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Agency Worker Regulations

Published over 5 years ago by Elkie Holland
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These will give temporary agency workers the right to equal treatment in terms of the same basic working and employment conditions as they would have been entitled to had they been recruited directly by the hirer to do the same job. Equal treatment for temporary works has been in operation in many other European countries since the 1980s and 1990s. In 2008, there were no longer enough countries blocking the Directive in Brussels. The UK Government agreed a compromise deal with business and unions whereby equal treatment would apply after 12 weeks of an assignment. In summary, temporary workers will have the right to equal treatment with regards to pay, holidays and working conditions once they have completed a 12 week qualifying period. They also get some rights from Day 1. The regulations come into force from 1 October 2011.

Who is an Agency Worker

  • An individual supplied by a temporary work agency to work under the supervision and direction of the hiring client.
  • A worker can be an agency worker even if he works through an intermediary eg an umbrella company. (This is Regulation 3). Agency workers cannot 'contract out' or 'opt-out' of these Regulations. This isn't stated in Regulation 3 but will be covered by Section 15 of the Employment Rights Act 1996.
  • Limited company contractors are agency workers if they are not genuinely self employed. HOWEVER, genuinely self employed persons are excluded whether they operate via limited companies or not. Simply calling the worker a 'Limited Company Contractor' will not automatically exclude them from the scope.
A tribunal will look at the facts of a case (eg the level of autonomy of the worker) to assess whether there is genuine self-employment. There are no obvious loopholes such as individuals opting out or being out of the scope by using umbrella companies. It will be up to the agency to work out whether an individual is an agency worker for the purposes of the Regulations or not.

Which Providers are covered

  • A temporary work agency which supplies individuals to work under the supervision and direction of hirers, or pays for or receives or forwards payments for those individuals.
  • Intermediaries including umbrella companies.
  • Master and neutral vendors.
Managed service companies are EXCLUDED.

12 Week Qualifying Period

The agency worker is not entitled to equal treatment until they have completed the 12 week qualifying period. The agency worker MUST work in the same role with the same hirer for 12 calendar weeks (any week during which the agency worker works is counted). If there is a break of 6 weeks or more, the clock starts again (except in certain circumstances where a break of more than 6 weeks will only suspend the clock). Sick leave does not 'break' the clock unless it is for 28 weeks or more. Pregnancy and maternity do not break the clock '" for the protected period from the start of the pregnancy to the end of the 26 weeks following childbirth. (This is Regulation 7). Jury service or time off for public duties will pause the clock. What this all means is that there are specific administrative implications of agencies. Specifically in terms of keeping a tab on the 12 week qualifying period. This is especially true where workers do not complete an assignment in 12 consecutive weeks but are taking on a serious of short intermittent placements and where the breaks in between are no longer than 6 weeks. There is no obligation on the worker to tell the agency that it has worked in the same role at the same hirer but through a different agency. Agencies should keep a record of asking for this information from the worker.

Establishing Equal Treatment

Regulations 5 and 6 say that an agency worker is entitled to the same 'relevant terms and conditions' as a comparable employee at the client. An employee is a comparable employee in relation to the agency work if they are both: 1 engaged in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualifications and skills and 2 the comparable employee works or is based at the same establishment as the agency worker, or works or is based at another establishment, if there is no comparable employee at the site the agency worker works at. What this all means is that once the comparator is established, the priority is to establish the correct rate of pay and other working conditions to which the agency worker is entitled and to be able to explain how this was worked out in the event of a claim. Where there are formal pay bands this will involve comparing the current pay rates with entry level pay rates at the client. Where no formal pay bands are in place, this may involve looking at the pay rates of existing staff doing the same or similar work. However, the additional experience and qualifications of the directly recruited 'comparator' can be taken into account and justify why the pay rate of the temporary workers is not at the same level.

Equal Treatment Covers

Equal treatment covers 'relevant terms and conditions' which are: Pay (more on this later), Duration of working time. Night work. Rest periods. Rest breaks. Annual leave (more on this later) Pay included:
  • basic pay
  • overtime and shift premia.
  • Certain bonuses (bonuses linked with an appraisal could be seen as being linked to the comparable employee's performance and potentially are likely to be included in the definition of pay).
  • Commission payments.
  • Holiday pay.
  • Vouchers (providing they have a fixed monetary value eg luncheon vouchers as long as they are not paid as part of a salary sacrifice arrangement).
Pay excluded:
  • Pension.
  • Occupational sick pay.
  • Maternity, paternity and adoption pay.
  • Redundancy payment.
  • Notice payment.
  • Advances and loans.
  • Share and option schemes.
  • Guarantee payments.
  • Private medical health insurance or life insurance.
  • Financial participation schemes.
  • Bonuses linked to long service / paid to encourage loyalty.
  • Childcare vouchers (which are a salary sacrifice arrangement between an employer and an employee).
Bonuses: Many companies have complex formulae for the calculation of bonus payments not all of which clearly distinguish between company performance and individual performance. In future, hirers will need to establish what element of a bonus refers solely to company performance and what element relates to personal performance. Hirers can appraise agency workers for the purposes of establishing whether they meet the necessary performance criteria for a bonus and this will not by itself make the agency worker an employee of the hirer. Equal treatment covers more than just basic salary but it's a good starting point. In some sectors, feedback from employers has confirmed that at 'point of recruitment' many temporary contract workers are paid the same and often more than direct recruits. However, the analysis has shown that some workers are currently paid less than staff recruited directly to do the same or similar work. It is in these situations that adjustments will need to be made after 12 weeks of an assignment. Temporary staff will be entitled the same holiday entitlement as if they have been directly recruited. Permanent staff will usually benefit from anything from 3 to 8 days holidays on top of statutory minimum. 
Day 1 Rights: Regulation 12 gives the right access collective facilities I e canteen, childcare facilities or transport services and car parking. Regulation 13 gives the right to be informed by the hirer of relevant vacant posts with the hirer. However there is no obligation on the hirer to employ the agency worker. Hirers do not need to 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. Only the hirer is liable for breach of these Regulations 12 and 13. 
Pregnant agency workers have the right to be paid when attending ante-natal appointments. Pregnant workers must also be offered suitable alternative work, if the current role can no longer be fulfilled. If suitable alternative work is not available, the agency worker is entitled to be paid for the remainder of the expected duration of her assignment. 

Enforcement 

The Regulations will be enforced through employment tribunals. As a result, it will be crucial that agencies have internal complaints mechanisms in place as a first outlet for workers who are concerned about pay and equal treatment. Effective internal procedures will play a key role in limiting the number of tribunal claims. The agency worker can bring an employment tribunal claim for breach of the Regulations but must do so within 3 months of the alleged breach. 

The employment tribunal can award compensation of not less than 2 weeks pay. 
Refusal to allow time off for ante natal care will be the amount the worker would have been paid had she not been refused the time off. Also any expenses or other losses incurred but no award for injury to feelings. 

Break of Regulation 9 (ie where assignments have been deliberately arranged to avoid equal treatment) can carry compensation up to £5,000. 

Regulation 14 states that the agency bears primary liability for the application of equal treatment. However, the agency will have a defence if they have taken reasonable steps and it is the client who is responsible for the breach. 

The employment tribunal will apportion liability between the agency, any intermediaries and the client and will apportion any financial sanctions accordingly. 

Moving forwards: 
Clients and agencies will need to work together and establish procedures to review each assignment. For more information, please review the legislation or ask our Contracts Manager, Gill Cotterell on gill@prospectus.co.uk for the information and guidance sheets put together by the REC (Recruitment Employment Confederation).
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