be guided on this.

As stated above, the Regulations will not change the employment status of agency workers. Therefore they will still not have the right to claim for unfair dismissal, redundancy pay or maternity leave which are entitlements reserved for employees. Nor will agency workers be entitled to benefits such as occupational sick pay, company pension schemes, share options schemes, loans, expenses, health/life insurance, financial participation schemes and bonus payments based upon organisational or company performance. These are considered a reflection of a long term relationship between an employee and an employer. Agency workers will therefore remain a flexible labour resource for hirers.

Finally, many hirers worry that the Regulations mean that if an agency worker is paid more than their own
employees they will have to either decrease their rate of pay to that of employees or increase the rate of
pay to employees. Neither of these is true. The Regulations provide for equal treatment for agency workers
when their pay is lower and they do not enjoy the same level of working conditions as comparable employees or workers.

7. Day One rights
As mentioned above, there are two rights to which agency workers are entitled from the first day of an assignment.

Firstly, hirers must inform agency workers of existing vacancies in their organisation. (Hirers do not have to actively seek out each agency worker and tell them individually of the vacancies but they must ensure that they have the same access to information about vacancies as other workers).

Secondly, agency workers will also be entitled to access collective on-site facilities such as crèche and
childcare facilities, canteen facilities, car parking and the provision of transport services. However, access to facilities can be refused if there are ‘objective grounds’ for doing so. In practice this means that if there is a waiting list for childcare facilities or a car park space, an agency worker is not automatically entitled to a place but can be subject to the same criteria to access the facility as someone directly recruited by the hirer.

‘Amenities’ such as subsidised gym membership and season ticket loans are out of scope as they are considered to be a reflection of the long term relationship between an employee and a hirer which will not be appropriate for agency workers. The BIS guidance will give more detail on the facilities and benefits an agency worker is entitled to or not.

8. Who is liable for establishing equal treatment?
The Regulations will require a qualifying agency worker to be treated as if s/he had been recruited directly by the hirer to do the same job. On a practical level, this means that equal treatment will need to be established in respect of the terms and conditions that apply to a comparable worker or a comparable employee engaged in the same role or broadly similar work.

For example; on a factory production line, the agency worker may be working next to a worker recruited
directly. The direct recruit could serve as a ‘flesh and blood’ comparator to establish parity in pay and working conditions. In these circumstances, the hirer and the agency will be deemed compliant with the regulations. If a ‘flesh and blood’ comparator cannot be found, then there may be an identifiable pay scale or a starting rate which could be used as a reference point. Therefore, pay scales and benefits outlined in company handbooks and any collective agreements must be taken into account when establishing equal treatment.

The temporary work agency will be responsible for any breach of a right in relation to equal treatment (except for breach of the Day One rights which are the sole responsibility of the hirer). However, the agency will have a defence if it has taken ‘reasonable steps’ to obtain the necessary information from the hirer, and has acted ‘reasonably’ in determining the agency worker’s basic working and employment conditions. An employment tribunal will examine the where the fault for the breach lies and will apportion liability, and any financial sanctions, accordingly.

The agency and the hirer must cooperate with each other to ensure that an agency worker receives his/
her rights. An agency can assist the hirer by asking the right questions at the right time – whether this
is on receipt of instructions to supply a worker or when it is clear that the assignment will last longer
than 12 weeks. Pier consulting will be utilising the impact assessment prepared by the REC for their corporate members

As mentioned above, all intermediaries in the supply chain are responsible for ensuring the agency worker receive his/ her entitlement. Therefore even if a worker issued a claim against their supplying agency only, the agency can join any other party to that claim if they have contributed to the breach.

9. Pregnant agency workers
Pregnant agency workers will be entitled to paid time off to attend medical appointments and antenatal classes once they have achieved the 12 weeks’ qualifying service.

In addition, if an assignment is terminated on pregnancy related health and safety grounds the agency will have to find suitable alternative work on terms which are not substantially less favourable than the previous assignment. If the agency cannot find suitable alternative work the agency will be required to pay the worker for the remainder of the original assignment unless she unreasonably refuses the assignment. Agencies and hirers should ensure that an assignment is not terminated solely on the grounds of pregnancy as this would constitute direct sex discrimination against the pregnant agency worker. Compensation for direct sex discrimination is unlimited.



10. Anti-avoidance measures
The Regulations contain anti-avoidance measures to prevent agencies and hirers from structuring assignments in a way to prevent the agency workers from reaching the 12 week qualifying period. This includes supplying a worker to connected hirers, rotating workers or repeatedly terminating and recommencing assignments when the most likely explanation is to prevent the agency worker from
accruing the 12 weeks’ qualifying period. In the event that the Tribunal finds that the Regulations have been deliberately avoided they can award an agency worker compensation of up to £5000.

11. What are the financial penalties for breach of the Regulations?
The Tribunal can award compensation to an agency worker where they have suffered as a result of a breach
of the Regulations. The compensation will normally be based on their losses but will be not less than 2 weeks’ pay. In any event, the compensation will be just and equitable. The hirer and the agency will need to work together to ensure that the agency worker receives equal treatment after the 12 week qualifying period.
The REC’s impact assessment form will assist our members and their clients implement the Regulations.

12. Next steps
If you, the hiring Client, have concerns, please do not hesitate to contact us.
We have detailed support programs in place that will assist in building stronger working relationships, while maintaining the considerable benefit of a totally flexible workforce.

Call now on – 01446 731 202