How does the exemption under the Agency Workers Regulations 2010 operate in relation to workers who have a permanent contract with an agency that provides for pay between assignments?

Note: The Swedish derogation is abolished from 6 April 2020. It will not be possible to avoid agency workers gaining the right to equal pay by putting them on a contract with guaranteed pay between assignments. Any agency workers on such contracts will have the right to equal pay under the Agency Workers Regulations 2010 following completion of the 12-week qualifying period. This FAQ covers the position prior to 6 April 2020.

Where an agency worker has a permanent contract with an agency that complies with certain detailed conditions, including the requirement for the agency to pay the worker between assignments, reg.10 of the Agency Workers Regulations 2010 (SI 2010/93) provides that the worker does not gain the right, after completion of the normal 12-week qualifying period, to the same pay that they would have received if directly recruited by the hirer. This is often referred to as the Swedish derogation.

While these workers do not accrue this right in relation to pay, they do benefit from all the other entitlements of agency workers under the Regulations. They have rights to access facilities and permanent employment opportunities from day one of the assignment and, once they have completed the 12-week qualifying period, they have a right to equality in the other basic terms and conditions of employment listed in the Regulations, ie with regard to the duration of working time, night work, rest periods, rest breaks and annual leave.

The Regulations set out complex conditions that must apply to the contract and the period between assignments if the permanent contract is to take away the agency worker's right to equal pay.

The contract must be in writing and must be entered into before the first assignment. It must set out:

  • the nature of the work that the agency worker may expect to be offered;
  • the minimum remuneration, or method of calculating remuneration;
  • the locations where the agency worker may be expected to work;
  • the expected hours of work during an assignment;
  • the maximum weekly hours that the agency worker may be required to work; and
  • the minimum weekly hours that may be offered to the agency worker during an assignment (which must not be less than one hour).

The contract must contain a statement that the agency worker does not have any entitlement to the rights conferred by reg.5 (the right to the same employment conditions as if they had been recruited directly by the hirer) insofar as they relate to pay.

During the periods between assignments, the temporary work agency must pay the agency worker no less than the national minimum wage and at least 50% of the rate of pay for the previous assignment. This is calculated using a reference period of the 12 weeks immediately preceding the end of the previous assignment, or the period of the assignment if that was less than 12 weeks. The temporary work agency must take reasonable steps to obtain suitable employment for the agency worker and pay them for at least four calendar weeks between assignments before it can terminate the contract.