Agency Workers Regulations 2011
The Agency Workers Regulations which govern the rights of agency workers, give temporary agency staff equal treatment with regards to basic working and employment conditions after 12 weeks of service in the same job.
These new laws were published by the European Parliament in December 2008. The UK Government was given three years from that date to introduce the new legislation into UK law and have announced 1 October 2011 as the UK implementation date.
Equal treatment under the regulations relates to basic working and employment conditions such as; working hours, overtime, breaks, rest periods, holidays and access to training and facilities, such as childcare. The directive does not include pension provision and occupational sick pay, nor do the regulations change the employment status of temporary agency workers to that of permanent employees after 12 weeks.
For more information on how the Regulations may affect you as a temporary worker or as an organisation hiring temporary workers, please see the FAQs below:
NB: For the purposes of this paper Michael Page will be referred to as the agency and the client as the hirer.
1)Who do the Regulations apply to?
2) What do the Regulations do?
3) What does the right to equal treatment mean?
4) What does pay mean?What is not pay?
5)What does the right to equal treatment mean?
6) 12 week qualifying period
7) Liability
8) Practical tips for the implementation of the Regulations terms and conditions
9) Overall impact
Who do the Regulations apply to?
The Regulations will apply to agency workers performing temporary work through an employment business (‘agency') such as Michael Page, i.e. they apply to ‘temps' supplied through agencies. They do not apply to:
- those seeking permanent or direct employment with employers;
- permanent employees;
- fixed term employees;
- casual workers hired direct by employers;
- independent contractors or consultants who are genuinely self employed working through their own personal service companies.
What do the Regulations do?
They give agency workers two types of rights:
12 week rights
The right, once they have worked in the same assignment for 12 weeks, to be treated, in terms of pay and employment conditions, as if they had been hired directly into that role at the start of the 12 week period. This is often referred to as the right to equal treatment after 12 weeks;
Day 1 rights
Rights applicable from day one of an assignment to:
a. be informed of any relevant vacancies within a hirer's organisation;
b. access to collective facilities and amenities provided by the hirer.
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What does the right to equal treatment mean?
The test to establish equal treatment in relation to a qualifying worker will be: on what terms would the agency worker have been employed by the hirer had the hirer employed them directly at the start of the 12 week period?
The hirer will need to establish and confirm to the agency what it would have paid the agency worker had they employed him/her directly, taking into account that individual's qualifications, expertise and experience. The test is hypothetical but if it can be shown that the treatment of the agency worker is consistent with the treatment of an actual employee within the hirer's organisation (who is currently employed and doing broadly the same or similar work), the agency will be deemed to have complied with the Regulations.
The onus, under the Regulations, is on the agency to satisfy this test but the agency will not be able to do this unless the hirer has been forthcoming with the information required. If the hirer is not forthcoming then the agency will have a defence and the hirer may be liable. The relevant treatment for these purposes is whether the agency worker is given (after the 12 week qualifying period is completed) the same basic pay and working conditions they would have received had they been hired directly into the role. This entitlement is only in relation to the following:
- pay
- working conditions:
a. duration of working time b. night work c. rest period
d. rest breaks e. paid annual leave
What does pay mean?
Pay means all sums payable in relation to the position in question (subject to some exceptions - see below):
- salary or wages
- commission
- holiday pay (which includes statutory and occupational paid holiday)
- shift allowances
- overtime, antisocial hours or dangerous/difficult work premiums
- bonuses attributable to quantity or quality of work done (e.g. piece work and individual performance related bonuses)
What is not pay?
- Occupational:
- sick pay
- maternity pay
- redundancy pay; - Pensions, retirement gratuity or compensation for loss of office;
- Financial participation schemes including share option and profit sharing schemes;
- Bonuses and incentives not directly attributable to the quality or quantity of work done but which are given for some other reason such as overall company performance.
Looking at some of these items in detail:
Holiday pay
If a hirer grants paid holiday entitlement in excess of the statutory minimum paid holiday entitlement this will need to taken into account when matching an agency worker's terms for equal treatment purposes.
Incentives and bonuses
There are a great many different incentive and bonus arrangements which makes this one of the more problematic areas of the Regulations. Whether an incentive or bonus arrangement will need to be taken into account and matched in relation to a qualifying agency worker will depend on whether the arrangement relates to the performance of the team or company (ie it contains an element of distribution of a share of profits, options or shares) to which extent it is outside scope or whether the payment is directly attributable to the amount or quality of the work done by the worker (in which case it is in scope).
Benefits in kind, vouchers and stamps
Benefits in kind are usually not pay and will not count. The exception will be where a benefit:
- has a fixed value expressed in monetary terms;
- is capable of being exchanged for money, goods and/or services. E.g. luncheon vouchers
12 week qualifying period
The right to ‘equal treatment' does not apply to an agency worker until they have worked in the same role at the same hirer for 12 continuous calendar weeks (from 1 October 2011 onwards), regardless of their working pattern.
What does the right to equal treatment mean?
A new 12 week qualifying period will begin if there has been:
- a new assignment with a different hirer;
- a six week break between assignments;
- a new role with the same hirer which is substantively different from the previous one. (The agency must have informed the agency worker in writing of the new role and type of work they will be doing in it.)
Some periods away from the workplace won't count towards the 12 week qualifying period or the six week break period but the agency worker will still be able to count the weeks worked before the absence. In other words the clock is paused during the following absences:
- up to 28 weeks sickness absence;
- statutory or contractual time off/leave excluding maternity, paternity and adoption leave;
- up to 28 weeks' jury service;
- a temporary workplace closure according to established custom and practice e.g. Christmas shutdown;
- a strike or lockout or other industrial action at the hirer's establishment.
In addition there are some absences which do count towards the qualifying period during which, therefore, the clock does continue to tick. These are:
- absences relating to pregnancy, childbirth, maternity leave or a protected period of up to 26 weeks after a baby's birth;
- absences in relation to contractual or statutory maternity, paternity or adoption leave.
In other words during these absences it is as if the agency worker were in fact at work for the purposes of qualifying for equal treatment under the Regulations.
Note - the 12 week period is measured in relation to the agency worker performing the same role at the same hirer. It is not measured in relation to the supply of that worker through one agency. A worker may be supplied into the same role at the same hirer by different agencies totalling 12 weeks and the agency worker will acquire the right to ‘equal treatment' at the points/he has worked that total 12 week period in the same assignment with the same hirer.
Anti avoidance provisions
The Regulations contain provisions which give an agency worker the right to be treated as if they have met the 12 week qualifying period if it can be shown that a hirer and/or agency have used a pattern of assignments to deprive an agency worker of their rights. In such a case a tribunal may make an additional award to that worker of up to £5,000.
Liability
Day one rights
Liability for any breaches relating to day one rights (access to vacancies and collective facilities) will rest solely with the hirer.
12 week rights
The agency is responsible for setting the agency worker's terms and conditions. Any breaches in relation to their pay and employment conditions will rest with the agency to the extent that the agency is responsible for the breach. The agency can only afford the agency worker the requisite pay and employment conditions however if the hirer has provided the necessary and correct information in the first place. Therefore if the hirer gives the agency incorrect information or fails to notify the agency of any change to any pay or working condition term the burden of liability will transfer from the agency to the hirer.
Remedies for breach
An agency worker who feels they are not being given equal treatment in accordance with the Regulations may make an information request:
- to the agency and the hirer in relation to 12 week rights; or
- to the hirer in relation to day one rights.
A tribunal can draw an adverse inference from any failure on the part of the agency or the hirer to respond.
Exceptions
If an agency worker has a contract of employment with the agency and is paid between assignments at least at 50% of the rate they were paid in their last assignment, then provided the contract meets certain conditions, the provisions in the Regulations relating to pay will not apply. This is often referred to as the ‘Swedish derogation'. It is likely to be most useful where there is a high demand for workers with particular qualifications, expertise or experience and a corresponding shortage of them.
Employment status
The rights the Regulations bestow on agency workers have no impact on their employment status in relation to the hirer. The entitlement to access the hirer's facilities from day one and to equal treatment after 12 weeks will not make the agency worker the hirer's employee.
Practical tips for the implementation of the Regulations terms and conditions
Between now and October 2011 hirers which use agency workers for periods in excess of 12 weeks need to carry out a systematic review of the terms and conditions they offer their own employees and identify which of those terms may need to be considered when granting ‘equal treatment' to a qualifying agency worker.
Having identified any high risk terms and conditions hirers may wish to consider the following:
- introducing transparent pay scales;
- reviewing whether any terms and conditions (especially contractual or policy wording) needs reworking in advance of the Regulations coming into force, particularly in relation to bonus and incentive arrangements;
- replacing terms and conditions identified as high risk, with others;
- introducing bespoke qualifying periods for certain terms and conditions, for example loyalty-based holiday entitlement. Agency workers would still be entitled to the increase if they worked for the length of time required, but not otherwise.
Recommended steps
For hirers
In order to determine the impact the Regulations will have, hirers, with the assistance of agencies where appropriate, will need to take the following steps:
- review their current systems for advertising internal permanent vacancies to ensure they can be made available to any temporary workers being supplied after 1 October 2011;
- review any on-site facilities that temporary workers will have access to from 1 October 2011 (if refusal to such access can be justified, such justification will need to be communicated clearly to all temporary workers and employees);
- consider the average length of their temporary assignments currently so as to ensure awareness of the proportion of temporary workforce that is likely to acquire 12 week rights;
- audit the terms and conditions offered to permanent employees who are carrying out work which might also be undertaken by temporary workers to ensure awareness of the entitlements which temporary workers supplied from 1 October 2011 could claim over and above those they currently enjoy. For example:
- the extent to which the hirer's contractual paid holiday entitlement exceeds the statutory minimum ; and/or
- the amount of overtime pay hirers routinely pay their your direct employees .
For temporary workers
A temporary worker supplied to fill a similar role might be entitled to expect the same in the future;
- ensure employed staff (and in particular line managers) are aware that from 1 October 2011 they will need to provide accurate information on basic pay and working conditions to any agency through which temporary workers are supplied;
- ensure there will be processes in place to inform agencies of any changes to the relevant terms and conditions once the Regulations are in force.
Overall impact
The main impact of the Regulations will be on the long term supply of agency workers. Agencies and hirers should therefore analyse the hirers' current usage of agency workers in order to:
- quantify the potential cost of the regulations; and/or
- consider whether hirers' terms and conditions and policies could be altered now to reduce the cost; and
- consider whether fixed term or direct placements would reduce costs in any circumstances.
Agencies will hold records that can assist hirers in these tasks.
For further information or to comment on any of the issues raised in this document please contact your Michael Page consultant.
