Contractor and Temporary Worker quick guide to the Agency Workers Regulations

The Agency Workers Regulations (AWR) come into effect on 1st October 2011, and are probably the biggest change to hit the business environment for contractors and temps since the Managed Service Company legislation in April 2007. See below for a high level guide to issues arising from the legislation, which we hope will explain some of the impacts and opportunities arising. The legislation is called The Agency Worker Regulations 2010, available at:
 
http://www.legislation.gov.uk/uksi/2010/93/pdfs/uksi_20100093_en.pdf,
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-949-agency-workers-regulations-guidance.pdf.

If you would like detailed advice concerning you specific circumstances, please contact CXC Global for a confidential consultation.

What’s the legislation all about?

It aims to ensure that temps and contractors receive core terms and conditions that are at least as good as those received by permanent employees doing similar work for the end client.

What are these core terms and conditions?

From your first day on site:

• Access to ‘Collective facilities and amenities’ e.g. office canteen or child care facilities provided on-site. This does not include off-site facilities not provided by the end client itself e.g. subsidised gym membership. NB If there is a waiting list for the child care facilities, you can’t jump the queue. You just add your name to the bottom of the list!
• Notification of any other appropriate employment opportunities on site that are notified to other staff.

After 12 weeks (qualification period or QP) on site:

• Basic pay, overtime etc., and personal performance bonus. This does not include profit shares or whole company bonuses that are not related to your personal performance.
• Hours of work, including night work and rest periods.
• Holiday and holiday pay.
• You are not entitled to other fringe benefits such as sick pay or maternity pay etc. in excess of statutory pay, pension, redundancy, or staff loans. 

Who does it affect?

Anyone who is not employed directly by the business to whom they provide their services e.g. if you are working through an umbrella company, as a recruitment agency temp, or through a personal limited company.

What impact will it have on me?

Most of the hard work goes on between the recruitment agencies and their end clients. They need to work out how to comply with the legislation.  If the pay rate that the client is prepared to offer is not at least as high as that paid to a similar permanent employee, then you may be asked if you are prepared to accept a ‘Pay between assignments’ (PBA) or ‘Swedish Derogation’ contract – see below. Alternatively, you may find that assignments are limited to 12 weeks duration, where they may not have been in the past. There are restrictions on workers being flipped around a list of 12 week contracts in order specifically to avoid the legislation, so keep your eye out for this sort of thing. On the positive side, pay rates for some of your assignments may increase in order to satisfy full compliance criteria without resorting PBA.

Are there any opt outs or exemptions? Yes ….

1. If your assignment with the end client does not exceed 12 weeks (counting from the either the start date of the assignment or the 1st October 2011 – whichever is later) then obviously you will not be entitled to QP rights
2. If you work for a business to which work has been outsourced, you are outside of the scope of the Regulations. For example, if you work for a business that provides outsourced IT support, even though you may spend a large proportion of your working year on one client site, the Regulations do not apply to you.
3. If you work through your own limited the company the situation is a bit subjective, as is often the way with personal limited companies! The legislation makes reference to ‘client or customer of a profession or business undertaking carried on by the individual’ (Regulation 3.2). This is superficially similar to IR35, although not quite the same because AWR is employment legislation and IR35 is tax legislation. If the operations of your company satisfy the ‘profession or business’ test then you are outside the scope of the legislation. If in doubt, seek specialist advice on each assignment.
4. If you are engaged under a PBA contract the part of the Regulations that applies to pay (regulation 5) is not applicable to you. See below for further information about PBA. 

What is a ‘Pay between assignments’ (PBA) or Swedish Derogation contract?

This is a new concept in English employment law, which has been created by the Agency Workers Regulations, so you may come across different interpretations of how the legislation should be applied. This model allows contractors and temps to elect to work for a lower pay rate than would have been offered to them if they had been engaged as a permanent worker. You may be prepared to do this in order, for example, to gain work experience, work with a prestigious client, or work on a state-of-the-art project. You will enter into an employment contract that acknowledges non-entitlement to the rights specified in regulation 5 of the AWR, insofar as they relate to pay. In compensation for this you will be entitled to pay between assignments, if you are available for work (i.e. not sick, on holiday, working on another assignment etc.) and no suitable work has been available for 7 consecutive days. The rate of pay between assignments is the higher of National Minimum Wage and 50% of the highest level of basic assignment pay within the 12 weeks before the previous assignment ended. This entitlement lasts for up to 4 weeks per contract of employment.

How can I check if I am receiving my full entitlement under AWR?

If you have any questions about your QP entitlements you should submit these to your umbrella company, or recruitment agency if you are not working through an umbrella company, at the earliest opportunity. Questions about other rights should be submitted to your agency, or end client if you are engaged directly through your own limited company. The legislation specifies a written request for information and twenty eight day response period. If you do not receive an adequate response after 30 days, you can escalate up the contract chain to the recruitment agency and end client. If the information you receive suggests to you that you have not received your full AWR rights, then you should discuss this with your umbrella company or recruitment agency to try to clarify any issues, or agree revised terms and compensation as appropriate. Failing this, you can take your claim to an Employment Tribunal, but this should be a last resort as failure to provide full AWR rights may have arisen merely by error or due to a lack of full information.

If I submit a request for information about my AWR entitlements, is there a risk that my contract may be terminated?

This should not happen. Your rights to request information and take action under this legislation are specifically protected by regulation 17, and to take action against a contractor for exercising rights under the regulations is an offence. An employment tribunal may find that you are due compensation if you have been treated unfairly.