blake lapthorn agency workers regulations seminar for end users - 8 september

The Agency Workers Regulations Are you ready for 1 October 2011?

Seminar for end users 8 September 2011

Bridget Wood, Head of Recruitment sector groupbridget.wood@bllaw.co.uk

020 7814 5426

Stephanie Slanickova, Senior solicitorstephanie.slanickova@bllaw.co.uk

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 groupbridget.wood@bllaw.co.uk

020 7814 5426

Stephanie Slanickova, Senior solicitorstephanie.slanickova@bllaw.co.uk

020 7814 5422