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What the Agency Workers Directive means for UK employers

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The Agency Workers Directive was published on 5 December 2008, and the UK Government (along with other EU member states) has until 5 December 2011 to implement it.

The Government will use the first round of consultation, which ended on 31 July 2009, to create new policy based on the Directive. A second round of consultation, to focus on new regulations and guidance, is planned for later this year. The current proposal is to introduce such regulations in the current Parliamentary session (i.e. by the end of November), but the Government is facing pressure from employer groups to push back this deadline, particularly in light of the harsh economic conditions currently faced by UK businesses.


What does the Directive achieve?


The broad aim of the Directive is to ensure that the principle of equal treatment applies to temporary agency workers. Importantly, subject to the relevant qualifying period, agency workers will enjoy during any assignment the same terms and conditions regarding: working time; overtime; breaks and rest periods; night working; holidays; and pay, as if they had been recruited directly by a company into the particular job.


How will the UK implement the Directive?


The finer points of policy and drafting are still up for negotiation, but the Government has already set out its core proposals in the May 2008 consultation paper. The key principles are set out below:

  • The regulations will apply to those workers who are introduced to companies by an "employment business" (i.e. an agency supplying temporary agency workers), where the workers' contractual relationship is with the agency. There will be certain exceptions, such as in relation to the genuinely self-employed and those working through their own limited company;
  • Determining "equal treatment" will involve comparing a temporary agency worker with a permanent employee of the company, doing broadly similar work;
  • Pursuant to the agreement between the CBI and the TUC, most of the equal treatment requirements will apply to agency workers only after they have been in a given job for a period of at least 12 calendar weeks. A substantially different assignment with the same company, or a minimum break period (length to be decided), will re-start the 12 week qualifying period. However, some rights will be available from day one, such as the right to be notified of any job vacancies within the company, and access to onsite facilities such as staff canteen and child-care facilities;
  • The definition of "pay" will include basic pay, plus other contractual entitlements directly linked to the assignment (such as holiday pay, overtime, and individual performance bonuses). Payments in recognition of long-term employment status, such as profit share schemes, will not be covered. The Government also intends to exclude occupational social security schemes (including pension and sick pay) from the entitlement to equal treatment. Significantly, agency workers who are paid a "reasonably high proportion" of their last pay rate by their agency between assignments, will not be entitled to equal pay;
  • Agency workers, who are pregnant or new mothers, will have the same rights as permanent employees in relation to ante-natal appointments and the adjustment of working conditions to remove specific health and safety risks;
  • The burden of ensuring equal treatment (and subsequent liability) will rest on the agency, but it will be reliant on information provided by the company. An agency will have a defence against a claim if it has taken "reasonable steps" or "best endeavours" to obtain accurate and relevant information from the company regarding equal treatment. Liability will pass to the company if it has provided the agency with inaccurate or incomplete information.

Implications for agencies and companies


The implementation of the Directive will increase costs for both agencies and companies, in terms of administration and improving benefits. As such, employment practices may change in order to mitigate the financial impact of the Directive. It has been suggested, for example, that existing employees may be offered overtime, in preference to the use of agency workers. Alternatively, assignments may be terminated before the 12 week qualifying period is reached, leading to an increase in the turnover of agency workers.
What is certain, however, is that there is still a lot of negotiation to come between employer groups and unions before the Directive is implemented in the UK (whenever that may be). During a time when businesses are struggling to cut costs and employees live in fear of their jobs, it has never been harder to balance the protection of workers' rights against the aim of maintaining flexibility in the labour market.

Andy Atwell is an associate at lawfirm SJ Berwin