This post was also written by Carl de Cicco.

The Agency Workers Regulations 2010 (“AWR”) are due to come into force on 1 October 2011. The AWR put in place the requirements of the controversial EU Temporary Agency Workers’ Directive, which has to be implemented by 5^th December this year. Last week, rumours circulated in the media that there may be a last minute “watering down” of the AWR by the present government. This seems unlikely, particularly because the AWR has already been scrutinised carefully by the new coalition government after they came into power. The Conservatives were unhappy about the proposed 12 week qualifying period which was not set out in the EU Directive. However, having conducted a review, nothing was changed because the AWR was based on an agreement between the CBI and the TUC made prior to the election and could not be changed. We will, of course, update you on any last minute changes to the AWR, but in the meantime we have prepared below a short summary of the basic elements of the AWR.

The AWR will apply to the relationships between agency workers, agencies and hirers. They offer protection to agency workers, providing them with equal access to facilities and amenities at work, the right to receive information about new positions within the hirer. After working for a qualifying period of twelve weeks, agency workers would also have the right to basic working and employment conditions that are equal to those enjoyed by workers recruited directly by the hirer. In May 2011 the government published guidance (the “Guidance”) to help hirers and agencies understand the implications of the AWR and their responsibilities under them.

Who is covered?

Workers who are supplied by agencies to fulfil temporary roles will be covered by the AWR if they: (i) are supplied by the agency to work temporarily for and under the supervision and direction of the hirer AND (ii) have a contract with the agency which is either a contract of employment or any other contract to perform work and services personally.

The AWR will not protect those working under the supervision and direction of the agency (not the hirer), those employed under managed service contracts or the self-employed. Nor will it protect individuals who find direct employment with an employer through an employment agency.

The AWR also does not cover temporary workers who are engaged directly by the end user.

Day one rights

The AWR give certain rights to agency workers from the first day of their assignment (“day one rights”). A hirer will need to make sure that:

• it treats its agency workers no less favourably than ‘comparable workers’ with regards to accessing collective facilities and amenities. These facilities are stated in the AWR to include canteen facilities, child-care facilities and transport services, but can include others such as a staff common room, prayer room or car parking. Hirers who do not treat agency workers equally in this respect will need to show that any less favourable treatment of agency workers is justified on objective grounds; and
• it provides its agency workers with information about any relevant vacancies that may exist during their assignment. Agency workers should be notified of new positions at the same time as the hirer’s other staff. The hirer does not need to deliver the information directly to the agency workers. A general notice in a suitable place would be sufficient.

Rights after twelve weeks

After carrying out the same role, whether on one or more assignments, with the same hirer for twelve weeks, agency workers will gain the right to the same “basic working and employment conditions” as they would have if recruited directly by the hirer (“twelve week rights”).

This twelve week qualifying period is calculated by reference to calendar weeks. The AWR provides that any week during the whole or part of which an agency worker is engaged on an assignment will count as a calendar week. Strictly, this would mean that an agency worker needs only work for a part of one day in each week (however short the working period) for that week to count as a calendar week for the purposes of calculating the qualifying period. The strict interpretation is at odds with the Guidance, which suggests that if an agency worker begins work on a Thursday, all the work he carries out up until the end of Wednesday will count as a week. Accordingly, this remains a matter to be resolved by the Courts and Employment Tribunals.

The qualifying period will normally be broken if the agency worker starts an assignment with a new hirer, or, while still assigned to the same hirer, starts a new, substantively different assignment, or takes a break of at least six calendar weeks after one assignment before commencing the next. If this happens, the qualifying period starts again.

The Guidance explains that for a new assignment to be ‘substantively different’ to a current assignment, there must be a real and genuine difference in the work and duties which make up the whole or main part of each role. It goes on to suggest that differences in the required skills and competencies, rate of pay, line manager and equipment should be considered in this respect. If the agency does not inform the agency worker of any changes to the role in writing, it will be presumed that the agency worker maintains the same role as before. It is therefore crucial for the hirer to ensure that the agency communicates this information in writing in such circumstances.

Not all periods of non-work will break continuity for the purposes of the qualifying period. Sickness absence or jury service of up to 28 weeks, annual leave and a strike at the hirer’s establishment will not affect the accruing weeks. Where an agency worker is unable to continue working for reasons related to pregnancy, childbirth or maternity for a period of up to 26 weeks after childbirth or because of maternity, paternity or adoption leave, these periods of leave will count towards the 12 week qualifying period as if they were worked.

Basic working and employment conditions

Upon completing the 12 week qualifying period, agency workers become entitled to the same basic working and employment conditions as a person who had been recruited directly by the hirer to do the same or a broadly similar job. Such basic working and employment conditions are to be determined by reference to the conditions that are ‘basic’ and ‘ordinarily included’ in the hirer’s contracts.

Basic terms are defined as pay, working time, night work, rest periods, rest breaks and annual leave. For the purposes of pay, the AWR provide that any fees, certain bonuses, commissions and holiday pay should be paid to agency workers. However, certain arrangements, including those in respect of redundancy pay, occupational sick pay, occupational maternity pay, bonuses not attributable to the amount and quality of work done by the agency worker and participation in long-term incentive, share-option or profit-sharing schemes, do not fall under the right to equal treatment.

Hirers and agencies will be able to defend allegations of unequal treatment by identifying a comparator who:

• does the same or broadly similar work to the agency worker at the same establishment; and
• works under the same relevant terms and conditions as the agency worker in circumstances where those terms and conditions are ordinarily included in the hirer’s contracts for such employees to the agency worker.

Requests for information

An agency worker who suspects that he does not enjoy basic working and employment conditions equal to the hirer’s employees is entitled to make a written request to the agency for information of:

• the hirer’s basic working and employment conditions;
• the factors considered by the agency when determining the agency worker’s terms and conditions once the qualifying period was completed, with regard to the hirer’s own terms and conditions; and
• the basis on which any employee of the hirer was considered to be a comparator for that agency worker in respect of terms and conditions.

Within 28 days of receiving any such request, the agency must provide the agency worker with a written statement setting out the requested information. If the agency does not do so, the agency worker may make a written request to the hirer, which must provide the information within 28 days of receiving this subsequent request. Agency workers can also request information from hirers on vacancies and collective facilities in the same way.

Failure to comply with any request for information is not actionable in itself. However, Employment Tribunals are entitled to draw adverse inferences where there is no response or where answers that have been provided are evasive or equivocal.

Pay between assignments

The AWR allow for an exemption to the right of equal treatment with regard to pay (including holiday pay) where the agency provides the agency worker with a permanent contract of employment under which the worker is paid a minimum amount when not working between assignments. This is known as the “Swedish derogation” and is an option which many hirers have been increasingly requesting agencies to adopt in order to escape obligations to pay agency workers the same rate as their permanent staff. There are a number of specific conditions which must be met for the Swedish derogation to apply. In essence, the contract of employment must be entered into before the first assignment, the agency is under an obligation to look for suitable work and make payment to the agency worker when the worker is not working but available to work, and the agency may not terminate the contract unless it has complied with these obligations for an aggregate of at least four weeks during the contract. The rate of pay is broadly at least 50% of the rate of pay paid during the previous assignment, provided that is at least equivalent to the national minimum wage.

The Swedish derogation option may sound like an attractive get out for hirers, but it does have some limitations. Even though the agency worker will not be entitled to equal treatment with regard to pay, they will still be entitled to equal treatment in relation to duration of working time, night work and rest periods, rest breaks and (unpaid) annual leave after the 12 week qualifying period, and of course to “Day 1 rights” such as access to facilities and job vacancies. Furthermore, agency workers who have sufficient continuity of employment with the agency will have valuable employment rights such as unfair dismissal and redundancy. Finally, the Guidance warns of the risk of legal action for attempts by agencies and hirers to use this option as a method of avoiding the effects of the AWR

Pregnancy rights

The AWR seeks to protect agency workers who are pregnant or new mothers, by giving them the following rights:

• after completing the twelve week qualifying period, a pregnant agency worker on assignment will be allowed reasonable paid time off from the hirer to attend antenatal medical appointments and antenatal classes;
• hirers will have an obligation to make adjustments to the work responsibilities of pregnant agency workers who are unable to carry out the duties of the original assignment for health and safety reasons. If reasonable adjustments are not possible or would not eliminate the risk, the agency will need to arrange alternative work on terms which are not substantially less favourable than the original assignment. If the agency is unable to offer suitable alternative work, the pregnant agency worker will be entitled to payment from the agency for the remainder of the original assignment (unless she has unreasonably refused suitable work).

Anti-avoidance provisions

The AWR contains a number of provisions aimed at preventing agencies and hirers from structuring assignments so that the agency worker does not complete the 12 week qualifying period. Whether avoidance structures are in use will be a factual question. The Guidance gives the following example of a possible structure of assignment designed to prevent workers completing the 12 week qualifying period:

An agency worker completes two assignments with the hirer. The first lasts 11 weeks, followed by a 6 week break, and the second also lasts 11 weeks, again followed by a 6 week break. The agency worker is then taken on for a third assignment of 11 weeks. 

In certain circumstances, attempts by any agency and/or hirer to structure assignments in this way will not prevent an agency worker from completing the 12 week qualifying period. In addition, Employment Tribunals may award agency workers who successfully bring claims that avoidance measures have been operated, additional compensation of up to £5,000.

Remedies

Agency workers will be able to bring a claim in the Employment Tribunal against the agency and/or the hirer that they are not receiving equal treatment under the AWR.  All agency workers are also protected from detrimental treatment by the agency or hirer because they asserted their rights under the AWR. If an agency worker is an employee and is dismissed for asserting their rights, that dismissal will be unfair.

A Tribunal can make a declaration, order payment of compensation and make recommendations for action to be taken. Compensation for detriment claims may include an award for injury to feelings; however, injury to feelings awards are expressly excluded for a failure to provide day one or twelve week rights.

Liabilities

Agencies and hirers will not be joint and severally liable for breaches of the 12 week rights. The Employment Tribunal can apportion liability based on the extent to which the agency or hirer is found to be in breach of the AWR. Liability for breach of day one rights will lie with the hirer, as the hirer alone can provide the agency worker with access to amenities or information.

Agencies pay agency workers and provide them with holiday but may have no knowledge of, or control over, the hirer’s ordinary terms and conditions, or who may be a suitable comparator. To avoid unfairness, the AWR offers agencies a defence to claims for non-equality of basic employment and working conditions where they can show that they took “reasonable steps” to obtain information from the hirer about its basic working and employment conditions, and that they acted “reasonably” in using this information to determine the agency worker’s terms and conditions. Where an agency is successfully able to raise this defence, the hirer will be liable for any failure to provide adequate, relevant information.

Considerations for your business

Your question	Reed Smith’s view
Is it ever permissible not to allow the agency worker access to the same facilities and amenities as other workers in the hirer?	Agency workers will be entitled to access the same facilities and amenities as other workers from day one. Any different treatment requires objective justification by the hirer. While cost might contribute towards a hirer’s reason for treating an agency worker differently, it is by itself unlikely to justify unequal treatment. Where there are practical difficulties – for example, a child care facility is at full capacity, the agency worker should be added to the same waiting list as employees of the hirer.
Do agency workers need to be integrated into the performance appraisal system?	This is not required under the AWR. However, as agency workers would be entitled to the same individual performance related bonus as they would have been entitled to had they been directly hired by the hirer to do the same job, an appraisal meeting may be appropriate to consider performance and the amount of any bonus to award.
Is it possible to keep moving agency workers around group companies to prevent them completing the 12 week qualifying period?	If an agency worker is regularly rotated between group companies but performs similar roles each time, an Employment Tribunal may find that the motivation behind this rotation was to deprive the agency worker of equal treatment. Where an Employment Tribunal makes such a finding, the agency worker would be deemed to have completed the twelve week qualifying period and would therefore be entitled to equality of basic working and employment conditions. In addition, the hirer and/or the agency may be required to pay the agency worker additional compensation of up to £5,000.