The Agency Workers Regulations 2010 – two years on

Many of you will remember the Agency Workers Regulations 2010 (“the Regulations”) coming into force on 1 October 2011. At the time, there were somewhat alarming statements which predicted that the Regulations would cost businesses more than £1.8 billion (according to figures from the Department for Business, Innovation and Skills (BIS)) and that the UK had “gold-plated” the legislation. We are now over two years down the line and this article examines the impact of the Regulations, including a recent complaint by the TUC (which represents the majority of UK trade unions) to the European Commission, which may affect the food sector.

The Regulations provide agency workers with the following rights:

• From day 1 of their assignment, agency workers must be able to access a hirer’s collective facilities and amenities and have access to information about a hirer’s job vacancies
• After 12 weeks’ continuous work in the same role, agency workers are entitled to the same “basic working and employment conditions” that they would have been entitled to had they been recruited directly by the hirer. This includes the right to be paid the same as an individual employed directly by the hirer in the same role. However, a “Swedish derogation” contract exempts an agency from having to pay a worker the same rate of pay, as long as the agency directly employs individuals and guarantees to pay them for at least four weeks during the times they can't find them work. During any such four week period with no assignment, workers must be paid broadly half of their pay or the National Minimum Wage, whichever is greater.

A survey at the end of 2012 by the CBI and Harvey Nash found that almost half of hirers (46 per cent) reported that their business had been affected. Some 57 per cent said they have reduced their use of agency workers and one in twelve businesses (8 per cent) have stopped using them entirely. According to the survey, more than a third of companies (36 per cent) are turning to fixed-term contracts instead, while 27 per cent have sidestepped the requirements for equal pay after 12 weeks by adopting the Swedish derogation model. It appears therefore that rather than paying higher wages to agency workers, hirers are either looking to alternative methods of engagement for casual labour or are implementing the Swedish derogation.

In September 2013, the TUC lodged a complaint to the European Commission about the alleged unfair treatment of agency workers. Evidence gathered by the TUC apparently shows that Swedish derogation contracts are used regularly in food production and manufacturing. Evidence also suggests that agency workers in the food sector are paid up to 30 per cent less for doing the same job as their permanent colleagues, equating to up to £135 per week.

The TUC considers that the Government’s implementation of the Agency Workers Directive is flawed and that other European countries pay far more than the UK requires during any period with no assignment. We are waiting for the outcome of this complaint. Will the Regulations be amended to remove the Swedish derogation? Will the other flexibility (the so called French extension) also survive? It seems likely that the Government will resist major changes (for fear of upsetting major UK businesses), but it may not be able to do so if the EC rules otherwise.