The Agency Workers Regulations 2010 which come into force on 1st October 2011 have received a large amount of press coverage over recent months. Most of the focus has been on the improved rights of temporary workers with “Day One Rights” allowing equal access to facilities and vacancies and “12 Week Rights” ensuring equal employment “conditions” to comparative full time workers as if they had been employed by the hirer directly.

Recruitment sector businesses may be tempted to try and circumvent AWR via various schemes. There are, however, very real risks for recruitment sector business to be aware of if they attempt to avoid the full impact AWR. The purpose of this article is to identify the risks and provide practical guidance in respect of the anti-avoidance measures contained within AWR.

Regulation 7 provides that Agency workers should receive equal treatment in respect of “relevant terms and conditions” with comparative permanent employees after a twelve week qualifying period with the same hirer. The Regulations contain detailed provisions on what events will either pause or stop the qualifying period. For example a break of 6 weeks between assignments will normally prevent a previous period from counting towards the qualifying period. Taking on a new role with the same hirer that is substantively different should also reset the qualifying period clock to zero.

AWR contains anti avoidance provisions designed to prevent assignments being structured to intentionally circumvent Regulation 7. If a structure of assignments develops which is designed to deprive an agency worker of their rights, the anti avoidance provisions give an agency worker the right to be treated as if they have met the 12 week qualifying period. The Agency and the hirer could also be fined £5,000 or the Employment Tribunal may order that the fine be split between the parties in a way they consider reasonable.

Guidance from the Department for Business Innovation and Skills states that the agency worker must have completed at least two assignments or two roles (in substantively different roles which break the qualifying period) with the same hirer or connected hirers within the same group for the anti avoidance provisions to become relevant. Factors which may indicate a pattern of assignments structured to intentionally deprive the worker of equal treatment rights could be related to the number of assignments, the length of assignments, the number of role changes, whether the role changes were substantively different and the length of any break periods.

As the anti avoidance provisions focus on a pattern of assignments designed to deprive a worker of their rights there is nothing to prevent a hirer genuinely deciding not to engage agency workers beyond the 12 week qualifying period and releasing them. Hirers will be free to release agency workers after 11 weeks or to adopt a usual practice of 12 week assignments. This alone should not be caught by the anti avoidance provisions unless there is a deliberate attempt to deprive an agency worker of their rights.

Case Studies

Example of an arrangement likely to be caught by the anti avoidance provisions

An agency worker completes 2 or more assignments with the same hirer, where they have already worked for 12 weeks with a 6 week break and then a further 12 weeks with another 6 week break. If the Agency worker is then taken on for a third assignment, this could be considered an attempt to avoid a completion of the qualifying period. The Employment Tribunal would, however, need to decide whether the attempt was deliberate. If it is found that there has been a deliberate breach, the agency worker will be considered to have finished the qualifying period and the hirer, the agency or both could be liable for a fine of up to £5,000 as well as potential liability for breach of providing 12 week rights.

Example of an arrangement unlikely to be caught by the anti avoidance provisions

A Hirer only ever engages Agency Workers for 11 week assignments. The Hirer keeps a record to ensure that the same Agency Worker is not engaged for more than two 11 week assignments with a break period of more than 6 weeks between. Whilst day one rights will apply to all Agency Workers engaged, No agency worker will ever be engaged beyond the qualifying period and therefore no 12 week rights will apply.

The Swedish Derogation

The Swedish Derogation is one possible solution for recruitment sector businesses and Umbrella Companies. Under this model if the agency worker has a permanent contract of employment with the agency, is paid between assignments (50% of basic pay while on contract) and the contract of employment meets certain other conditions the 12 week rights relating to pay will not apply. The Derogation is not a miracle solution though, as all agency workers including those covered by the pay between assignments exemption are entitled to other protections under the Regulations. This includes equal treatment in relation to the duration of working time, night work, rest periods, rest breaks and annual leave after the qualifying period of 12 weeks and, of course. They will also be entitled to “Day One rights”. In view of this, recruitment sector businesses will need to weigh up carefully the commercial viability of using this approach for umbrella company contractors.

As a specialists provider of legal services to recruitment sector business Debenhams Ottaway can assist with readying your business for AWR. Our services include a full audit and redrafting of key documentation including: employment contracts, temporary worker contracts for service, and service and terms and conditions of business.

For any queries relating to the above article and the Agency Worker Regulations please contactl Michael Kerrigan on 01727 738244 (DDI) or email mk@dolegal.co.uk 

Debenhams Ottaway can also carry out audits of all your employment documentation and procedures to ensure compliance with current laws and best practice. We offer businesses a free review of contracts and policies as part of the Employer Support Service which fully protects your business against the financial exposure of an employment dispute for an agreed monthly fee. Click here for further details.

For further advice and information, please contact Louise Attrup on 01727 735 663 or via email on la@dolegal.co.uk.