The long awaited Agency Workers Regulations (AWR) came into force on the 1 October, and are designed to create equal treatment in regard to pay and working conditions between agency workers and the hirer's permanent employees who work in comparable roles.
As ever the commercial parties affected (the end user/hirer and the temporary work agencies) have been examining the regulations to see how they can best 'manage' (or avoid – call me cynical if you wish!) with the inevitable 'rights creep' this will introduce.
Given the tight anti-avoidance provisions contained in the AWR the potential ways to restrict these new rights are limited. Indeed, despite the UK government stating they wished to end the 'gold plating' of European legislation, the AWR only provides for one of the two potential derogations available under the European Directive, but perhaps that is a different point! The Swedish derogation is so named due to the Swedish government's insistence on its inclusion.
Unfortunately, as anyone familiar with the law will know, the name is far more exotic than the substance.
However, as several large businesses (including Tesco) have recently announced they will be availing themselves of the Swedish derogation and we are being increasingly asked to advise on it, is that the way to go?
In short, the Swedish derogation provides that there is a permitted exemption from the principle of equal treatment with regards to pay (note, only pay!) where the temporary work agency provides the agency worker with a permanent contract of employment that meets several specified requirements (more on this point later!).
Of course, it should therefore be immediately apparent that the Swedish derogation is therefore no 'silver bullet' as it does not excuse all the other elements of equal treatment including hours, holiday entitlement, breaks and access to facilities.
In addition, the employment of the agency workers by the temporary work agency obviously gives rise to a variety of employment rights not previously available. These include the right to claim unfair dismissal (after 12 months' service) and the right to redundancy pay (if employed for 2 years). Further, as mentioned, the contracts between agency worker and temporary work agency have to contain specific requirements to be effective. These include specifying expected hours or work, location and the nature of the work that can be offered. Most importantly it must also provide for certain minimum payments to be made between assignments.
Whilst this is clearly beneficial to the agency worker it brings with it inevitable costs and responsibilities which may not be welcome by the temporary work agency. Whilst companies the size of Tesco may be able to use their clout to insist on this type of arrangement, some others may not be able to do so. Also, it seems only sensible that ultimately those extra costs will be passed on and reflected in the price paid by the end user.
In addition, as usual, the legislation and guidance is unclear on some of the details of how the derogation will work in practice. Of particular concern is the fact that the contracts of employment should be entered into 'before the beginning of the first assignment under that contract'.
So what happens if an agency worker has been provided by the agency to the end user before? Unfortunately there is no complete answer.
Similarly, the grounds on which the contracts can be terminated and when payments between assignments are due, are to differing extents tied to what efforts the agency have made to find 'suitable work' for the employee between assignments, and whether the employee has been available to do that work. Not only does this leave inevitable room for debate (and litigation) but it also seems far from the natural relationship of agency worker and agency.
Another potentially unintended effect of using the Swedish derogation could be an increase of TUPE transfers. For example, if an end user has contracted with a temporary work agency to provide individuals to carry out a certain function (say run its admin) and later decides to bring this function in-house that is a service provision change caught by TUPE.
If the agency has 'employed' individuals under Swedish derogation contracts and they are dedicated to that function then they should transfer to the end user.
So, aside from the TUPE point, if you are the end user and have the commercial strength to insist on the use of the Swedish derogation (just to save on the pay equality) without an associated rise in agency charges then you probably think it is a great idea.
Similarly, for those agency workers who actually want to be 'employed' (I query how many of those individuals there are!) it may be welcome. For everyone else it seems to be smoke and mirrors.
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