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Blake Lapthorn Agency Workers Regulations seminar for end users on Thursday 8 September 2011.
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The Agency Workers Regulations Are you ready for 1 October 2011?
Seminar for end users 8 September 2011
Bridget Wood, Head of Recruitment sector [email protected]
020 7814 5426
Stephanie Slanickova, Senior [email protected]
020 7814 5422
Overview
IntroductionWho is an “agency worker” and what is a “temporary work agency”?Who falls within the scope of the Regulations and who falls outside?What are the new rights of “agency workers”?Who is liable for breaches of the Regulations and what are the penalties?Possible workaroundsImplications for end usersNew information to be supplied to workplace representativesImplications for recruiters and other suppliers Practical tips for staying aheadConclusionsAny questions
Introduction
Part-time workers and fixed-term employees already have equal treatment rights under UK Regulations which implement EU Directives
The aim of the European Agency Workers Directive was to extend this principle to agency workers
The Agency Workers Directive became European law in December 2008
UK to implement within three years
Introduction
The Agency Workers Regulations 2010 were laid before Parliament on 21 January 2010
The Agency Workers (Amendment) Regulations 2011 were laid before Parliament on 3 August 2011
BIS published revised final guidance on the Regulations on 27 May 2011 - additional guidance for teaching agencies published in August 2011
The BIS Guidance provides important clarification of the Regulations but is not a statement of the law – ultimately for courts to interpret
Introduction
The Agency Workers Regulations give agency workers the right to equal treatment with regards to “basic working and employment conditions” once they have completed a 12 week qualifying period – to be provided by “temporary work agencies”
“Day 1” rights to be provided by end users
The Regulations come into force on 1 October 2011
The Agency Workers Regulations 2010: what the Regulations say
Who is an “agency worker” and what is a "temporary work agency“?
Who falls within the scope of the Regulations and who falls outside?
What are the new rights of agency workers?
Who is liable for breaches of the Regulations and what are the penalties?
Who is an “agency worker”?
An agency worker:
– is supplied by a “temporary work agency”
– to work temporarily for and under the supervision and direction of the client/end user (Regulations use term “hirer” for client/end user)
AND
– has a contract of employment with the temporary work agency or any other contract with the agency to perform work or services personally (n.b. new definition)
What is a “temporary work agency”?
A temporary work agency:
– supplies individuals to work temporarily for and under the supervision and direction of hirers/clients
OR
– pays for, or receives or forwards payment for, the services of individuals who are supplied to work temporarily for and under the supervision and direction of hirers/clients
Worker can be an “agency worker” even if he or she works through an intermediary
Agency workers cannot contract out or “opt out” of the Regulations
Who falls within the scope of the Regulations? (examples)
Hirers (= clients/end users)
Recruitment agencies which supply individuals to work temporarily for and under the supervision and direction of clients
Organisations which pay for or receive or forward payment for the services of those individuals
Individuals supplied per supply model above
Intermediaries (and their workers/employees), such as umbrella companies, master vendors and neutral vendors
Who falls outside of the scope of the Regulations? (examples)
Individuals who find direct employment with the client
Agencies when they provide direct employment services (permanent and/or fixed term)
In-house temporary staffing banks
Secondment arrangements
Who falls outside of the scope of the Regulations? (examples)
Genuinely self-employed where the status of the hirer/client or the agency is that of a client or customer of a profession or business undertaking carried on by the individual, e.g. solicitors, locum doctors, company contractors (nb not automatic)
Service providers engaged on “managed service contracts” are excluded as are the individuals working on those managed service contracts (eg IT, catering services)
Dispute as to who is within or outside scope? Ultimately Employment Tribunals will decide
What new rights will agency workers have?
IMPORTANT:
The new rights under the Regulations are in addition to existing rights, e.g. equality laws, data protection, National Minimum Wage, Working Time Regulations
What new rights will agency workers have?
Rights
Day 1After 12 weeks
(can be restarted/paused/continued)
Collective Facilities and Amenities Access to Vacancies Equal Treatment
Day 1 rights
“Day 1” rights to be provided by the client (not subject to the 12 week qualifying period – i.e. from the first day of any assignment which begins on or after 1 October 2011)Agency worker has the right to be told of any relevant vacancieswith the client during their assignment in order to be given thesame opportunity as a comparable employee or worker to find permanent employment with the clientEntitlement to notice of client’s permanent vacancies – agency workers should know where and how to access
vacancies, e.g. notice board, intranet, induction packs – no requirement to advertise staff re-deployment roles in
redundancy or restructuring situation– BIS Guidance: clients are not constrained regarding
requirements for qualifications or experience
Day 1 rights
Access to client’s “collective facilities and amenities” (unless less favourable treatment is justified on objective grounds)– canteen or other similar facilities– childcare facilities– transport services – for example, local pick-up service,
transport between sites– workplace crèche– toilet/shower facilities– staff common room– waiting room
Day 1 rights
Access to client’s “collective facilities and amenities” (continued)– mother and baby room– prayer room – food and drinks machines– car parking
N.b. list above is non-exhaustive, no enhanced rights, excludes benefits to reward long-term service or loyalty
Treatment must be no less favourable than comparable employee or worker directly employed or engaged by client
Day 1 rights
Access to client’s “collective facilities and amenities” (continued)
– Less favourable treatment may be “objectively justified”
– Unlikely that cost alone will be enough
– Practical and organisational considerations
– Consider offering access to facilities and amenities on a pro rata basis as an alternative to completely excluding them
Rights after 12 week qualifying periodEntitled to “equal treatment” after a 12 week qualifying period
Must work in the same role with the same client for 12 calendar weeks
Any week during which the agency worker works is counted
Break of more than six calendar weeks between assignments in order for the 12 week clock to be restarted except in certain circumstances
Multiple clients and multiple agencies
Calculating the 12 week qualifying period
Qualifying clock is reset to zero:– New assignment with a new hirer/client– Same hirer/client but a new assignment which is
“substantively different”– Same hirer/client but a break of more than six calendar
weeks between assignments
Qualifying clock is paused:– Break for any reason of six calendar weeks or less and a
return to same role with same hirer/client– Break for the purpose of taking leave to which the agency
worker is entitled, including annual leave– Break of up to 28 weeks due to sickness or injury or jury
service– Regular and planned shutdown in workplace – Industrial action at client’s establishment
Calculating the 12 week qualifying period
Qualifying clock continues to tick:
– Pregnancy, childbirth or maternity: during pregnancy and up to 26 weeks after childbirth
– Adoption leave or paternity leave
Anti-avoidance provisions
– Aimed at preventing obvious avoidance
What rights will agency workers have after the 12 week qualifying period?
An agency worker will be entitled to the same “basic working and employment conditions” as he/she would have been entitled to for doing the same job had he/she been directly recruited by the client as an employee or worker
What rights will agency workers have after the 12 week qualifying period?
“Basic working and employment conditions” are:– pay (see next two slides)– duration of working time– night work– rest periods and breaks– annual leave
“Overall package” being the same is not a defence
After 12 week qualifying period, pregnant workers have a right to time off for ante-natal care
Pregnant women and new mothers have additional new rights
What rights will “agency workers” have after the 12 week qualifying period?
What will “pay” include?– basic pay– paid holiday (above Working Time Regulations entitlement if that
is what a comparable direct hire is contractually entitled to)– payment of overtime (subject to qualifying conditions being met)– shift/unsocial hours allowances– risk payments for hazardous duties– vouchers or stamps with a monetary value, eg luncheon and
childcare vouchers– bonus or commission payments directly attributable to the amount
or quality of the work performed by the agency worker, eg commission linked to sales targets
What rights will “agency workers” have after 12 week qualifying period?
What will “pay” not include? (examples)– payment in respect of maternity, paternity or adoption leave – financial participation schemes such as share participation
and profit sharing– occupational sick pay – occupational pensions– redundancy payment – benefits in kind such as health insurance– bonuses based on organisational performance and those
designed for long-term motivation and retention of staff– further examples: see BIS Guidance
The additional experience and qualifications of the comparable direct hire can be taken into account and justify why the pay rate of the agency worker is lower
Liability and penalties
Protection from detriment
The Regulations will be enforced through Employment Tribunals
Crucial to have internal complaints procedures in place for workers to express concerns about equal treatment
The agency has a potential defence – if it has obtained or taken reasonable steps to obtain relevant information from the client AND has acted reasonably in determining the basic working and employment conditions AND has treated agency worker accordingly
The Employment Tribunal will apportion liability and any financial sanctions between the agency, the client and any intermediaries
Liability and penalties
Agency worker can bring a claim for breach of the Regulations within three months of the alleged breach
Employment Tribunal can make a declaration, order payment of compensation and make recommendations for action
Employment Tribunal can award compensation of not less than two weeks’ pay as well as any expenses or other losses incurred
Compensation of up to £5,000 can be awarded for breach of anti-avoidance provisions
Liability and penalties
No cap on compensation
Other “costs”– reputation– management time– stress– relationships between recruiters and clients
How evidence is gathered– beware emails, telephone calls: always act professionally– beware data subject access requests
Possible workarounds
Do workarounds need to be considered?
Assignments of less than 12 weeks – concerns about agency worker turnover?– beware anti-avoidance measures
“Margin only” assignments direct with end user – headcount issues?
In-house temporary staffing banks – staff must only work for the business that employs them
Possible workarounds
“Swedish” derogation
– agency workers with permanent contract of employment with the temporary work agency are not entitled to equal pay
– paid between assignments for an aggregate of at least 4 weeks before contract can be terminated – not less than 50% of highest level of basic pay and at least National Minimum Wage
– other conditions that must be satisfied
– entitled to all the other rights under the Agency Workers Regulations
Possible workarounds
Self-employed contractors
– use the usual tests of self-employment – see Directgov link in the BIS Guidance
“Project” basis without end user client “supervision or direction”
– paid for delivering pre-scoped deliverables– substitution rights: not personal service
Implications for end users
Administrative burden
– end user clients will need to work with recruiters to assess whether workers supplied are within scope
– if within scope, end user clients will have to compile data about pay and other working conditions and establish the correct rate of pay and other working conditions to which each agency worker is entitled
– calculating the 12-week qualifying period
Implications for end users
Higher cost of agency workers?
– widely reported concerns that costs will increase, but depends on the type of agency workers engaged
– highly paid professional/technical agency workers?
– lower paid agency workers?
– cost of providing “day 1” rights?
Implications for end users
Claims against end users?
– if an agency worker brings a claim and the recruiter can show that it took “reasonable steps” to obtain relevant information from the end user and acted reasonably in determining what the agency worker's basic working and employment conditions should be at the end of the 12-week qualifying period, the end user will be liable to the extent there is a breach of the Agency Workers Regulations
– end user client will be liable for failure to meet its obligations to put in place “day 1” rights
Implications for end users
Concerns about providing pay data on comparable direct hires to recruiters?
Request confidentiality and non-poach undertakings from recruiters
Will be asked by recruiters to sign new contracts or agree contract amendments or, if you contract on your own terms, thesewill have to be amended
Implications for end users
New contract terms are likely to include:
– obligations on end user client to provide information on the basic working and employment conditions of comparable direct hires
– potential fee increases
– confidentiality and non-poach undertakings from recruiters
– indemnities – ensure appropriate risk apportionment
New information to be supplied to workplace representatives
The Regulations impose new obligations on employers when disclosing information to employee representatives in:
– collective redundancy
– collective bargaining and
– TUPE transfer situations
New information to be supplied to workplace representatives
In these situations, from 1 October 2011, employers must also include the following in the information supplied:
– the number of agency workers working temporarily for and under the supervision and direction of the employer
– the parts of the employer's undertaking in which those agency workers are working
– the type of work those agency workers are carrying out
New information to be supplied to workplace representatives
Failure to comply is likely to result in a financial penalty
Employers must ensure their processes and pro-forma documentation for collective redundancy consultation, collectivebargaining and TUPE transfer situations include this informationgoing forward
Implications for recruiters and other suppliers
Costs will all be passed on to recruiter?– increased pay rates will be deducted from recruiter’s
margin? unfair burden - negotiate!– cost of comparator exercise will be borne by recruiter?– end users will ask for indemnities?
Recruiters and other suppliers will have to request “comparator”information:– if commercially sensitive: offer confidentiality and non-poach
undertakings to end user clients?– offer “comparator consultancy” as a value add?– chance for recruiters to build deeper relationships with end
user clients?– contract terms will need to be re-written
Practical tips for staying ahead
Work with all relevant areas of your business and your recruiters to assess the impact of the Regulations on your business– review your use of temporary contract workers– identify who is and who is not within scope– break down those within scope by skill sets and pay grades– assess what “equal treatment” will entail– formal pay bands: compare the current pay rates of agency
workers with entry level rates at the client– no formal pay bands: look at pay rates of existing staff doing
the same or similar work for the client– assess any cost impact– consider amending salary bandings and bonus schemes
Practical tips for staying ahead
Is the likely cost impact significant? If so, agree pricing with recruiters and/or consider workarounds
Put new contracts in place or amend contracts where necessary with appropriate agreement on risk apportionment and any increased payments, confidentiality and non-poach provisions
Practical tips for staying ahead
Involve Trade Unions where necessary
Develop an internal process to collate information on the basic working and employment conditions that would apply if agency workers were recruited directly
Establish a procedure for passing this information on to recruiters and to any agency workers who may request this information
Practical tips for staying ahead
Track the use of agency workers in the same role to establish when the 12-week qualifying period is completed
Make any necessary changes to give agency workers access to:
– your collective facilities and amenities such as canteen, crèche, on-site gym, transport facilities
– relevant permanent vacancies within your business, for example, by extending intranet access
Conclusions
The Agency Workers Regulations 2010 (as amended) will be law from 1 October 2011
Read the BIS Guidance for clarification of how the Regulations are intended to work
Do not panic - beware scaremongering – unlikely to apply to all agency workers and little effect in many cases
If not already done, impact assessments are the key immediate step
Any questions
The Agency Workers Regulations Are you ready for 1 October 2011?
Seminar for end users 8 September 2011
Bridget Wood, Head of Recruitment sector [email protected]
020 7814 5426
Stephanie Slanickova, Senior [email protected]
020 7814 5422