Agency Workers Regulations - 24 myths

1. Personal Service Company (PSC) contractors are automatically outside of the scope of the AWR

Myth – an individual working through a PSC is not automatically outside the scope of the AWR. However, if the individual is ‘carrying on a business undertaking’ and is supplied under the right form of contract where the hirer is the client of the company, then that individual will not be an agency worker.

2. A worker employed under a R.10 (‘Swedish Derogation’) contract will not be an agency worker

Myth – an individual engaged under a ‘Swedish Derogation’ contract will always be an agency worker This form of contract only removes the R.5 right to parity of pay. The agency worker will still be entitled to the remaining rights afforded by the AWR.

3. Where the individual supplied is an employee, the individual will not be an agency worker

Myth – regardless of employment terms, an employee will be an agency worker if supplied to work temporarily for and under the supervision and direction of a hirer. This applies whether the individual is an employee of the agency, umbrella company or other company.

4. If there is no direct recruit at the hirer’s site doing the same or broadly similar work as the agency worker, you do not have to apply the AWR

Myth – even if there is no one else doing the same or similar job, there may still be terms and conditions that would apply if the worker were engaged directly by the hirer. These may be laid out in a published pay scale, trade union agreement or may be usual practice within the organisation.

5. Termination of assignments before 13 weeks is illegal

Myth – a possible, legitimate solution is to engage agency workers on short term contracts so they never reach the 12 week qualifying period with a hirer.

6. The R.5 rights to equal pay can be avoided by switching the workers to a new hirer every 12 weeks

Partly true, part myth! The above is correct, unless the agency worker is alternated between hirer A and hirer B in order to try and avoid the rights accruing, in which event there could be a breach of the anti-avoidance provisions in the AWR. Breach of the anti-avoidance provisions could result in a significant penalty for each individual breach.

8. If the agency worker’s rate is higher than a comparator’s, the AWR does not apply

Myth – where there is an agency worker the AWR will apply. If an agency worker is earning a higher rate than a comparator, they will still be entitled to all the other benefits afforded by the regulations. But make sure that comparable rates are assessed on a like for like basis taking into account paid hours and breaks.

7. If the agency worker’s rate is higher than a comparator’s, the agency worker’s rate should be reduced to equal the comparator’s after the 12 weeks. Alternatively, the direct recruit’s rate should be increased to match the rate of the agency worker

Myth – there are no circumstances in which the AWR requires the hirer to change payments to its directly recruited members of staff, nor need the agency worker’s rate be reduced – the rights under the AWR provide only the minimum entitlement. However you may choose to reduce the agency worker’s pay to afford the additional rights such as extra holiday, if the worker will agree!

9. An agency worker can have only one qualifying period running at a time

Myth – an agency worker can have a number of qualifying periods running with a number of hirers at the same time. If the agency worker completes an assignment for hirer A on Tuesday and hirer B on Thursday every week for twelve weeks, the qualifying period will be reached with both hirers in the same week. If the agency worker alternates between hirer A and hirer B each week, the qualifying period will be broken and will begin again with each assignment. 

10. The AWR does not apply if the contract started before 1^st October 2011

Myth – the AWR applies to all supply after October 1^st 2011. It does not matter when the supply began. The weeks worked by an agency worker before this time however, do not contribute to the twelve weeks required to qualify for the R.5 right to equal pay.

11. The AWR only applies to those who were already agency workers on 1^st October 2011

Myth – if the agency worker is supplied to a hirer on or after 1^st October, the AWR will apply.

12. Holiday pay must be part of the ‘payments between assignments’ under the Swedish Derogation model

Myth – holiday pay only accrues when the worker is actually working. When making payments to individuals under the Swedish Derogation model, holiday pay will not be accrued.

This is the first part of AWR- 24 Myths (part 2 will follow), by Adrian Marlowe of Lawspeed, legal partner of The Association of Recruitment Consultancies.