Agency workers Regulations: overview
Kerry Viner and Deepa Parekh of Osborne Clarke begin a series of articles on the agency workers Regulations with an overview that looks at the type of organisations that will be affected by the agency workers Regulations, and the new rights to which agency workers will be entitled.
The Agency Workers Regulations 2010 (SI 2010/93) come into force on 1 October 2011. The Regulations implement the Temporary Agency Work Directive (2008/104/EC), which was formally adopted by the European Council in November 2008 and came into effect on 5 December 2008, following on from an agreement that was reached in May 2008 between the UK Government, the CBI and the TUC. Following the election of the coalition Government in May 2010, employer organisations lobbied the Government to consider amending the Regulations. In October 2010, the Government confirmed that the legislation would not be amended because the proposals for simplifying the Regulations were not acceptable to both the CBI and the TUC. As the TUC and CBI were designated as social partners for Directive purposes their agreement to any changes to the Regulations was necessary before amending legislation could pass through Parliament.
The Regulations will give agency workers certain rights from their first day on an assignment at a hirer organisation as well as the same basic working and employment conditions as permanent employees and workers at the agency worker's hiring organisation, after a 12-week qualifying period.
On 1 April 2011, BIS published (for comment by 15 April 2011) Draft agency workers Regulations guidance (PDF format, 299K) (on its website).
Which organisations will the Regulations affect?
The definition of an "agency worker" is far-ranging. "PAYE temps", workers who supply their services through an "umbrella company" (ie an intermediary that employs the agency worker), and other types of worker who supply their services on a temporary basis via a "temporary work agency" (defined in reg.4 of the Regulations) to work under the supervision and direction of a hirer organisation will fall within the scope of the Regulations.
Falling outside the scope of the Regulations will be those who are genuinely self-employed or working under the supervision and direction of the supplier rather than the hirer. Workers who are engaged via their own personal service company will be out of scope provided that they are genuinely self-employed. Managed service arrangements, although not expressly excluded, will fall outside the scope of the Regulations, unless, in reality, the hirer, rather than the managed service provider supervises and directs the worker.
Hirer organisations will be affected according to the type of agency workers staffing companies supply to them. While some hirer organisations may have a straightforward supply of the same type of worker, all caught under the Regulations, others may be supplied with a variety of workers, not all of whom will be within the scope of the Regulations. Therefore, it is important that hirer organisations act now to consult their staffing companies about the types of worker that they supply, so that they can understand and be prepared for the impact that the Regulations may have on their organisation.
After an agency worker has completed a 12-week qualification period with a hirer he or she will be entitled to equal treatment as if he or she was engaged directly by the hirer. Under reg.6 of the Regulations, agency workers are entitled to equal treatment in relation to:
- the duration of working time;
- night work;
- rest periods;
- rest breaks; and
- annual leave.
A complex set of anti-avoidance provisions is contained in the Regulations with the intention of making it difficult for hirers and suppliers to circumvent the qualifying period. Employers that breach these provisions could be liable for a penalty of up to £5,000.
Arguably, the most important element of equal treatment is equal pay. Pay is taken to mean not only the basic contractual pay that a worker receives, but also any other contractual entitlements directly linked to work undertaken by the agency worker while on assignment. This can include:
- shift allowances;
- unsociable hours premiums/bonuses;
- fee commission payments; and
- performance-related bonuses.
By meeting with staffing companies well in advance of the coming into force of the Regulations, hirers will be able to identify if they are at risk of breaching them and address pay disparities if potential liability cannot be reduced any other way. For example, by introducing pay grade scales for permanent workers and employees as well as structured bonus schemes based on service length (subject to the provisions on age discrimination), hirers can help to reduce the risk of claims by agency workers.
While the Regulations extend the rights of agency workers, they do not give agency workers employee status at the hirer company. Unless an agency worker can establish that he or she is the hirer's employee, he or she will still have no right to claim unfair dismissal, statutory notice or statutory redundancy pay from the end user.
Further, in line with the CBI-TUC agreement, the Regulations exclude from the equal treatment requirement some benefits that a worker's permanent comparator at the hirer organisation receives, including:
- occupational sick pay;
- company pension schemes;
- share options schemes;
- health/life insurance;
- financial participation schemes; and
- family-leave-related pay above the statutory minimum.
Pregnancy: Pregnant agency workers will also be entitled to take paid time off work to attend ante-natal appointments after the 12-week qualifying period. Hirers will continue to be subject to a requirement to carry out risk assessments for pregnant agency workers, including agency workers who become pregnant while on an assignment. Where a risk is identified, the hirer will need to make reasonable adjustments to remove the risk. Where the risk cannot be removed, the staffing company must try to find the worker a suitable alternative assignment. If an appropriate alternative role cannot be found for the worker she will be entitled to paid time off for the remainder of the assignment (or where the length of the assignment is unknown, for the predicted length of the assignment).
In determining to what "equal treatment" he or she is entitled, an agency worker can compare rights with those of an employee or worker employed directly by the hirer. It is not necessary that the "comparable employee" is doing exactly the same job as the agency worker; an employee or worker undertaking a broadly similar role as the agency worker will be deemed to be a sufficient comparator.
As well as the equal rights to which agency workers are entitled following the 12-week qualifying period, they will also be entitled to certain rights from day one of an assignment with a hirer.
Collective facilities: Under the Regulations, agency workers will be entitled to the same access to collective facilities as equivalent permanent staff. By no means an exhaustive list, examples of collective facilities include canteens, childcare facilities, car-parking and transport services. Access to facilities may be refused if there are objective grounds for doing so. This means that, for example, if there is a waiting list for a car park space, an agency worker will not automatically be entitled to a place but can be subject to the same criteria to access the facility as someone directly employed by the hirer.
Vacant posts: Agency workers should be afforded the same opportunity as permanent staff to apply for relevant vacant posts with the hirer. The exception to this right is where the hirer organisation is undergoing an internal reorganisation of its staff and there is a headcount freeze. Hirers would not then be obliged to notify agency workers of internal vacancies that arise as a result of restructuring.
Detriment: Agency workers will have the right not to be subjected to a detriment by the hirer (or anyone else in the supply chain) for asserting (or being perceived as having asserted or being likely to assert) their rights under the Regulations.
Unfair dismissal: The Regulations also provide limited unfair dismissal rights. These apply only if the agency worker is an employee and is able to show that the dismissal was for a reason related to the Regulations, in which case he or she will be able to bring a claim against his or her employer. Under the Regulations, the concept of an "agency worker" is inconsistent with the idea of employment by a hirer. This means that an unfair dismissal claim under the Regulations should be successful only if the agency worker is employed by a temporary work agency and brings an unfair dismissal claim against it. Unfair dismissal claims under the Regulations are separate from, and do not affect, the current legal position in relation to agency workers and unfair dismissal, under which agency workers can bring unfair dismissal claims against hirers if they can prove that they are employed by the hirer and that their temporary worker status is a sham.
Liability and enforcement
Breach of the Regulations will generally be actionable in an employment tribunal. Agency workers will need to bring claims within three months of an alleged breach.
Whether or not the agency, hirer or another party in the supply chain will be liable for a breach of the Regulations depends on the right in question and/or the degree of responsibility for the breach.
As it is the hirer's duty to ensure that the "day-one rights", such as access to collective facilities and internal vacancy information, are in place, it will be the hirer that is solely liable for any breaches that occur in relation to these rights.
While temporary work agencies will primarily be liable for post-qualification-period breaches, reg.14 of the Regulations provides them with a defence if they can demonstrate that they have taken all reasonable steps to obtain, from the hirer, the information required to comply with their obligations and, if they have obtained relevant information, that they have acted reasonably in setting the agency worker's post-qualification-period terms. Where an agency has a valid defence, the tribunal can join the hirer to the claim and the hirer organisation will be liable for the breaches to the extent that it is responsible for them.
If a claim succeeds, the employment tribunal can award compensation, taking into account the losses suffered by the worker and the tribunal's assessment of what is just and equitable. This is subject to a minimum award of two weeks' pay. The Regulations have been drafted so that class actions for denial of rights under them are possible. Therefore, agencies and hirers could be liable for substantial awards.
Next week's topic of the week article will look at the rules on attaining 12 weeks' service for agency workers to qualify for equal treatment, and will be published on 11 April.
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