News & publications
No more them & us- 19/10/2011
This article was first published in New Law Journal on 14 October 2011.
Enhanced equality for agency workers provides a headache for employers, warns Sarah Johnson
IN BRIEF
- From day one, agency workers must be treated no less favourably than comparable workers regarding collective facilities & amenities provided by the hirer.
- Additional rights accrue after a 12-week qualifying period.
“Getting a temp in” has been a popular solution to staffing issues, with around 1.3 million agency workers in the UK labourmarket. The attraction of using temps declined this month when the Agency Workers Regulations 2010 (SI 2010/93) (the regulations) came into force on 1 October. They aim to improve the position of many temps working alongside permanent staff who enjoy substantially better terms. The Department for Business Innovation and Skills has provided helpful guidance on the regulations (see www.bis.gov.uk).
Who is covered?
The regulations apply to agency workers who are supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer, and have either an employment contract with the agency or another contract to perform work or services personally.
Agencies could include traditional employment businesses or intermediaries, such as umbrella companies, involved in the supply of the agency worker. Examples of arrangements not covered are:
- genuine self-employment (where the agency or hirer is effectively a client/customer of a profession/business undertaking carried on by the individual);
- managed service contracts (where a service, catering perhaps, is provided to a customer where the provider supervises and employs the workers, deciding how their work is done);
- in-house temporary staff banks where the employer employs staff direct who only work for that employer;
- direct employment with an employer through an employment agency; and
- potentially secondments from one organisation (whose main activity is not supplying temps) to another.
Labels put on relationships are relevant, but the reality of arrangements is the key.
Protection—day one rights
From day one of assignments, agency workers must be treated no less favourably than comparable workers regarding the collective facilities and amenities provided by the hirer, such as canteen and childcare facilities and transport services, unless the treatment is objectively justified (reg 12). Cost alone may not justify exclusion.
This does not require “queue-jumping”; if a crèche has a waiting list, the right is to join the list, not to an immediate place. For service-related benefits, service starts to accrue when the qualifying period starts.
Temps must also be informed by the hirer of any relevant vacant posts it has, to give them the same opportunity as a comparable worker to find permanent employment with the hirer (reg 13). Information can be provided through a general announcement, such as via intranet or communal notice boards. The guidance says this right does not apply during genuine “headcount freezes” when jobs are ring-fenced for redeployment of staff facing redundancy.
Twelve week rights
After a 12-week qualifying period, agency workers are entitled to the same basic working and employment conditions as they would be if they had been recruited to do the same job directly by the hirer when the qualifying period started (reg 5). There is no justification defence.
These rules apply to: pay (including fees, bonus or commission directly attributable to the work done by the individual, and holiday pay); working time duration; night work; rest periods and breaks; and annual leave.
Certain payments are excluded, including occupational sick pay (not statutory sick pay paid by the agency), pension (although temps will be covered by new auto-enrolment rules in 2012), compensation for loss of office, occupational (not statutory) maternity, paternity or adoption pay, redundancy pay and those under fi nancial participation schemes (such as share/option plans). The obligation is ongoing so, if the comparator’s pay increases, the temp’s should too.
To qualify, the agency worker must work in the same role with the same hirer for 12 continuous calendar weeks, during one or more assignments. Calendar weeks clock up even if the temp only works a few hours per week. No qualifying period can start to run before 1 October 2011 as the regulations are not retrospective.
It does not matter if the worker has been supplied to the hirer in that role by different agencies over the 12 weeks. Agencies will, therefore, want to know a temp’s working history. Agency workers could work for more than one hirer and accrue several 12-week qualifying periods at a time.
Breaks affect the ticking of the qualifying period clock. The clock stops and resets to zero, for example, when the temp:
- starts a new assignment with a different hirer;
- takes a substantively different role with the same hirer; or
- has a break between assignments with the same hirer of more than six weeks (unless the clock pauses/continues).
Examples of where the clock pauses include when the temp:
- has a break of six weeks or less and returns to the same role with the hirer;
- cannot work due to sickness/injury and has a break of 28 weeks or less; or
- takes annual leave.
The clock will continue to tick during some breaks until the original intended duration of the assignment ends. These include breaks due to pregnancy, childbirth or maternity or breaks for maternity, adoption or paternity leave.
Comparators
The comparators required under regs 5, 12 and 13 are slightly different. However, broadly, both comparator and temp must be: working for and under the supervision and direction of the hirer; engaged in the same or broadly similar work having regard to similarity of qualification and skills level; and working or based at the same establishment or, (save for reg 13) if no suitable comparator there, at a different establishment. If there are no comparable workers or employees, there is no entitlement to equal treatment.
Anti-avoidance measures
Agencies and hirers trying to avoid the regulations through careful structuring of assignments risk a penalty of up to £5,000 (awarded against either or apportioned between them). Hirers can adopt a policy of terminating assignments before the 12-week qualifying period is up, but a pattern of assignments designed deliberately to deprive temps of entitlements could cause claims.
“Swedish derogation”
Equal treatment rules relating to pay only (including holiday pay) will not apply where a temp has a permanent employment contract with an agency and the agency pays him/her a minimum amount between assignments. Regulation 10 includes requirements regarding the contract and what happens between assignments. The temp must receive at least four weeks’ pay between assignments of at least 50% of assignment pay, subject to the national minimum wage. The attractions of these arrangements are reduced as the derogation only applies to pay, not day one rights or other benefits, and agencies are exposed to additional employment claims by using permanent contracts.
Information
The hirer must provide information to the agency regarding pay and leave if a worker completes 12 weeks in a job.
After the 12 weeks, agency workers who believe the hirer or agency has breached 12-week rights can make a written request to the agency for a written statement regarding their treatment which must be provided within 28 days. If the agency does not comply within 30 days, the worker may make a written request to the hirer for a written statement. The hirer must provide one within 28 days. Agency workers can also make a written request to the hirer regarding day one rights. The hirer has 28 days to provide a written statement.
Wise recipients will treat these requests seriously. Tribunals can draw adverse inferences if information is not provided or is evasive or equivocal.
Maternity
Special protections apply to agency workers who are pregnant, new mothers or breastfeeding. For example, after 12 weeks’ service: pregnant temps will be entitled to paid time off for antenatal care; and temps will be entitled, if their assignment cannot be completed on maternity grounds for health and safety reasons, to be offered available suitable alternative work and, if that is not possible, usually to be paid by the agency for the expected duration of the original assignment. Temps already have protection under the Equality Act 2010.
Liability
The hirer will always be liable for breaches of day one rights and will be liable for failure to provide basic working and employment conditions to the extent it is responsible for the breach.
The agency is liable for breaches of reg 5 to the extent that it is responsible for them. It will have a defence if it can show it took reasonable steps to obtain relevant information from the hirer and treated the worker accordingly. If the defence succeeds, the hirer takes on its liability.
If there is more than one respondent, tribunals can apportion the amount payable by each according to their responsibility. For breaches, or detriment related to breaches, of reg 5 or 10, compensation must normally be at least two weeks’ pay, unless the tribunal believes that would not be just and equitable. There is no maximum award.
Agency workers who are employees will be automatically unfairly dismissed (with no service requirement) if the reason (or principal reason) for dismissal is a protected ground, such as seeking to exert rights under the regulations. Temps also have the right not to be subjected to any detriment on protected grounds.
Generally, complaints must be made to the tribunal within three months of the breach, but tribunals may consider complaints made after this time if they consider it just and equitable.
Tribunals can make declarations regarding temps’ rights, order compensation payments, or make recommendations. If an agency or hirer fails without reasonable justification to comply, (further) compensation can be awarded.
Agency workers cannot contract out of rights under the regulations without using an Acas-conciliated agreement (COT3) or, probably, a compromise agreement (the regulations appear to allow settlement by compromise agreement, but the drafting may not actually allow this).
The future
Hirers can expect the price of using agency workers to increase as agencies pass on equal treatment costs. Agency workers may find assignments are more short-term through fear of 12-week rights accruing. Agencies and hirers will have to work harder to monitor terms and share information. Many managers currently recruit temps without HR’s knowledge. Tighter central control is needed. Hirers should audit temp numbers, service length and terms. They should keep a central record of agency workers, diarising when 12-week rights will accrue.
Employers should also bear in mind the regulations’ impact on other legislation. For example, information provided in various consultation situations, such as collective redundancies or TUPE transfers, will need to include certain details regarding temps.