Agency Workers Regulations (AWR): An Overview
Agency Workers Regulations 2010 come into effect in England, Scotland and Wales on 1st October 2011 and in Northern Ireland on 1st December 2011.
As a hirer of temporary agency workers (temporary workers) please ensure you:
- Understand the regulations
- Assess the likely impact the regulations will have on your business
- Work closely with us to minimise the costs and any potential disruption the implementation of the regulations may cause
- Put effective systems in place to ensure compliance with the regulations
2. What are the Agency Workers Regulations?
The regulations stem from the EU Temporary Workers Directive 2008. This gives temporary workers the right to the same pay and working conditions enjoyed by your own comparable workers/employees. The regulations do not alter the agency temps' employment status, i.e. rights granted under these regulations do not grant them employment status in law.
3. Who is an agency worker and what is an agency under the regulations?
Temporary agency worker
- A PAYE temporary worker whether employed by the supplying agency under a contract of employment or engaged as a worker under a contract for services
- A PAYE temporary worker supplied via an umbrella limited company either directly or through an agency
- A worker who is genuinely in business on their own account, (i.e. a genuinely self employed one person limited company contractor) is outside the scope of the regulations
- The agency supplying the temporary worker to the hirer
- Umbrella limited companies whether supplying through an agency or directly to you
- Any master or neutral vendors in the supply chain
4. What do the regulations do?
The regulations grant two types of rights to temporary workers:
- Day one rights – which are enforceable directly against you, the hirer of the temporary worker, from day one of an assignment
From day one in an assignment temporary workers are entitled to the:
- Same access to collective facilities as if were directly employed by you, e.g. company canteen, gym membership, car parking facilities, subsidised transport etc.
- Right to be informed of suitable internal vacancies at your place of work e.g. if you post internal vacancies on the company intranet site make sure you give temporary workers access to it
Liability for non compliance rests with you.
- Week 12 rights – which are enforceable primarily against agency. Liability switches to you if the information you provide to us about the pay and paid holiday the worker would be entitled to if directly employed by you is shown to be incorrect.
After working for the same client hirer (you) in the same role for 12 weeks a temporary worker becomes entitled to the:
- Same pay (explained later in article)
- Working conditions (explained later article)
It's as if they had been directly employed into that role by you at start of the 12 week period (12 weeks explained later in article).
Primary liability for non compliance rests with the agency. Liability switches to you if you give the agency incorrect information on which they rely to comply with the above.
5. What is ‘pay’ under the regulations?
- Salary or wages
- Shift, difficult/dangerous work premia
- Holiday pay*
- Overtime pay
- Vouchers (with a fixed monetary value)
- Individual performance related bonuses (explained later)
- Other money benefits referable to the work undertaken during the assignment
* Temporary workers are already given statutory paid holiday. This is paid in addition to the hourly/daily rate as rolling it up in the rate is unlawful. The definition of pay under the AWR includes holiday pay but in reality this will be limited to any additional contractual paid holiday over and above the statutory minimum already given. This additional contractual holiday pay can be rolled up with the pay rate and we will ensure any additional contractual holiday is accounted for in the rate agreed with the temporary worker.
Pay does not include (therefore temporary worker not entitled):
- Benefits in kind
- Occupational sick pay
- Pension payments
- Maternity, paternity and adoption pay
- Redundancy pay
- Share and option schemes
Loyalty bonuses (such as a Christmas bonus) or any bonus payments which are not directly
attributable to the amount or quality of the work performed by the temporary worker
- Guarantee payments
- Company car
- Health/life insurance
6. What is meant by ‘working conditions'?
This refers to any working time entitlements – working hours, rest breaks, paid holiday.
7. When has a temporary agency worker worked for 12 weeks?
When they have performed work in each of 12 consecutive calendar weeks subject to the following types of absence which will pause the clock, but not break continuity:
- Absence of up to six weeks
- 28 weeks’ sick leave
- Statutory or contractual holiday
- 28 weeks’ jury service
- A planned temporary work shutdown (such as a Christmas closure)
- A strike, lockout or other industrial stoppage
Continuity will be broken (and the 12 week qualifying period reset) by:
- A break of more than six weeks (but beware the anti-avoidance provisions – explained later)
- The commencement of a new and substantively different role either with a new hirer or within your organisation
8. Maternity rights
Pregnant 'temps' will be entitled to paid time off for ante-natal care after 12 weeks and other pregnancy related entitlements.
The regulations include anti-avoidance provisions to prevent a hirer from structuring assignments to prevent a temp from acquiring 12 week rights. A penalty of £5,000 is payable if the temp succeeds before a tribunal.
10. Individual performance related bonus payments
A bonus you would pay the temporary worker if you directly employed them and which is directly attributable to their individual performance falls within the definition of 'pay'.
Where this applies the temporary worker does not have to receive exactly the same bonus as your comparable direct employee but should have the same opportunity to achieve it and be assessed using the same criteria. By contrast, bonuses or any part of them, directly linked to an individual's length of service/the company’s performance will not count.
11. The Michael Page approach
Michael Page deals mainly at a level where temporary workers supplied are paid at least at market rates. Therefore, we do not anticipate making significant adjustments generally and aim to ensure the temps' packages are compliant from day one.
We do not think it appropriate in the case of valued, high level agency temps to pay them less in the first 12 weeks of an assignment than they would be paid had they been directly engaged by you at the start of it. Indeed it could lead to a situation where clients who only pay AWR compliant rates after the 12 week qualifying period are unable to attract high calibre temporary staff.
We will complete a questionnaire with you ahead of each assignment to determine what the temp’s pay would be if you were to directly engage them. This would include determining the relevant:
- Basic pay
- Contractual paid holiday
- Whether any individual performance related bonus would be due
- Whether any commission would be payable in the role
- Whether overtime or other premium rates would apply
- Whether any vouchers with a monetary value would be due
The information you give may be based on a comparable employee or a pay grade but must be accurate as it will be relied on to ensure the worker is receiving the correct package. Where there is no comparable employee/pay grading equal treatment will be deemed.
Individual limited company contractors set up as genuinely in business on their own account for tax purposes will be treated by us as outside the scope of the regulations.
There are derogations from the regulations such as the managed service company exemption and the Swedish derogation but we do not consider these to be generally viable for our business.