Using agency workers to fill staffing gaps is often thought of as a quick and easy fix. New regulations will alter the way that agencies can supply temporary workers and the obligations for businesses that hire them.
The Agency Workers Regulations 2010 come into force on 1st October this year. Designed to protect temporary agency workers, they have serious implications for employers.
The headline changes include the following:
Rights from ‘day one’
Agency workers will gain some rights on day one of their assignment, for example access to staff facilities such as a canteen or childcare facilities. They must also have access to information on relevant job vacancies with the hiring business from day one.
Equal treatment rights
Agency workers will be entitled to equal treatment rights after a 12-week qualifying period, as if they had been employed directly by the hiring business. The right to equal treatment applies only to certain terms and conditions of employment, like pay (including basic pay, holiday pay and overtime), duration of working time, night work, rest periods and annual leave. However the intention is that pay should not include pay-related rights that are legitimately regarded as linked to longer-term reward and retention. As such the right to equal pay does not cover certain items including:
- Redundancy pay (whether statutory or contractual);
- Notice pay (whether statutory or contractual, linked to the loss of employment);
- Occupational sick pay (though this does not affect an agency worker’s entitlement to statutory sick pay);
- Occupational pensions;
- Occupational maternity, paternity or adoption pay (although the Regulations do not affect an agency worker’s statutory entitlements to such pay);
- Bonuses which are not directly linked to the contribution of the agency worker, such as a flat rate bonus based on the profits of the hirer which is given to all directly recruited workers to encourage loyalty or long-term service;
- The majority of benefits in kind given as an incentive or reward for long-service such as reduced rate mortgages;
- Expenses (such as accommodation and travel expenses).
In most cases, equal treatment can be established by giving the same relevant entitlements as if the worker had been recruited as an employee to the same job. It is not always necessary to identify a comparator.
12 week qualifying period
The 12 week qualifying period restarts if an agency worker:
- starts a new assignment for a different client;
- has at least a six-week break with the same client; or
- starts a substantially different role for the same client.
The 12 week qualifying period will not be broken and may still subsequently be completed (though weeks within the break will not count) where the break is:
- for any reason but is not more than six calendar weeks;
- up to 28 weeks where the agency worker is incapable of work because of sickness or injury;
- to take leave, including annual leave, to which the agency worker is entitled;
- up to 28 weeks to enable the agency worker to carry out jury service;
- caused by a planned shutdown of the workplace by the hirer (for example, at Christmas); or
- caused by a strike, lock out or other industrial action at the hirer’s establishment.
The 12 week period will continue to accrue (for the originally intended or likely duration of the assignment whichever is longer), such that weeks within the break will count, where a break is due to:
- pregnancy, childbirth or maternity and which take place either during pregnancy and for up to 26 weeks after childbirth; or
- the agency worker taking maternity, adoption or paternity leave.
However, beware as there are anti-avoidance provisions which prevent businesses adopting a “12 week on, 6 week off” pattern over and over again with the same agency worker, even where they are supplied by different agencies.
Liability for breaches
The hiring business is liable for any breach of day one rights.
The agency is liable for a breach of equal treatment rights to the extent that it was responsible for the breach.
Hirers can be liable for a breach of equal treatment rights if they fail to provide the agency with accurate information about their terms and conditions.
Not all agency workers are protected. For example those who are genuinely in business on their own account are excluded even where they find work through a temporary work agency.
Reducing the impact
If you regularly engage agency staff, there are various precautions that you can take to reduce the impact of the regulations:
- The equal treatment provisions on pay do not apply to agency workers who have a permanent contract of employment with the agency and are paid between assignments at a rate specified in the regulations. You could ask your agency whether they are prepared to do this although they may pass the associated costs on to you.
- Limit the assignments of agency workers to less than 12 weeks, taking care not to fall foul of the anti-avoidance measures by using the same agency worker on successive occasions.
Consider alternatives to agency workers, including self-employed contractors, fixed-term employees, or contracting out functions performed by agency staff. However, you will need to be mindful of the possibility of the TUPE legislation applying to an outsourcing.
We recommend that you conduct an assessment of your agency worker arrangements and discuss them with the agencies to establish how these issues will be dealt with.
You may also need to amend company policies and we would be delighted to advise you about this.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.