New rules boost agency workers’ rights

Amidst all the headlines about workers’ rights during lockdown and furlough, it’s easy to forget that a raft of long-planned changes came into force this month (April 2020).

Two key changes affect agency workers: the abolition of the “Swedish Derogation”, and the introduction of a key information document for agency work-seekers. Both sets of changes emerge from a Government policy paper, the Good Work Plan, which was published by the Government in December 2018 in response to the Taylor Review of modern working practices.

In a third development, both workers and employees are now entitled to a statement of employment particulars, under s1 of the Employment Rights Act 1996, from the first day of their employment.

Abolition of the Swedish Derogation

This is good news for agency workers whose contracts contain a “Swedish Derogation” clause. Some such workers, typically those with jobs in retail and manufacturing, found that they were being paid less for doing the same work than colleagues who happened to have a permanent contract with the company they were all working for. The provision had originally come about because the Swedish government lobbied for its inclusion in the Temporary Agency Workers Directive, and until this month it was to be found at regulations 10 and 11 of the Agency Workers Regulations 2010 (“AWR”) as an exception to the right to equal treatment set out in regulation 5 of the AWR.

What it meant in practice was that when an agency worker had a permanent contract with a temporary work agency that paid him or her a minimum sum between work assignments, and fulfilled various other requirements, there was no obligation to ensure that that worker was paid at the same level as the hirer’s permanent staff. The Taylor Review considered that that was leading to abuse in some situations, such as failing to pay the agency worker in line with the National Minimum Wage.

As a result, from 6 April 2020, regulations 10 and 11 of the AWR have been revoked by the Agency Workers (Amendment) Regulations 2019 (SI 2019/724) (“the Amendment Regulations”). This means that once agency workers have completed 12 weeks doing the same job for the same hirer, they must receive the same working and employment conditions, including pay, as those who are directly employed by that hirer. What constitutes “pay” for these purposes is set out at regulation 5 of the AWR and includes certain bonuses, overtime and holiday pay, but excludes things like occupational sick pay, maternity/paternity/adoption leave pay, pension or redundancy pay.

By 30 April 2020, under regulation 4 of the Amendment Regulations, temporary work agencies must provide any agency workers whose contracts include a Swedish Derogation clause with a written statement explaining that as from 6 April 2020, that provision no longer applies. A failure to provide such a statement will allow a worker to bring a claim in the employment tribunal. Further, any agency workers who assert their rights under the Amendment Regulations will be protected from detriment and unfair dismissal under regulation 5 of those Regulations.

Clarity for agency workers

The second big change to agency workers’ rights this month comes courtesy of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Conduct Regulations”) into which is inserted the new regulation 13A, also with effect from 6 April 2020.

Regulation 13A is very long, and it’s not the most gripping read, but in essence it requires all employment businesses to provide agency work-seekers with a “Key Information Document” before agreeing terms under which the work-seeker will do the work.

The information that must be set out includes the type of contract the work-seeker will be engaged upon (contract of service, contract for services, or apprenticeship); the minimum expected rate of pay; how they will be paid and by whom (for example, an umbrella company); other benefits to which the work seeker will be entitled; any annual leave entitlement; and details of any deductions, costs or fees to which they will be subject.

Regulation 13A is extremely specific about the wording and layout of this document and those drawing it up are well advised to take advice as to its contents. Note that regulation 13A applies to employment businesses (which in effect are “temp agencies”, typically hiring staff themselves and finding them temporary work with hirers) but it does not apply to employment agencies (which in effect are “head-hunters” or permanent recruiters, finding staff to place, usually on a permanent basis, with a hirer).

The new regulation 13A is brought into force by the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 (SI 2019/725) which contain explanatory notes to help businesses understand the new requirement. The Department for Business, Energy and Industrial Strategy has also produced a booklet giving guidance. Visit: www.gov.uk/government/publications/providing-a-key-information-document-for-agency-workers-guidance-for-employment-businesses.

Regulation 13A is not retrospective, so those working to existing terms with an employment business will not be entitled to such a document unless and until they sign up with a new employment business.

The paperwork blizzard continues…

The third document coming the way of employees and – for the first time – workers is the statement of terms of employment that must be provided pursuant to section 1 of the Employment Rights Act 1996, and often, unsurprisingly, called a “section 1 statement”.

It has long been the case that such a document must be provided to employees within two months of their starting a job, but as of 6 April 2020, there are important changes, again flowing from the Taylor Review. The document must now be given to both employees and workers, and it must be given to them on day one of their employment.

Section 1 ERA 1996 does in fact allow for two types of document to be provided. On the first day of employment, the statement to be provided must contain key details such as the identity of the employer; the date when the employment or worker’s engagement began; the date when an employee’s period of continuous service began; details of hours, notice period, place of work, salary and the method of calculating it. Other information – such as regards sick pay, pensions, and maternity/paternity leave pay – can be provided in a “reasonably accessible” document such as a staff handbook.

Some information, such as collective bargaining agreements, may still be provided within the first two months of the job’s start date.

Employees or workers who are already in a job as of 6 April 2020 will not automatically get a new statement, although they can request one. The section 1 statement is not the same as a contract of employment, although it may be a good guide to the contract’s terms.

The minimum service requirement of one month for provision of the statement prior to 6 April has been abolished and it must now be provided no matter how short the engagement or employment is.

As before, the penalty for failure to provide such a document is set out at section 38 of the Employment Act 2002 and can add between two and four weeks’ pay to an award, should the employee or worker succeed in a claim listed in Schedule 5 of that Act.