Why we should leave the Agency Workers Regulations alone

The Government is showing signs that it may accede to calls to revoke and replace the Agency Workers Regulations 2010, but consultant editor Darren Newman thinks that we should learn to live with them in their current form.

The Agency Workers Regulations 2010 (SI 2010/93) are designed to implement the Temporary Agency Work Directive (2008/104/EC), which was adopted in November 2008 and must be implemented in the UK by December 2011.

One of the unusual things about the Regulations is that, although they were laid before Parliament in January 2010, they do not come into force until October 2011. The temporary work industry can usefully spend the time getting ready for the major changes that the Regulations will bring - or lobbying to get the Regulations changed. On 5 July 2010, Ed Davey, minister for employment relations, consumer and postal affairs, said in a written answer that the Government is "aware of the different points of view expressed by the business community about certain aspects of the agency workers Regulations and is currently considering the way forward". This raises the possibility that the legislation may be revoked and replaced with a more "business friendly" version.

I hope not. There is much in the Regulations that is difficult, but that is because balancing the interests of agency workers, temporary work agencies and hirers is a complicated affair, made more difficult by the fact that there are two rival bodies representing temporary work agencies. The traditional voice of the industry is the Recruitment and Employment Confederation. However, in 2009, a legal consultancy called Lawspeed set up the Association of Recruitment Consultancies (ARC), which has generated a lot of press coverage for its rather more radical critique of the last Government's approach to implementing the Directive, identifying several areas where it thinks that the Regulations go beyond what the Directive requires.

But working out what the Directive requires is not straightforward. For example, there is an argument about which terms and conditions agency workers should be entitled to enjoy on an equal basis with directly employed workers. The Directive says that the right to equality should cover working and employment conditions laid down by "legislation, regulations, administrative provisions, collective agreements and/or other binding general provisions in force in the user undertaking" (art.3(1)(f)). One interpretation, pushed very hard by the ARC, is that most agency workers in the UK should not be covered by the Directive, because individual employees' terms and conditions are set by their employer on a more or less ad hoc basis and are not determined by law, collective agreement or binding general provisions. The Regulations take a wider view than this and provide that they apply to terms and conditions "ordinarily included" in the hirer's contracts of employment (reg.5(2)(a)). This would appear to give the Regulations much wider coverage than the ARC's interpretation of the Directive, although they are still ambiguous and open to different interpretation. The point, however, is that the ambiguity flows from the Directive itself, and there will be those who will argue either that the Government has failed to implement the Directive, or that it has "gold-plated" it.

I have to admire whoever labelled doing more than is strictly necessary to implement EU law "gold-plating". It is a very effective phrase that makes the practice seem pointless and extravagant. But is it? Suppose the UK adopted the same view of what the Directive means as the ARC. The inevitable result would be legal challenges and references to the European Court of Justice (ECJ). The process of figuring out just what rights an agency worker has would take years and, while the ECJ pondered the issue, thousands of cases would stack up in the employment tribunal system. Building a modest safety margin into the Regulations may result in a higher level of regulation than the Directive requires, but legislating on the basis of the narrowest possible view of what the Directive means risks years of legal chaos and uncertainty.

Another reason not to interfere with the current agency workers Regulations is that they are based on an agreement between the TUC and the CBI (as provided for in art.5(4)). It is in this agreement that we find the 12-week qualifying period before the right to equality kicks in (the Directive assumes equality from day one). The agreement was reached on the basis that the Government would ensure that the Regulations included appropriate "anti-avoidance measures", so a number of provisions in the Regulations are designed to stop agencies and hirers avoiding the right to equality through the way in which they structure either assignments or relationships. Thus regs.3(3) and 3(5) make it clear that the Regulations apply even if the agency worker is engaged through an intermediary or umbrella company. These provisions have been attacked by the ARC and others, but they are an important part of the balance that has been struck. If the Regulations were revised to allow agencies and hirers to avoid their provisions by redefining their relationship or structuring their arrangements differently, there would be a real risk that the TUC would renounce the agreement reached with the CBI. If it did, the legal basis of the Regulations would be thrown into doubt and the 12-week qualifying period might well have to be scrapped.

I do not want to defend everything that is in the agency workers Regulations. In fact, I think that there are all sorts of problems with them. In some places they may go beyond what is required by the Directive, but in others (for example on the definition of pay, and the way in which comparisons are made) I think they fail to meet its requirements. However, giving way to the current pressure to revisit the drafting of the Regulations will almost certainly make things worse rather than better. There were always going to be problems with the interpretation of the Regulations, but the main reason for this is the way in which the Directive is phrased, and it is too late to change that now. Businesses have plenty of time to prepare for the new rules, but they need certainty and stability to do so. Whatever their problems, the current Regulations offer the best prospect for that.