The Swedish Derogation model refers to Regulation 10 of the AWR that allows for temporary workers not to receive comparable pay (with ‘comparable’ permanent employees working at the end hiring company) if:
- They receive pay between temporary assignments for at least 4 weeks, and
- They are employed by the Recruitment Agency on a permanent contract that must contain a minimum amount of information (including that the agency worker has no entitlement to the rights in Regulation 5 of the AWR in respect of equal pay)
Brief details of the case
This case found Recruitment Agency Monarch Personnel Refuelling defending a claim by some of its temporary workers that Monarch had not complied with all the requirements of the Swedish Derogation model. The temps were supplied by Monarch to BP Oil UK Ltd as tanker drivers.
The agency workers – who had worked for several years for BP on a series of assignments that were described as continuous and regular, and who were employed by Monarch on zero-hours contracts – received 70 pence less per hour than ‘comparable’ permanent workers at BP.
With the introduction of the AWR, BP instructed Monarch to employ its driver under the Swedish Derogation model, so Monarch held meetings with the drivers in October 2011 to explain they would be issuing the temps with new contracts at the end of their current assignment with BP on 30th November 2011. On 15th November 2011, all the workers were issued with new contracts and most drivers returned their signed contracts by 29th November 2011.
At Tribunal, Monarch argued that the agency workers had agreed to the new contract which incorporated the Swedish Derogation terms, so the agency workers had waived their rights to equal pay.
The Employment Tribunal’s decision
The Tribunal looked at the key issue of how to interpret and apply the words of Regulation 10 (1)(a), which states “the contract of employment was entered into before the beginning of the first assignment under the contract...”
The Tribunal decided that the agency workers had been given the new contract ahead of starting their first assignment, and were aware they would not be able to continue working for BP without agreeing to the new terms – even though not all agency workers had signed the new contract before starting the new first assignment. The Tribunal were confirming that it is not necessary to require a signature as acceptance of the new terms, the conduct of the workers could be enough to imply agreement (for example, they continued working under the new contract).
The Tribunal also found that ‘assignment’ referred to particular assignments Monarch had received from BP. It did not inevitably refer to the total period during which the agency workers had been hired out to BP, it could refer to the next assignment. This decision confirms it is possible to create a new contract including the Swedish Derogation terms, with an existing hirer, if the new terms are entered into before the start of the next assignment under the Swedish Derogation terms. Thus it is possible to sub-divide one period of engagement with a hirer into multiple assignments.
This decision also confirms that the contract containing Swedish Derogation terms did not have to be entirely new – it could be a variation to the existing contract to include those terms, it did not need to be an entirely new contract.
The Tribunal ultimately accepted that the contract provided by Monarch complied with the requirements of Regulation 10 of the AWR.
The Judge dismissed the claimants argument that an AWR Regulation 10 compliant contract should be in place prior to the first ever assignment with the hirer. This answers the question of whether you can transfer an agency worker from a ‘standard’ agency contract to a ‘Swedish Derogation’ agency contract even if the worker will still be working in the same place and in the same way.
Two other recent Agency Workers Regulations cases went to Employment Tribunal at the end of 2012, and brief details are here:
- Four temporary workers of Kelly Services working at a Hewlett Packard plant near Blackpool went to Tribunal with the PCS Union to complain about their pay. They had been working at HP for between 15 months and 4 years, prior to October 2011 and were earning £6.10 an hour, which was 24% less than Hewlett Packard’s ‘comparable’ permanent staff. They asked for comparable pay and did receive a pay rise but to £6.65 an hour (which was the rate that permanent staff at HP who had performance issues earned, not to £7.98 which is the rate earned by most staff at HP). In addition 9 temporary workers from Kelly Services had been taken on permanently by HP at the higher rate. The Employment Tribunal ruled in favour of the temporary workers.
- Agency staff from Blue Arrow, working at an Airbus plant in North Wales, were denied an annual bonus of just over £1,000. The Tribunal Judge ruled that this bonus “did not meet the definition of pay” and so was exempt from the AWR.
And in December 2013 it was confirmed that agency workers who are working on an ‘indefinite’ and not a temporary basis at the end-hirer are not covered by the Regulations – full details of the case are here.
In September 2014 another case came to tribunal that confirmed the end-Hirer was liable for underpayment of an agency worker’s salary – full details are here.
In August 2015 in Coles v Ministry of Defence the Employment Appeal tribunal found there is nothing in agency workers legislation that prevents employers from choosing permanent staff over agency workers for job vacancies.
In January 2015, in a programme entitled Low Pay Britain, Channel 4’s Dispatches reported on tax-avoiding practices by employment agencies and umbrella companies. The programme also highlighted methods used by agencies to ignore the provisions of the Agency Workers Regulations – you can read the details here.
In June 2015, the GMB union began legal proceedings over agency workers pay, against 4 companies (providing a service to Marks and Spencer’s distribution centre in Swindon) on behalf of 250 GMB members. We’ll update you when we hear more.
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.
Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.
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