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

Swedish Derogation is not an easy “get out”

We have been disappointed and surprised by the recent negative press surrounding hirers who are asking their agencies to supply agency workers on AWR Regulation 10 “Swedish Derogation” contracts.

We are disappointed because much of the media coverage, which gives the impression that such hirers are “avoiding” the regulations or have found a “loophole”, is incorrect; and we are surprised because we take the view that, rather than treating such workers unfairly, Swedish Derogation contracts offer agency workers a real benefit.

The biggest benefit offered by the regulations is the opportunity for an agency worker, who accrues the 12 weeks’ qualifying period, to claim the same pay that they would have received had they been engaged by the hirer on day one of their assignment.  Although this might be a significant benefit for some agency workers, it will only benefit those workers who have achieved the qualifying period and who can demonstrate that their pay would have been greater had they been directly engaged; even then, the uplift might be very small and it will only last for as long as the agency worker continues to work for that hirer.

Compared to this, agency workers offered a Swedish Derogation contract by their agency do not have to wait 12 weeks for the contract to take effect, and they have the comfort of knowing that, for a minimum of 4 weeks when they are available for work but their agency cannot offer them work, they will continue to be paid by that agency.  Because of this potential exposure to “pay between assignments”, Swedish Derogation contracts are not offered lightly by agencies, and agencies will only offer such employment contracts where they are confident that they can keep the agency worker in work.  Therefore, perhaps the real benefit for such workers is not the comfort of knowing that they will receive pay between assignments, but the knowledge that their agency will be going the extra mile to keep them in work.

Yes, agency workers on Swedish Derogation contracts have waived their entitlement to claim “pay parity” after 12 weeks, but they still have the other Agency Workers Regulations rights to equal treatment in respect of working time, annual leave, access to facilities and information about vacancies and, arguably, a worker on a Swedish Derogation contract, knowing that his agency will be searching high and low for opportunities to keep him in work, is in a better position than an agency worker who has received a uplift in pay but who also knows that uplift will only last for so long as the assignment lasts.

And let’s put to bed this idea that Swedish Derogation is a loophole.  Swedish Derogation is a perfectly legal new method of supply, expressly provided for in the regulations after considerable consultation between the government and bodies representing both workers and hirers.  There are enough challenges to implementing these new regulations without the media scare-mongering about the perfectly reasonable course that some hirers have chosen to follow.