Changes to the Agency Worker Regulations – the end of the Swedish Derogation!

As of 6^th April 2020, the rules relating to agency workers will change, something which may prove costly to businesses presently using agency workers, and which requires action to ensure businesses are compliant with the new law. 

The current law

Currently, The Agency Workers Regulations 2010 provide for a “Swedish Derogation” exemption. This allows agencies to avoid giving agency workers pay parity and other forms of equal treatment with comparable direct recruits at a company, provided the agency instead offers the worker a permanent contract of employment and pays the worker between assignments.

The new law

The Government intends to repeal the Swedish Derogation exemption. This means that, under the new law, all agency workers will have a right to the same basic working and employment conditions (after 12 qualifying weeks) as those directly recruited by the hirer.

When it comes to basic working and employment conditions, agencies and hirers will need to ensure that there is parity between agency workers and their comparable direct recruits by the 6^th April 2020. The changes in the law do not mean that an agency worker’s contract automatically terminates.

Agencies must also ensure that they provide a written notification to agency workers whose existing contracts contain a Swedish Derogation clause. The notification must be provided by 30^th April 2020 and should inform workers that the Swedish Derogation provision will no longer be valid.

Instead, agency workers and their comparable direct recruits must be treated equally in relation to the following:

• Pay
• Certain bonuses
• Duration of working time
• Night work
• Rest periods
• Rest breaks
• Annual leave
• Paid time off for antenatal appointments for pregnant agency workers
• Alternative work or pay for pregnant agency workers where they are not able to continue with an assignment for Health and Safety reasons

If agency workers are not treated equally to the comparable direct recruits after the initial 12-week period, both the agency and the hirer may be held liable. An Employment Tribunal will consider the extent of each party’s responsibility for the breach when determining how much compensation should be payable by who.

Agencies may be able to avoid liability where they can show that they obtained, or took reasonable steps to obtain, the relevant information from the hirer and acted reasonably in determining the agency worker’s basic working and employment conditions.

This defence means that hirers need to be careful to ensure they provide the correct information to the agencies they use in a timely manner. Hirers will also need to remember that intrinsic to providing the correct information is being able to identify the relevant comparable employees in each situation. Finally, updates may need to be provided where working and employment conditions change, such as where pay reviews increase employees’ salaries.

Another point for hirers to consider is the fact that commercial contracts between themselves and the agencies they use may need to be updated to reflect the changes in the law. This is especially true where the majority of a hirer’s agency workers are provided via the current Swedish Derogation model.

Should your organisation require further information in respect of the above legal changes, or should you require assistance to: update your existing hirer/agency commercial terms; determine comparable employees or; ensure the correct working and employment conditions information is obtained from/sent to the relevant hirer/agency, please do not hesitate to contact the Clarkslegal LLP Employment Law team.