How will your business be impacted by the agency workers regulations (AWR)?

How will your business be impacted by the agency workers regulations (AWR) which, from October 2011, give temporary workers the same rights to pay and working conditions as your permanent staff?

This really is a minefield and I have tried to be as simplistic as possible to give you an idea of the type of things you need to consider ahead of 1st October, which is when this legislation comes into effect. That said, this forum is an ideal place for you to email me back your questions and I will provide you with the answers to the best of my ability. We are members of the Recruitment and Employment Confederation (REC) so I have continual access to their legal helpline on this subject and reams of other information.

When does the new AWR legislation come into effect?
1st October 2011.

Who will it affect?
All companies who hire Temporary workers.

What is the impact to my business?
You will have to provide equal “treatment” and “pay” to any temporary worker who works for you for 12 weeks or more.

What is the definition of “equal treatment”?
Equal treatment means that you will have to offer the temp the same working conditions, holiday entitlement, hours of work and pay as a permanent employee doing the same role would earn in your company.

What is the definition of “equal pay”?
Equal pay means that you will have to pay the temp the same hourly rate, bonus, commission, or holiday pay that you would offer to a permanent employee doing the same position.

Do I have to pay the temp a bonus?
This is best explained by the REC as follows:

“Unfortunately there is no standard type of bonus and this will mean that agencies will need to carefully consider which bonuses to include and which to exclude for the purpose of equal pay. Clients who pay bonuses to their own directly engaged workers may have different criteria, rules and formulae for such payments. A bonus that a client pays which is directly attributable to a worker’s individual performance will be within the definition of “pay.” In comparison, a bonus which is directly linked to an individual’s length of service or company performance will not be within the definition of “pay.”” REC

In short, you may be eligible to pay the temp a bonus depending on how your bonuses are calculated. It depends on whether your bonuses are based on your company’s performance or the individual’s performance. If the latter, or part of the bonus comes under the latter, then some pro rata remuneration would be. This is still a grey area and will ultimately need to be tightened up for the following reason, again best explained by the REC –

“Where individual performance does have bearing on a bonus payment, clients may have appraisal systems in place to assess to what extent individual targets have been reached. Quite sensibly, clients will not wish to include agency workers in appraisal procedures as this may be a factor which supports a contention that an agency worker is in fact the client’s own employee. Agencies themselves will not find it easy to carry out such appraisals as the agency worker would have to be assessed against the client’s own criteria. REC is talking to BIS about this issue and will seek clarity in the BIS guidance.”

What benefits are not included in “equal pay” and “equal treatment”?
A number of different types of payments have been excluded from the definition of pay and which an agency worker will not therefore be entitled to receive.

These include:

  • occupational sick pay (i.e. sick pay over and above statutory sick pay);
  • a pension, allowance or gratuity in relation to retirement or compensation for loss of office;
  • any payment in respect of maternity, paternity or adoption leave;
  • redundancy pay;
  • any payment in relation to a “financial participation scheme” i.e. a distribution of shares or options, or a share of profits in cash or shares;
  • payments that a client pays to its own directly engaged workers which are not “directly attributable to the amount or quality of the work done by a worker, and which is given to a worker for a reason other than the amount or quality of work done such as to encourage the worker’s loyalty or to reward the worker’s long term service;”
  • expenses;
  • advances and loans;
  • health and life insurance.

If I hire a temporary worker for 6 weeks and then rehire the same temporary worker a month later for another 6 weeks, do I still have to provide equal pay and equal treatment?

Yes you do. For assignments to be considered “separate” there needs to be a break of at least 6 weeks between the temp leaving and returning.

N.B. There are a number of anti-avoidance clauses within this legislation that stipulate contracts should not be kept purposefully short and that if a candidate is bought back within the 6 week period in a different role, they still fall within the 12 week remit.

The legislation is complicated at first glance, although I hope I have simplified things sufficiently. Feel free to voice your concerns or areas you seek further clarification on and I will do my best to answer these.

Thank you, David

Categories: Employers

Tags: Employers

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