The Agency Workers Regulations came into force on 1st October 2011 (in England, Scotland and Wales; from 1st December 2011 in Northern Ireland), but what does it mean for the way you run your business as a Locum?
The AWR applies to all ‘agency workers’ undertaking temporary work and gives them the same basic working and employment conditions they would have received if they had been employed directly by the end client in the same job (when compared to a ‘comparable’ permanent employee of the client. A ‘comparable’ worker is a directly employed member of staff who does similar, although not necessarily the same, type of work and generally at the same location. If there is no comparable worker there is no entitlement to equal treatment).
Although the original EU Directive was intended to give low paid, vulnerable, ‘agency workers’ protection, the way the legislation was written can bring some professional, higher-paid, Locum Contractors into its grasp.
In brief the AWR says that:
- If you are an ‘Agency Worker’ you have a right, after 12 weeks service with a client / end-hirer (these 12 weeks do not have to be continuous), to equal pay and equal working hours, rest breaks and holiday provisions and the right to paid time off for ante-natal appointments, that a ‘comparable’ permanent employee of your client receives.
- Agency Workers also have ‘Day 1’ rights – to be told of any relevant vacancies at the client’s organisation during their assignment; the right to be treated no less favourably than a comparable worker in relation to collective facilities and amenities at the hirers workplace; and the right not to suffer any detriment or dismissal for asserting their rights under these Regulations.
For full details about what is included see our AWR Guide here.
This means that if you are only receiving the legal minimum entitlement to holidays, rest breaks etc. you have the right to any enhanced entitlements your client gives to its permanent staff (if you are in-scope of the AWR).
The Department of Business, Innovation and Skills (BIS) issued final guidance on the Regulations in May 2011, and with the few cases that have made it to Employment Tribunal so far, it is mostly clear that Contractors will be treated as follows by the AWR:
In-Scope of the AWR
- All ‘agency workers’, including Locums, supplied through a Temporary Work Agency (TWA) to an employer (which includes Recruitment / Staffing / Temp Agencies) to work on a temporary basis and paid on a PAYE basis by the TWA will be in-scope and entitled under the AWR to receive equal treatment with comparable permanent employees. These workers must have a contract or agreement with the TWA and will do temporary work for an end ‘hirer’ (the Company they go to work at) and work under the ‘hirers’ direction or supervision
- Locum Doctors who supply their services though an Umbrella Company (called an ‘intermediary’) and find work through a TWA. Normally these Locums will have an employment contract with the Umbrella company
Out-of-Scope of the AWR
- Any Locum that is already treated equally or better than a comparable employee in relation to these benefits
- It was confirmed in December 2013 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.
- Locum Doctors who are in business in their own right (usually operating through their own Limited Company that is outside of IR35 legislation. Limited Company Contractors are also called Personal Service Companies (PSC). If you are a LCC who works under the ‘supervision and direction’ of the hirer then you may be in-scope.
- Genuinely self-employed sole-trader Locums who are in business on their own and outside of IR35
- Locums that operate through an Umbrella Company that use the Full (permanent) Employment / Swedish Derogation Model are out of scope but for pay ‘equal treatment’ only (see details below), but remain entitled to equal treatment for rest breaks, holidays etc.
- Locums who work for an in-house temporary staffing ‘bank’ where they are employed by the hirer directly
- Locums who find direct, permanent employment with an employer through a Recruitment Agency (but are then employed directly by the employer)
Recruitment Agencies and AWR?
Since the introduction of the AWR, Agencies that provide Locum Doctors and the employers that hire them have had to make changes to the way they administer and operate their arrangements. Agencies now have to gather information about a Locum’s employment history, so they understand their ‘employment status’ and can communicate this to the end-hirer.
Therefore, with regard to Day 1 benefits, agencies need to know:
- What benefits hirers offer to permanently employed doctors, e.g. use of canteen and crèche. The end-hirer is responsible for providing you with this information but some agencies may do this as well
- End-hirers also need to tell you of any relevant vacancies at their organisation during your assignment
With regard to Week 12 rights, agencies need to understand:
Umbrella Companies and AWR?
Locums working via Umbrella Companies will be classified as ‘agency workers’ under the AWR and therefore be entitled to equal treatment rights at their clients
There are many Umbrella Companies in the UK of all varying shapes, sizes and abilities. The large, reputable, Umbrellas know where they stand on the AWR and mostly deal with it by going down the Swedish Derogation route (SDM) offering permanent employment to their Contractors, which was and still is proving controversial.
The Swedish Derogation (Full Employment) Model
When the Agency Workers Directive was negotiated at EU level a Swedish delegation negotiated a clause that said:
Where ‘agency workers’ are employed on a permanent contract by their TWA (agency / umbrella) and receive pay in between assignments, the AWR rights to equal pay for an agency worker no longer exists (so the client does not have to ensure the Contractor receives equal pay to a comparable employee).
For the Swedish Derogation model (SDM) to apply correctly, however:
- The permanent contract of employment with the TWA must be in place before the start of the agency worker’s first assignment and the employment must be genuine. An Employment Tribunal case at the end of 2012 confirmed that although an agency worker may have been working for the same hirer on a series of the same assignments, when they were asked to sign a new contract on the SDM model this was classed as the ‘first’ assignment so the SDM was in place before the start of this assignment
- A TWA using the SDM will have a legal obligation to pay agency workers between assignments a minimum amount for no less than 4 calendar weeks. The minimum amount that can be paid is 50% of the worker’s average basic pay for the last 12 weeks (or at least the National Minimum Wage).
- The TWA must take reasonable steps to seek suitable further employment for the worker when their assignment ends and make sure it is offered to the worker.
However, this does mean your employment can be terminated by the TWA after 4 weeks if there is no further work.
The SDM only applies to pay – it does not remove the equal treatment rights to working hours, holidays etc. So, your Client is still liable for ensuring you receive these (if you are in scope).
If you are an Employer and need ongoing professional help with any staff/freelance issues then talk to us at The HR Kiosk (click here) – a Human Resources Consultancy for small businesses – you can retain 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.