The Agency Workers Regulations - Your questions answered

The Agency Workers Regulations 2010 ("the Regulations") have now been published and will come in to force on 1 October 2011. This article sets out a series of questions and answers which explain the impact of the Regulations in frequently encountered situations.

Q1. Across our business we use a wide variety of workers including contractors, agency temps, consultants and freelancers. Which of these are protected by the Regulations?
From 1 October 2011, protection will exist where an individual is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer. Agency workers supplied via intermediaries (such as master and neutral vendors and so called "umbrella" companies) are also protected. However, the genuinely self-employed do not fall under the Regulations and are not protected, providing they are genuinely operating in business on their own account.

Applying the provisions of the Regulations to the above question, it will depend on whether the contractors, freelancers and consultants are genuinely self-employed. If they are not, they may be protected even where their contract is with your business and not with a temporary work agency.

The table below indicates where you can expect workers to be protected:

Q2. Will agency workers really qualify for "equal treatment" with permanent employees once the Regulations come in to force from 1 October 2011?
No! Reference to "equal treatment" under the European Directive and, more recently, the Regulations is a convenient, though somewhat misleading, shorthand for what the new legal rights mean. A 12 week qualifying period will apply before most of the Regulations' protections/benefits accrue but, thereafter, "equality" is limited to basic terms and conditions of work only.

Agency workers must be afforded the same basic working and employment conditions as they would have received had they been directly recruited by the hirer as an employee or a worker.

The non-exhaustive table below identifies some of the more straightforward items falling within the definition of "pay" or required benefits.

*Separate provisions under the Pension Act 2008 will afford pension provision to agency workers from 2012

Q3. Can agency workers contract out of the Regulations?
No, this is expressly prohibited. Furthermore the Regulations provide for a fine of up to £5000 for arrangements designed to prevent the 12 week qualifying period being met, such as rotating agency workers through substantively different assignments to break continuity.

Q4. As a business we operate a discretionary bonus scheme for our employees but do not open this up to the agency workers. Must we now do so?
The principle behind the Regulations is "pay for work done". So, if a bonus is to reward loyalty or long service, it will not be in scope. However, certain bonuses are included where they are directly attributable to the amount or quality of the work done.

Notably, there is an exception for financial participation schemes (ie shares/options/profit sharing schemes). In addition, a hirer can attach the same conditions to payment it does with other employees (such as still being engaged on the date the bonus falls due).

Q5. Can an agency worker use an employee in another office or at another location as a 'comparator'?
Yes. The starting point is treating the agency worker "as if" (s)he had been recruited as an employee or worker to the same job. In other words, what pay and holidays would (s)he command were (s)he offered employment or engaged as a worker from the outset?

The table below gives a summary of who may be a comparator for these "deemed compliance" purposes.

* The "as if" comparison can be made with both employees and workers, but, confusingly, the comparator for deemed compliance must be an employee (see Q5)
**Qualification and skills can be taken into account, where relevant

Q6. Does an agency worker have to accrue the 12 weeks qualifying service with the same agency?
No. The way in which the Regulations are drafted means that qualification for comparable terms and conditions is dependent on service as an agency worker at a particular hirer (as opposed to agency). Service must involve the same role (subject to any anti-avoidance measures by the employer) but will accrue in calendar weeks, not by hours worked.

In theory, therefore, an agency worker, working with three different agencies who place him with the same hirer for just one day (perhaps for only an hour or so) each in a 12 week period, will qualify for "equal treatment". In practical terms, agencies and hirers will now need to keep much better records of agency worker placements and also share information with each other, which is likely to prove administratively difficult and costly.

Q7. What happens if the agency worker falls ill or fails to complete a full 12 weeks for that or some other reason?
The right to equal treatment in basic terms and conditions will only be triggered when the agency worker has accrued 12 continuous calendar weeks' service in the same role. Continuity will be broken in the event of any break of six weeks or more during or between assignments in the same job or upon commencement of a new or substantively different role.

However, there are a number of circumstances where absence will pause the qualifying "clock". The table below indicates in which circumstances the clock will pause, and in which it will continue to run:

Q8. Who is liable if an agency worker believes he or she is receiving less favourable treatment to permanent colleagues doing the same job?
Initial responsibility for ensuring equal treatment for agency workers after 12 weeks lies with the agency. Where the agency have obtained (or taken reasonable steps to obtain) relevant information from the hirer about the basic working and employment conditions applied, have done so and have acted reasonably in setting appropriate conditions for the agency worker, once the qualifying period has ended, liability for breach will be likely to lie with the hirer. The tribunal is otherwise able to apportion blame if it considers more than one party is at fault.

There is no maximum limit to any compensation awarded to successful claimants but a minimum award of two weeks' pay should normally be awarded by the tribunal in relation to a failure to provide equal terms and conditions.

Q9. Our business posts any job vacancies on specific pages of an intranet according to job type but these pages are not generally accessible to agency workers. Do we need to take further steps to bring any such vacancies to the attention of our agency workers?
Agency workers are entitled, from day one of an assignment, to be informed by the hirer of any "relevant" vacant posts in the organisation, to give them the same opportunity as a comparable employee/worker to find permanent employment. The inclusion of the word "relevant" means that a hirer would not be obliged to inform, eg, an administrator, of an executive level vacancy.

Agency workers must therefore have the same access to vacancies posted on the hirer's intranet or notice boards as their employees/workers and should be included in any additional steps taken to advertise a position internally.

An important caveat is that there would be no vacancies (and therefore no breach) where a hirer is carrying out an internal reorganisation and there is a headcount freeze. The Government has also indicated that this obligation should not require a change to selection processes. Instead, this obligation is aimed at simply providing information on vacancies, rather than changing processes for dealing with any resulting applications from agency workers.

Q10. As an organisation we operate a childcare facility for staff. There is currently a waiting list of 6 months. Must we make any special provision for agency workers?
The Regulations provide that, from day one of an assignment, an agency worker must be treated no less favourably than a comparator in relation to access to collective facilities such as child care facilities unless this can be justified on objective grounds.

Provided that agency workers are given the same access to your waiting list as your permanent staff, you will comply with this requirement, despite their reduced opportunity for reaching the top of the list. Note that, similar rights exist in respect of other collective employment arrangements, such as transport and canteen/food facilities. Cost alone is unlikely to present a legitimate ground upon which to justify refusal.

Simon is a partner and has considerable experience of employment litigation and has a reputation for his discrimination law expertise, having been responsible for a number of high profile discrimination cases over the last five years, and continues to build this area of his practice. In addition, Simon's contentious workload includes unfair dismissal, whistleblowing and executive terminations.
 
In addition to his contentious practice, Simon also gives advice in relation non-contentious matters, such as the implications of the TUPE regulations for large acquisitions, issues relating to proposals to change terms and conditions of employment and large scale redundancy exercises.