30 January 2013

By Roger Jeary

A recent employment tribunal has shown the Agency Workers' Regulations are easy for employers to escape.

Back in 2010, you will recall the concerns and reservations that accompanied the eventual implementation of the Agency Workers’ Regulations. Finally established in late negotiations between the outgoing Labour Government and the Conservatives (who would rather have continued with no protection at all), the Regulations were passed and subsequently implemented by the new Coalition government. Certainly, there was some satisfaction that the regulations provided more protection than had previously been in place, but the greatest concern was the inclusion of the "Swedish Derogation", a clause which drove a coach and horses through the main purpose of protection and securing equal pay and benefits .

Effectively, the nature of the Swedish Derogation was that agencies could decide to take over the direct employment of the agency workers providing them with some continuity guarantee and pay between assignments (PBA), thus removing them from the protections (i.e. equal pay and conditions with permanent workers) of the Agency Workers' Regulations. A number of employers put pressure on agencies to adopt this process to avoid their obligations to pay agency workers equal pay after 12 weeks continuous work. Trade unions where possible sought to defend agency workers from this clear abuse of the intentions of the EU directive as they could see the consequences for the workers concerned. The TUC even raised the issue at European level to challenge whether the government was in compliance with the Directive. The arguments continue and will no doubt be resurrected after a recent Tribunal decision.

In a case brought by BP Tanker Drivers against the Agency Monarch (Bray and others v Monarch Personnel Refuelling (UK) Ltd) the Tribunal decided that it was allowable within the regulations to switch agency workers from an agency contract to one where they were directly employed by the Agency, even though there was no break of continuity in their job as tanker drivers.

Before the regulations came into force on 1st October 2011, their agency put them on Swedish Derogation contracts in accordance with Regulation 10, thereby depriving them of equal pay even though they would continue working for the same hirer. Since this occurred during an existing agency assignment, the workers sought to challenge the legitimacy of the new contracts. The question the Tribunal was asked to address was would Regulation 10 be complied with if an agency worker was already on a long-term assignment with an end-client, but that assignment was artificially terminated and then re-started on new PBA/Swedish Derogation terms (essentially avoiding their reaching the 12 week qualifying period).

The Judge found that Regulation 10 had been complied with in this case by the "switch" even though in practice, from one day to the next, the workers continued to perform the same role for the same end-client. The tribunal found that "assignment" does not refer to the entire period during which agency workers undertake work for a hirer, but to a particular assignment. So the new employment contracts were entered into on the legitimate termination of the existing arrangement and before the next assignment for the hirer. They were accordingly valid under Regulation 10. In other words, contract "flipping" was found to be permissible.

Equally importantly, the Tribunal confirmed that, providing the workers receive the information set out in Regulation 10, they do not need to sign new contracts. Existing contracts can be varied to include these terms.

I am sure that the decision will be appealed, and therefore has to be seen simply in the context of this one case. However, the writing is on the wall, and unless the legal challenges are successful we can expect to see employers yet again seeking to avoid their social obligations, no doubt with the full support of the Coalition who never wanted these rules in the first place.

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