Cummins Mellor Recruitment

1. What is the AWR?

The Agency Workers Regulations will come into force in England, Scotland and Wales on 1 October 2011.

The Agency Workers Regulations 2010 (the Regulations) will give temporary agency workers the right to equal treatment in terms of the same basic working and employment conditions as they would have been entitled to had they been recruited directly by the client to do the same job. The rights will commence after the agency worker has worked in the same role for 12 calendar weeks with the same client.

2. Who do the regulations apply to?

The regulations do not apply to workers who have found a ‘perm’ job with a client, even if they were introduced by an agency.

The regulations apply to individuals who meet the definition of an agency worker. The regulations define an agency worker as:

• An individual
• Who is supplied by a temporary work agency to work temporarily under the supervision and direction of a hirer; and who
• Has a contract of employment or any other type of contracts under which they provide their service personally for the agency

Workers who are genuinely in business on their own account (i.e. Genuinely self-employed) will not be within scope.

 3. How does an agency worker qualify for equal treatment?

The Regulations state that an agency worker is not entitled to equal treatment until the agency worker has completed the qualifying period. Under Regulation 7 an agency worker will complete the qualifying period by working “in the same role with the same hirer for 12 continuous calendar weeks, during one or more assignments.”

On the face of it, counting 12 weeks may seem fairly straight forward but there are a number of factors that will in practice make the 12 week period difficult to measure.

3.1 12 weeks with the same client

The agency worker must complete the 12 week period by working in the same role with the same client. However, the agency worker does not have to work for those 12 weeks through the same agency. This means that an agency worker can complete the qualifying period even if supplied by more than one agency to the same client. Agencies will therefore need to have mechanisms in place to identify those agency workers who may have already been supplied to a client. Ultimately the agency worker will be best placed to provide this information. However the client should also be asked to provide this information as the liability under the Regulations rests with the agency and or the client.

3.2 What is ‘the same role’?

Regulation 7(3) states that the agency worker will be working in the same role unless the agency worker starts a new role in which the work or duties are “substantively different.”

In some cases it will be relatively straightforward to identify when the work that the agency worker is doing in a new assignment is “substantively different” but there will be situations when this is not easy to identify. However, the Regulations place the focus on the work and duties performed during the assignment, so if the only difference in a new assignment is that the agency worker moves to a different department or a job title has changed, this will not be a new role.

Example
If an agency worker is supplied to provide admin support (typing, filing, etc) within a client’s sales team and moves to do the same work for the marketing department for the same client, the work and duties here are clearly the same and there is no new role.

Even if the work and duties are “substantively different,” the agency worker will only be deemed to be in a new role if the agency notifies the agency worker in writing about the type of work which she/he will be doing in the new role.

Presumably, the purpose of this is to ensure that the worker is aware that the duties will be different and to flag up that this may delay or prevent the agency worker from reaching the 12 week qualifying period.

If the agency worker starts a new assignment, albeit carrying out the same work and duties as in a previous assignment, but with a different client, this will not be the “same role” for the purposes of the Regulations. In this case the agency worker will start a new qualifying clock for this new assignment. Agency workers can have a number of qualifying clocks running at the same time. More clarification is needed to identify a “substantively different” role and this is one of the areas that the REC is pressing the Government to address in its guidance to the Regulations.

3.3  Breaks in assignments

3.3.1 Working for 12 continuous weeks

Any week in which the agency worker works for the hirer will count towards the 12 week qualifying period, even if it is for just one day in a week. However, the agency worker does not have to work for 12 continuous weeks in order to reach the qualifying period. The Regulations allow the agency worker to have certain breaks in an assignment without having to start counting towards the 12 weeks from scratch. This means that an agency worker’s qualifying period can be accrued over a period of time which exceeds 12 weeks.

3.3.2 The six week break

Regulation 7 provides that if the agency worker takes a break from an assignment for any reason and the break is for six weeks or less, on returning to the same role, the weeks that the agency worker previously worked will be carried forward.

Example
If an agency worker works for eight weeks in a role with a client and takes a two week break from the assignment for whatever reason, on returning to the same role with the same client, the agency worker will enter into the ninth week of the count towards 12 weeks. The agency worker will not have to start counting again from zero but will only need a further four weeks to reach the 12 week qualifying period.

3.3.3 Other breaks permitted in the Regulations

An agency worker will also be able to carry forward weeks previously worked towards the qualifying period if they have a break in continuity which is caused by:

• sickness or injury (up to a maximum of 28 weeks and provided evidence is given to the agency where requested);
• pregnancy, childbirth or maternity and the agency worker is within a “protected period” (i.e. from the beginning of pregnancy to 26 weeks from childbirth);
• statutory/contractual maternity, adoption or paternity leave;
• jury service;
• periods when the client does not require the agency worker because of various types of industrial action at the client’s establishment; or
• periods when the client does not require the agency worker because the business has temporarily closed down (e.g. Christmas shut down).

This means that even if the break is for six weeks or more but is for one of the reasons listed above, any weeks worked prior to the break will be carried forward and added to any weeks worked subsequently.

3.3.4 Weeks where the agency worker will be deemed to be working even when unable to continue working in a role

As stated above, there are permitted breaks under the Regulations where an agency worker is absent from a role but returns to the same role with the same client and the qualifying clock continues to run.

The Regulations will also allow an agency worker to count weeks toward the qualifying period when the agency worker starts a role but then is unable to complete it. These circumstances are fairly limited and will only apply if the reason that the agency worker has not returned to the assignment is related to pregnancy, childbirth or maternity and/or due to statutory or contractual maternity, paternity or adoption leave.

The agency worker will be deemed to have worked in any week which is covered by the above reasons for either the actual duration of the assignment or the likely duration of the assignment. The rights will commence after the agency worker has worked in the same role for 12 calendar weeks with the same client

3.4 Can the agency worker count time worked in an assignment before the Regulations come into effect to qualify for equal treatment?

No. The Regulations will not be retrospective. This means that any time spent on an assignment up to and including 30 September 2011 will not count towards the qualifying period.

4. What does equal treatment mean?

Agency workers will need to qualify for equal treatment in order to be entitled to receive equal pay and working conditions.

Regulation 5 provides that a qualifying agency worker is entitled to the “same basic working and employment conditions as [she/he] would be entitled to for doing the same job had [she/ he] been recruited by the hirer…”

Regulation 6 then sets out what these basic working and employment conditions are:

• pay;
• the duration of working time;
• night work;
• rest periods;
• rest breaks; and
• annual leave.

Equal treatment also includes day one rights (explained further below) which is the right to access the client’s collective facilities and to receive information about existing vacancies. These rights will apply from day one of an agency worker’s assignment. Therefore, the 12 week qualifying criteria does not apply to these rights.

 4.1Pay

 4.1.1 What is equal pay?

“Pay” is defined as “sums payable to a worker of the hirer in connection with the worker’s employment, including any fee, bonus, commission, holiday pay or other emoluments referable to the employment whether payable under the contract or otherwise.”

Example
If a client pays a directly employed worker £8.00 per hour to work on a production line, a qualifying agency worker supplied to do exactly the same role will also be entitled to be paid at least £8.00 per hour. The agency worker can look either to the actual pay that the client’s own directly engaged employee receives, or the amount that the client would pay someone doing an identical role if the client has no specific comparator. Certain payments have been excluded. These include payments which are not “directly attributable to the amount or quality of the work done” by the worker but rather, are designed to “reward the worker’s long term service.”

4.2 Specific elements included in pay

Pay does not simply take into account the basic hourly rate that an agency worker receives. There are other elements included in pay:

4.2.1 Bonuses

Unfortunately there is no standard type of bonus and this will mean that agencies will need to carefully consider which bonuses to include and which to exclude for the purpose of equal pay. Clients who pay bonuses to their own directly engaged workers may have different criteria, rules and formulae for such payments. A bonus that a client pays which is directly attributable to a worker’s individual performance will be within the definition of “pay.” In comparison, a bonus which is directly linked to an individual’s length of service or company performance, will not be within the definition of “pay.”

These are fairly simple examples, but the reality is that clients often have more complex bonus schemes which might include for example, a formula which combines the performance of the business with performance of individual departments as well as individual workers. Additionally, where individual performance does have bearing on a bonus payment, clients may have appraisal systems in place to assess to what extent individual targets have been reached. Quite sensibly, clients will not wish to include agency workers in appraisal

Example 1
A client’s directly engaged worker in a call centre receives a bonus for dealing with X number of calls within a shift. In accordance with Regulations 5 and 6, a qualifying agency worker who meets those same targets would also be entitled to receive the bonus as this is a sum “payable to a worker of the hirer in connection with the worker’s employment.”

Example 2
A client assesses at the end of each financial year how well the business has performed. If certain criteria is met, the client makes a bonus payment to individuals under a formula which for example, pays either a percentage of that individual’s salary, or relates to the length of service she/he has with the client – the longer the service, the higher the bonus. In this case a qualifying agency worker would not be entitled to receive a payment that reflects this bonus as such bonus is excluded because it is not “directly attributable to the amount or quality of the work done” by the worker but rather, are designed to “reward the worker’s long term service.”

4.2.2 Holiday pay

A qualifying agency worker will be entitled to parity in terms of holiday pay. This means that where a client provides holiday entitlement which is more generous than the statutory minimum allowance, a qualifying agency worker will be entitled to the same additional entitlement.

4.2.3 Vouchers and stamps

The definition of “pay” in the Regulations also extends to vouchers or stamps that a client gives to its directly engaged workers, if there is a monetary value attached to the stamps and they can be exchanged for goods or services. The provision of childcare has proved more complicated. Our initial view was that the salary sacrifice mechanism through which childcare is provided for by childcare vouchers would mean that they would be outside the definition of “pay.” Further clarification from BIS indicates that childcare vouchers may be included in “pay” if a physical voucher is issued which has a monetary value.

Agencies need to obtain detailed information regarding pay (including bonuses) from clients in good time to ensure that equal treatment can be applied once the qualifying criteria is met.

Agencies also have to be aware of the client’s pay structures so that they can correctly calculate the equal pay. The specific inclusion of bonuses and holiday pay is of great concern for agencies in terms of how exactly equal pay can be measured.

4.3 Payments excluded from the definition of pay?

A number of different types of payments have been excluded from the definition of pay and which an agency worker will not therefore be entitled to receive. These include:

• occupational sick pay (i.e. sick pay over and above statutory sick pay);
• a pension, allowance or gratuity in relation to retirement or compensation for loss of office;
• any payment in respect of occupational maternity, paternity or adoption leave;
• redundancy pay;
• any payment in relation to a “financial participation scheme” i.e. a distribution of shares or options, or a share of profits in cash or shares;
• payments that a client pays to its own directly engaged workers which are not “directly attributable to the amount or quality of the work done by a worker, and which is given to a worker for a reason other than the amount or quality of work done such as to encourage the worker’s loyalty or to reward the worker’s long term service;”
• expenses;
• advances and loans;
• health and life insurance;
• other prescribed payments.

Importantly, agency workers who have a permanent contract of employment with the agency, will not be entitled to equal pay provided that certain conditions set out in the Regulations are met.

4.4 Annual leave entitlement under the Regulations

Qualifying agency workers will be entitled to the same annual leave as workers directly engaged by the client. Therefore, if a client gives its comparable employee more than the statutory entitlement, the agency worker will be entitled to the additional leave. Discussions are taking place with BIS as to whether the additional leave can be rolled up or paid in lieu and whether the agency worker must be allowed to take it.

4.5 Working time for the purpose of the Regulations

All qualifying agency workers will be entitled to equal treatment with regards to working time, including the duration of their working hours, night work, rest periods and breaks.

4.6Day one rights

Agency workers will be entitled to access collective facilities which clients make available to their own workers on-site, such as canteen, childcare facilities and transport services. Agency workers will also be entitled to details of the client’s existing vacancies. There is no qualifying period for these rights so agency workers are entitled to them from day one of the assignment. These are the client’s responsibility

4.7 Will a client always be required to provide equal access to facilities?

Importantly, unlike the right to equal treatment in terms of pay and working conditions, there are circumstances in which a client may argue that it is not obliged to make the same provisions to agency workers as it does to its directly engaged workers. The Regulations will enable a client to withhold access to such facilities if this less favourable treatment can be objectively justified. Unfortunately, there are no examples given in the Regulations as to when less favourable treatment can be objectively justified. Clearly cost may be an issue but it remains to be seen whether cost alone will be deemed to be an objective justification for withholding access to these facilities.

4.8 Access to information regarding vacancies

Agency workers will be entitled to be provided with the same information as the client’s own directly engaged workers about any jobs which the client is seeking to fill. This does not mean that an agency worker has a right to be employed by the client.

5.Pregnant agency workers

Pregnant agency workers will be entitled to paid time off to attend medical appointments and antenatal classes once they have achieved the 12 weeks’ qualifying service.

In addition, if an assignment is terminated on pregnancy related health and safety grounds the agency will have to find suitable alternative work on terms which are not substantially less favourable than the previous assignment. If the agency cannot find alternative work the agency will be required to pay the worker for the remainder of the original assignment unless she unreasonably refuses the assignment. Agencies and hirers should ensure that an assignment is not terminated solely on the grounds of pregnancy as this would constitute direct sex discrimination against the pregnant agency worker. Compensation for direct sex discrimination is unlimited.

6. Establishing equal treatment

The regulations require an agency worker to be treated as if she/he had been recruited directly by the hirer. On a practical level, this means that equal treatment will need to be established in respect of the terms and conditions that apply to a comparable worker or a comparable employee engaged in the same role or broadly similar work. For example on a factory production line, the agency worker may be working next to a worker recruited directly. The direct recruit could serve as a ‘flesh and blood’ comparator to establish parity in pay and working conditions. In these circumstances, the hirer and the agency will be deemed compliant with the regulations. If a ‘flesh and blood’ comparator cannot be found, then there may be an identifiable pay scale or a starting rate which could be used as a reference point.

Disclaimer

Cummins Mellor Recruitment have made every effort to provide accurate and up-to-date information, however we cannot accept no responsibility for the information above which has been provided by the REC.