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Agency Workers Legislation

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On 21 January 2010 the Agency Workers Regulations 2010 were laid before Parliament, and came into force on 1 October 2011. The potential implications for UK business are wide reaching. Hiring companies will have to consider whether it is economically viable to staff via an agency to reduce the risk of workers being found to be employees, or whether it is time to employ these workers directly.

Guidance

The main purpose of the Agency Worker Directive (AWD) is to ensure the appropriate protection of temporary agency workers through the application of the principle of equal treatment and to address unnecessary restrictions and prohibitions on the use of agency work. Under the AWD 'equal treatment' relates only to basic working and employment conditions of temporary agency workers. The Directive does not affect the employment status of temporary workers. It will introduce the principle of "equal treatment" for agency workers after they have been in an assignment with the same hiring company for a qualifying period of 12 weeks. This principle is designed to ensure that in many respects agency workers will receive the same pay, benefits and working conditions as if they had been recruited directly by the hiring company to do the same role.

The Regulations will apply to most workers who are provided by an agency to a hiring company. Even individuals provided through a personal services company as individual contractors are likely to be in scope unless a hirer can persuade a tribunal that they are genuinely self-employed.

Once the 12-calendar-week qualifying period (applicable to both part-time and full-time staff) has been triggered, these agency workers will be entitled to equal treatment unless the role changed “substantially” during the term of the assignment.

Hiring companies will be able to reduce the impact of the Regulations by restricting the length of any agency worker assignment to under 12 weeks. Obviously there may the costs of having to regularly retrain agency staff to do the job should this way forward be chosen.

The Government is keen to prevent "avoidance" by "unscrupulous" employers terminating a worker's assignment just before the 12 weeks is up and then re-engaging them, they have introduced a minimum break period of six weeks before the clock will be reset after a short break. There will also be grounds for a claim from the agency worker if a "structure of assignments develops" that is designed to deprive the workers of equal treatment – e.g. where workers with 11 weeks' service are constantly “substantially” moved into different roles. Tribunals will have the power to make an additional award of £5,000 in respect of such claims.

Cost

Agency workers who have completed their qualifying period will be entitled to the same pay as permanent employees in relation to all pay and benefits related to the actual work being done. This will include pay, contractual holiday entitlement, overtime, luncheon vouchers, shift allowances, and even bonuses (where these relate to the individual's performance in meeting short-term targets) as well as access to facilities including childcare, canteens and transport. They will not be entitled to equivalent treatment in respect of share schemes, occupational pension schemes, sick pay, contractual notice, contractual redundancy pay, contractual maternity or paternity rights, or any bonus arrangements designed to reward loyalty or long-term service and which is not directly attributable to the amount or quality of the work performed.

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