Agency Workers Regulations 2010

23 May 2011

The Agency Worker Regulations 2010 are due to come into force on 1 October 2011. The final version of the government guidance on the Regulations was published on 6 May 2011.

The Regulations will do two things:

1. entitle agency workers to the same, or no less favourable, treatment as that received by directly recruited workers in respect to basic employment and working conditions (subject to a 12-week qualifying period);
2. give agency workers the right of access to on-site facilities and information about vacancies immediately.

The Regulations will apply to temporary agency workers provided to a hirer via a temporary work agency. They will have a major impact on how both hirers and temporary work agencies operate, in respect of both cost and administration. This will include:

• temporary work agencies will need to request more information from hirers, in order that they may comply with the Regulations equal treatment provisions;
• both hirers and temporary work agencies will have obligations to respond to certain forms of requests for information from agency workers about their treatment;
• hirers will be liable for breaches of the right of access to on-site facilities and information about vacancies;
• liability for breach of equal treatment provisions will rest with the temporary work agency and/or the hirer, depending on their responsibility for the breach;
• liability for dismissal and/or detrimental treatment of agency workers on prescribed grounds linked to the Regulations e.g. alleging breach of the Regulations.

There are limits to the scope of the Regulations. It is intended that workers providing services though an “umbrella” company will be covered, but those who are genuinely in business on their own account will not. Managed service contracts (where a company provides a specific service to a customer such as catering or cleaning) are not intended to be covered by the Regulations, provided the managed service contractor has sufficient genuine control over the provision of the service. Also, agency workers who have a permanent contract of employment with the temporary work agency and are paid between assignments with hirers, will fall outside the Regulations in regard to right to equal treatment on pay, provided the contract meets the various requirements set out in the Regulations.

Comparable terms: Subject to a twelve week qualifying period, the Regulations will require employers to provide agency workers with working and employment terms comparable to direct recruits in respect of:

• pay;
• holidays;
• working hours (including length of night work, rest periods and rest breaks); and
• paid time off for ante-natal appointments.

Pay includes holiday pay, overtime, shift allowances, and other increases in pay for e.g. unsocial hours or dangerous duties. It will also include bonuses that are linked to the worker’s performance, as well as other forms of payment for work done (e.g. vouchers or stamps with a monetary value, such as luncheon and transport vouchers, so long as they are not salary sacrifice schemes).

Pay excludes financial participation schemes (i.e. distribution of shares or a share of profits in cash or shares), occupational pensions, occupational sick pay and occupational maternity, paternity and adoption pay (although this will not affect current and proposed statutory entitlements), and the majority of benefits in kind given as an incentive or reward for long service, as opposed to reward for work done. Bonuses awarded without reference to individual performance are likely to fall outside the Regulations’ scope.

The Regulations do not provide the agency worker with the right to comparable contractual notice or contractual redundancy terms, or recoupment of expenses.

Access to facilities: From the start of their assignment an agency worker has the right to be told by the hirer of any relevant vacancies with the hirer and also to have access to on-site facilities, for example the canteen, child-care facilities and transport services.

Consultation information changes: The hirer will be obliged to provide “suitable information” on the use of agency workers when providing consultation information to workers’ representatives, e.g. in a collective redundancy situation. Also, the temporary work agency will need to include the agency workers in its headcount for the thresholds on various consultation obligations e.g. under the Information and Consultation of Employees Regulations 2004.

Bringing a claim: Agency workers will be able to bring claims in respect of breach of the Regulations in the Employment Tribunal. If successful the agency worker will be compensated for any loss of earnings related to their entitlements under the regulations or receive an appropriate level of compensation, for example if they have been denied access to a facility. There is no maximum award, but there is a minimum award of two weeks’ pay regardless of the value of the loss (unless the tribunal believes there is a just and equitable reason to reduce the award).

Anti-avoidance provisions: Anti-avoidance provisions have been included to protect against structuring assignments to avoid the scope of the Regulations. Breach of the anti-avoidance provisions may result in the agency worker being awarded an additional sum of up to £5000 in compensation.

The Regulations are not entirely clear and potential problem areas include:

• defining what terms of employment fall within the scope of the Regulations;
• calculating when the 12 week qualifying period is met (some changes or breaks in work will end the accumulation of the qualifying period, others will put it on hold, and in some instances the qualifying period will continue to accrue when the worker is absent);
• identifying what on-site facilities the hirer needs to provide; and
• ensuring the correct exchange of the appropriate information between the three parties.

The potential impact of the Regulations for those who hire agency workers could be dramatic. This Insight is only a bare outline. We will update you shortly with details of our Agency Workers Regulations training programme for those who need a more in-depth knowledge of the Regulations.