Agency workers – do they now get bonuses and share options?

The Agency Worker Regulations 2010 came into force on 1 October 2011.

Temporary agency workers are now entitled to the same basic employment and working conditions as those ordinarily provided to directly recruited comparable workers. This is subject to a 12-week qualifying period and other conditions.

Comparable terms include comparable pay, and this has led many to speculate on “what is pay”?

Pay will include holiday pay, overtime, shift allowances, and other increases in pay for unsocial hours or dangerous duties, 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 will not include 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. (Note: Agency workers whose terms with the temporary work agency mean they fall within the “Swedish Derogation” will not be entitled to comparable pay.)

What about bonuses? Bonuses that are linked to the worker’s performance are included in pay. This could include commission linked to sales or production targets or payments related to individual performance. It may also include non-contractual payments that have been paid regularly and so become a custom and practice. However, bonuses awarded without reference to individual performance are likely to fall outside the Regulations’ scope. Where a bonus encompasses both included and excluded types of payment, the hirer should try to distinguish between the two types of payment to reduce the possibility of the agency worker being entitled to both parts of the bonus.

And shares? The Regulations exclude financial participation schemes, so most share schemes should be excluded. However, phantom share schemes may be captured by the definition of pay. Also, some arrangements may arguably be both an individual bonus (included in pay) and a financial participation scheme (excluded). In this scenario there may be a dispute as to whether the agency worker is entitled to the benefit.

Further issues: The Agency Workers Regulations are a complex, and the issues go far beyond the points on shares and bonuses set out here. Hill Dickinson regularly provides training on the Agency Workers Regulations, please click here for the latest event details.

For more details please contact;

Rob Coward
Partner
rob.coward@hilldickinson.com
T +44 (0) 151 600 8626
M +44 (0) 7730 925784