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Understanding the Agency Workers Regulations 2010

Posted on 13th September 2011
Briefing note

Does your business or organisation use temporary staff supplied from agencies like Hays, Manpower or Reed? If so you need to take steps now to comply with the Agency Workers Regulations 2010 which come into force on 1 October 2011.

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Simon Quantrill Simon
Quantrill
Managing Partner Telephone: 01473 688100

workers benefit from new equal treatment entitlements which for some employers may mean that using temporary staff will not be so cost effective or attractive

Is your business ready?

A breach of the regulations can lead to fines of up to £5,000 for both your business and the agency; additionally, the temporary worker will be able to bring a claim in the employment tribunal which has powers to award compensation including for loss of earnings. This briefing note explains what the regulations do and includes a hirer's checklist to help you comply after their implementation.

What are the new entitlements?

For many organisations using temporary staff is a flexible solution to uncertainties of work flows or gaps left by holiday or sickness absences. Agency workers can be "hired and fired" at will and enjoy minimal employment rights and protection. From 1 October 2011 agency workers benefit from new equal treatment entitlements which for some employers may mean that using temporary staff will not be so cost effective or attractive.

Day 1 rights for all agency workers

Starting on 1 October 2011, from the first day of the assignment:
 
  • Your agency workers must be given equal access to your "collective" staff facilities such as food or drink machines or the canteen, childcare, staff room, car park, transport collection and drop off services, waiting room, mother and baby room or prayer room.
  • Less favourable treatment which can be objectively justified will not be unlawful. Here you would have to have a good reason for treating the agency worker less favourably. Cost may be a valid factor but is unlikely to be sufficient on its own.
  • You must provide to all your agency workers information about any job vacancies that are available to a comparable employee or worker. You can decide how and where to publish this information, such as on your intranet or notice boards, but the agency workers should know where and how to access it.
The entitlements apply only if there is an actual comparable employee or worker doing the same or broadly similar work at the same location as the agency worker. If not then there is no entitlement to equal treatment.

After 12 weeks in the same job

After your business or organisation has engaged the same agency worker for the 12 calendar week qualifying period, in the same role, he or she will be entitled to have the same basic terms and conditions of employment as if they had been employed directly by you.
 
The basic terms are:
 
  • Pay, including performance related bonuses
  • Duration of working time
  • Night work
  • Rest periods
  • Rest breaks
  • Annual leave
  • Time off to attend ante natal appointments (for pregnant agency workers).
A calendar week counts regardless of how many hours the worker works on a weekly basis.
 
The qualifying period is not retrospective. This means that an agency worker will only start to accrue the 12 week qualifying period from 1 October 2011, even if the assignment commenced before this date. The worker must work in the same job with the same hirer for the 12 calendar weeks.
 
The entitlement to equal treatment means that you should give your qualifying agency workers the same basic terms and conditions "as if" he or she had been recruited as your employee or worker to do the same job. It is not necessary to look for a comparator because the agency worker can rely on your standard contracts, pay scales or grades, a relevant collective agreement or employee handbook to identify the relevant basic working and employment conditions which must be provided.
 
An actual employee comparator can be used by you to establish deemed compliance with the regulations on equal treatment if you identify an appropriate employee and treat the agency worker in the same way.

Breaking the 12 week qualifying period

The "qualifying clock" may be reset to zero in certain cases, just "paused" or kept "ticking". For example, the clock is reset to zero when a temp begins a new assignment with a new hirer; or remains with the same hirer but starts a new role or if there is a break between assignments with the same hirer of more than six weeks.
 
The clock is paused where the break for any reason is no more than six calendar weeks and the temp returns to the same role with the same hirer, or goes on sick leave, takes annual leave, does jury service or there is a regular and planned shut-down of the workplace.
 
The clock continues to tick when the break is due to pregnancy, childbirth or maternity or due to the temp taking maternity leave, adoption leave or paternity leave.

Definitions

The regulations govern the tripartite relationship between an agency worker, the agency and the end user - the hirer. If you hire a temporary worker direct, then the regulations and equal treatment entitlements do not apply.

Temporary work agency

It is a business which supplies agency workers ('temps') to work temporarily for a third party ('the hirer'). Each temp has a contract with the agency only and never with the hirer.

Who is the agency worker?

He or she is an individual ('the temp') who has a contract with a temporary work agency to perform work personally but who works temporarily for or under the direction and supervision of the hirer. A typical arrangement is where the temp works for a variety of hirers on different assignments and is paid by the agency who deducts tax and NIC. There must be a continuing contractual relationship between the temp and the agency. Therefore a worker or employee who is introduced by an agency to fill a directly employed role, and who is paid by the employer instead of by the agency, will not create liability under the regulations because he or she will not be a qualifying agency worker.

Who is the hirer?

The hirer is the end user who engages agency workers via a temporary work agency. A hirer can be a company, partnership, sole trader or public body. The hirer is responsible for supervising and directing the temp while he or she carries out the assignment.

Pay and bonuses

After the 12 week qualifying period, the agency worker is entitled to the same basic terms and conditions that he or she would have received if recruited directly including pay which includes:
 
  • Basic pay based on annual salary
  • Overtime payments
  • Shift/unsocial hours allowances
  • Holiday pay
  • Bonus or commission payments linked to personal performance
  • Luncheon, child care and other similar vouchers.
"Pay" does not include statutory or contractual notice pay, the majority of all benefits in kind, occupational sick pay, occupational pensions, occupational maternity, paternity or adoption pay and statutory and contractual redundancy payments. Bonus payments which are discretionary or which reward long service or loyalty are also excluded from the definition of pay.

What the regulations do not do

The regulations do not give temp workers employment status or prevent the hirer from terminating the assignment at any time, require the hirer to pay any form of redundancy payment or give the temp unfair dismissal rights.

Requests for information

The regulations set out obligations on the hirer to provide compliance information to the agency so that this information can be given to the temp if and when it becomes clear that the assignment will last more than 12 weeks. This information includes the level of basic pay, overtime payments, bonus details and annual leave entitlement.
 
Temps are entitled to be given information by the agency about their equal treatment entitlements.

Liability and remedies

Liability always rests with the hirer for failure to provide Day 1 entitlements. For failure to provide basic working and employment conditions both the hirer and agency can be liable to the extent that each is responsible for the failure. The agency has defence if it can show that it took "reasonable steps" to obtain relevant information from the hirer about the equal treatment entitlements and provided these to the temp. An employment tribunal can award the temp compensation for any loss of earnings related to his or her entitlements under the regulations or receive an appropriate level of compensation if denied access to a Day 1 entitlement.
 
Finally, there are a number of detailed anti avoidance provisions to prevent assignments being structured to avoid the regulations. If breached the employment tribunal can make an award of up to £5,000.

Hirer's Compliance Checklist

  • Audit your existing agency workers and check what basic terms they receive and compare these with your equivalent employees.
  • Determine if you have appropriate employed comparators for your agency workers.
  • Give to your temporary work agencies copies of your standard terms and conditions of employment, pay scales and annual leave entitlements of comparable workers.
  • Set up a mechanism to keep track of agency workers so that the qualifying period can be calculated correctly from 1 October 2011.
  • Ensure your agency workers receive equal access to your collective staff facilities.
  • Set up procedures to ensure your agency workers are made aware of all relevant job vacancies.
  • Subject to the anti-avoidance provisions, consider engaging workers on short term assignments of less than 12 weeks and replace them with different agency workers - but may be costly and a lack of continuity may make this option impractical.

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