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Legal Update: Changes to agency workers rights

Napthens - February 28th 2020

Under the current Agency Worker Regulations 2010 (AWR 2010), if agency workers work for a business on the same assignment for 12 continuous weeks, they are entitled to the same normal pay rights as permanent employees of that business. However, as an alternative, agency workers can work under what is commonly known as “Swedish Derogation”. The Swedish Derogation means that the agency who employs the agency worker agrees to pay them between assignments and, in return, the agency worker gives up their rights to pay parity.

The agency is only required to pay the agency worker national minimum wage so agency workers may not be paid the same as a worker in a similar role earns. The financial implications of working under Swedish Derogation could therefore be detrimental to the agency worker.

These special kinds of contracts are most commonly used in manufacturing and retail industries. The Taylor Review recommended that the Swedish Derogation be removed to provide more stability for agency workers.

As of 6th April 2020, Regulations 10 and 11  of the Agency Worker Regulations will be revoked which includes the abolishment of Swedish Derogation. The change means that agency workers will be entitled to equal pay after the 12-week qualifying period in all circumstances. This will have a financial impact on clients as, after the 12-week qualifying period, clients will need to pay the agency worker the same rate as direct employees. The government has estimated that around 120,000 agency workers will be affected by the change.

Recruitment businesses will need to consider any existing contracts with agency workers which contain a Swedish Derogation provision. Any agency workers to whom this applies will need to be provided with a written statement by 30th April 2020 informing them that as of the 6th April 2020, the Swedish Derogation provision in their existing contract will no longer apply.

Agency workers that are considered employees of the agency will be protected from unfair dismissal or other detriments if they assert their rights in line with this change or in line with other parts of the Agency Worker Regulations.

In addition to the above, as of the 6th April 2020, all agency work-seekers must be provided with a key facts statement. This statement must set out the terms under which they will undertake the work. The statement must clearly set out the employment relationship and the terms and conditions with the agency.

Businesses who make use of agency workers and the agencies themselves will need to ensure that they are prepared for these changes prior to them coming into force on 6th April 2020.

For further guidance on the changes to Agency Workers Rights, please contact a member of the Napthens Employment Team.