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The End of the AWB – An Employer's Guide

Napthens - August 27th 2013

The Agricultural Wages Board (“AWB”) was abolished in June this year and the current Agricultural Wages Order (“AWO”) in force expires on 30 September and will not be replaced.

This is a fundamental change regarding the employment of current and new agricultural workers. The will no longer be terms and conditions of employment (“T&C’s”) set by a regulatory body for agricultural workers, ending more than a 60 year history.

The reason for the removal of the AWB and the AWO is to give agricultural and horticultural employers greater flexibility in relation to the T&C’s for the workers they employer. The government has recognised that the 'one size fits all' approach was inappropriate and that employers needed greater flexibility to dictate their own terms for the specific needs of their business. 
So what does this mean for employers of existing and future agricultural workers?

Existing agricultural workers employed before 26 June 2013
Until theses reforms, the AWO set out T&C’s for agricultural workers relating to grades of workers, rates of pay for each grade, overtime rates, holiday entitlement, agricultural sick pay and various allowances relating to accommodation, dogs, birth etc.

It would be fair to say that some of T&C’s granted to workers under the AWO were significantly more generous the employers in other sectors who only have to comply with the National Minimum Wage 1998 (“NMW”) and the Working Time Regulations (“WTR”) and are free to dictate terms relating to sick pay, allowances and benefits etc.

Now that the AWB has been abolished there will be no future AWO setting out revised hourly rates or other T&C’s.

The first notable impact for existing workers is that there will be no wage review/increase on 1 October 2013 unless the employer voluntarily awards a wage increase or needs to increase wages to continue to comply with the NMW 1998. As such, it would be sensible to write to all existing workers reminding them that about the reforms and confirm your plans in relation to a wage review/increase in October (if any). Employers will now need to consider future pay increases having regard to the NMW and market forces.

Note, for existing workers employed before 26 June 2013, the T&C’s granted under the AWO to them is in essence embedded into their contract of employment and as such these workers will have a contractual right for the T&C’s under the AWO to continue ie rates of pay, holiday entitlement, agricultural sick pay etc.

To change their terms, without consent, will be a breach of contract and may also amount to unlawful deduction of wages where the changes impact upon pay. A breach of contract may entitle to the worker to pursue various legal remedies including constructive dismissal (if they have the requisite length of service to claim unfair dismissal).

It maybe feasible to change the T&C’s with their consent but realistically which workers will consent unless there is a significant financial incentive to do so or where redundancies may result unless terms are relaxed?

Where an employer needs to consider imposing changes to T&C’s to make them more economically viable due to financial pressures on the business then there maybe grounds to consider a termination and re-engagement route but legal advice must be sought as the process is complex and potentially high risk.

Finally, many employers have relied on the AWO to set the T&C’s for their workers and as such many have failed to issue a statement of employment particulars (as required under S.1 ERA 1996). Given the reforms it would be sensible to review the current status of your workers' employment contracts/particulars (if any) and look to update them or create some to ensure clarity moving forwards.

Agricultural workers employed between 26 June 2013 to 30 September 2013
Although the AWO will apply to workers employed before 30 September 2013, it is possible to dis-apply the terms and conditions granted under the AWO after 1 October – however this must be made expressly clear under the new recruits terms and conditions of employment given you the contractual right to dis-apply the terms and vary the contract.
Future agricultural workers employed after 1 October 2013
You are free to dictate the terms of employment for new workers engaged after the 1 October 2013. However you must comply with the NMW regarding hourly rates, and the WTR regarding limits on working weeks annual leave and rest periods/breaks as a bare minimum. The relevant enforcement authority for the NMW is HMRC and for WTR the HSE.

Employers will be expected to keep relevant records relating to pay and working hours for their workers for up to 6 years in order to satisfy any inspection by the enforcement authorities and defend any possible employment tribunal claims brought by a worker.

Being free to dictate T&C’s for new workers may result in you having a two tier workforce, the more recently employed on lesser T&C’s. This can create disharmony and may give rise to challenges that discrimination is taking place. We don’t believe a discrimination claim can be sustained where the comparator is a worker who gained rights under the AWO. However, given the new found flexibility, employers must not fall into the trap of treating new workers differently in relation pay and other T&C’s without justification. For example, it would be discriminatory to pay a higher rate to English workers than Polish workers.

Summary for employers

  • For existing workers send a letter or memo reminding staff of the changes taking place, explain that new rates of pay will not be set automatically and explain how you intend to review pay in the future moving forwards
  • Consider carefully, with legal advice where necessary, your plans for existing staff – do you intend to keep on the same T&C’s or are you going to explore trying to implement changes?
  • Consider and plan ahead as to what you intend to do for new workers – do you intend to take advantage of the flexibility now granted by the removal of the AWO and if so consider what your new T&Cs of employment will be for new staff in particular for holidays, sickness, overtime, various allowances and accommodation expenses etc.
  • Many employers of AW’s relied on the AWO to govern the T&C’s of their workers so many have failed to provide a statement of particulars of employment as required under ERA. Given the removal of the AWO now would be a good time to review the need to issue T&C’s to existing staff to set out exactly what rights they have and what new workers will have upon commencement
  • Review annually compliance with the NMW and WTR for all staff