AWR Mythbuster: Swedish Derogation

Fact or Myth? – A worker employed on a Swedish Derogation contract is taken outside of Agency Workers Regulations.

MYTH!

A worker employed on a Swedish Derogation contract does not waive all of their AWR rights.  It is a common misconception that the Swedish Derogation model removes all of a worker’s rights under AWR, and as a result the Agency and Hirer don’t need to concern themselves with any AWR compliance for that worker.

The purpose of a Swedish Derogation contract is to remove that worker’s right to pay parity under Regulations 5 and 6.  However, it doesn’t remove any of the other rights that a worker is eligible for under Regulations 5 and 6, namely equal treatment in respect of:

1. Working time duration;
2. Night work;
3. Rest periods;
4. Rest breaks;
5. Annual leave; and
6. The day one rights regarding information about relevant vacancies and access to collective facilities.

Hirers and Agencies have occupied themselves in the run up to AWR “biting” by predominantly looking at the real terms financial cost of compliance, which is why we have had so much information from Clients giving us their permanent equivalent rates (“PER”).  However, knowing how much it will cost in terms of pounds and pennies to migrate an agency labour workforce onto PER is one thing, ensuring overall compliance is another.

Hirers and Agencies need to ensure that they are asking for comparators for other directly engaged “benefits”, such as the number of holidays a comparable directly engaged worker gets.  If temporary workers are offered 20 days holiday per year, and comparable employees get 25, the temporary worker will be entitled to a corresponding uplift in their holiday entitlement when they reach the qualifying period, irrespective of the fact that they are on a Swedish Derogation contract.

So don’t be fooled into thinking Swedish Derogation is the answer to all Agency Workers Regulations problems, because as with most things AWR-related, it doesn’t do a complete job.

– Joe Tully, Legal Director

AWR Mythbuster: Workers paid more than comparators

Fact or Myth? – If I hire agency workers who are paid more than employees engaged in a similar role I don’t need to worry about the Agency Workers Regulations.
 
MYTH!

The “basic working and employment conditions” caught by the Agency Workers Regulations (AWR) fall into four categories:

1. the “day one rights” (of which there are two – the right to access collective facilities and amenities and the right to receive information about relevant vacancies
2. pay
3. working time
4. annual leave

It is correct that, in the great majority of cases, the biggest cost burden of these will be “pay” and, for that reason, it is upon “pay” that most hirers and agencies have focused.  Therefore, there has been a tendency in those sectors that typically pay their “temps” more than their “perms” (often the more highly-skilled sectors) to conclude that the workers will not bring a pay claim under the AWR and therefore to treat those workers as irrelevant as far as the AWR is concerned.  That is incorrect.

The regulations would be a more manageable piece of legislation if they included an “all or nothing” provision, so that the qualifying worker who wishes to receive the same basic working and employment conditions that they would have received had they been directly engaged must take all of those basic working and employment conditions (as defined in the regulations), for better or for worse. But the regulations do not say that, and the terms on which the qualifying agency worker is engaged by their agency, in respect of pay, working time and annual leave, must each be compared to the terms that they would have received, in respect of pay, working time and annual leave, had they been directly engaged.  Therefore, just because a qualifying temp receives more in pay does not stop them comparing working time and annual leave, also.

This has created some anomalies which we can only assume were not considered, and not intended, by the legislators. For example, it will often be the case that a temporary worker is paid more than a comparable employee because they do not enjoy the same annual leave entitlement as the comparable employee.  However, the AWR allows that temporary worker to continue to enjoy their higher pay rate whilst also claiming the same higher annual leave entitlement as the comparable employee, and such apparent unfairness is now causing considerable disquiet amongst hirers and perm workforces.

Therefore, hirers and agencies must consider each element of the regulations, even where the temporary agency worker is on a higher pay rate.  That worker is then entitled to be treated the same in respect of working time and annual leave as they would have been treated had they been directly engaged (not forgetting, of course, that worker’s “day one rights”). It may be that hirers, facing anomalies such as that described above, with all the perm workforce disquiet that is likely to follow from it, can approach their agencies to ask them to amend the terms of supply of the qualifying temp, so that such anomalies are ironed out (with, say, a decrease in pay rate or annual leave – provided always that the hirer and the agency continue to comply with Regulations 5 and 6 of the AWR), but that is probably easier said than done, requiring the agency to act within the terms of its contract with the worker, and the worker to agree to accept the reduced terms.

Like many things AWR, it’s a tricky one.

– Joe Tully, Legal Director.