THE AGENCY Workers Directive (AWD) will finally come into effect in October. It is officially the most protracted piece of UK employment legislation ever: it was first proposed back in 2002. However, it was stalled by the UK which used its blocking minority until 2008 when enlarged EU membership meant it could no longer sustain its opposition.
For finance directors employing the UK’s estimated 1.5 million agency workers, the AWD will mean that these workers will now have the right to expect the same conditions (and pay) as those recruited to do the same job on a permanent basis.
The UK is slightly different from the rest of Europe. In 2008, a deal was struck between the Confederation of British Industry and other business groups to delay this equality until workers have been in a job for 12 weeks. But businesses are still furious, believing they will have to give full-time employee rights and all the benefits this entails, as defined by the 1996 Employment Rights Act, to people whom they consider as falling outside this term and who work on the basis that they are brought in on flexible terms.
While some of this is true, the reality for FDs is a little different. From 1 October, those paid via PAYE – through an agency or other umbrella organisation – will have the right to the same basic hourly/daily rates as other workers after 12 weeks. They must also have the same overtime or shift working opportunities, the same unsocial hours, premiums or payments for difficult or dangerous duties, equal bonuses directly attributable to the quality and quantity of work completed, as well as the same rest breaks and annual leave allowance. They will also be entitled to collective facilities, such as childcare facilities and canteens.
However, the directive does not give temporary workers full employment rights. “This is one of the big misunderstandings amongst FDs,” says Joe Tully, legal director at temporary worker procurement company De Poel. “These workers will still be classed as temporary. They cannot request flexible working, redundancy, occupational sick pay, occupational maternity/paternity pay, and they do not have entitlement to pensions.”
In terms of what FDs must budget for, equal pay does not have to mean that it is equal to existing staff either. The rules still allow for temporary workers to be cheaper.
“Agency workers will typically receive the pay that someone joining the hiring company would expect to get if they were hired direct,” says Tully. “What FDs seem to fear is agency workers comparing themselves to the pay and experience of someone who’s been at the same company, doing the same job, for five years. This is not the case. They simply need to find out what they would pay someone who comes direct, and pay this.”
Massaging the rules
A paradox of the directive is that it seeks to raise the income of temporary workers compared to that of permanents. However, agency workers are paid more in some cases, such as in the care sector. In these cases, FDs cannot ask agency staff to come down to the level that they pay permanents, and permanents cannot ask for their pay to be lifted up to the rates paid to agency staff.
But FDs do need to worry about blatant massaging of the rules. Temps only qualify for enhanced benefits if they stay in the same role with the same hirer for a full 12-week period. James Wilders, partner at Dickinson Dees, says: “Attempts to avoid the regulations, by having an agency work for two or more assignments of less than 12 weeks or terminating a job just before the 12 weeks are up, could land employers facing a tribunal, which will be able to award up to £5,000 in damages.”
Moving a temporary worker to different sites with the same employer will not break a worker’s continuity: the 12-week clock is only reset when an agency worker moves to a new hirer – in other words, to a different legal entity.
“FDs should take care of moving people around because of what the rules refer to as ‘substantively different roles’ – something that can cause the 12-week clock to be reset,” adds Tully. “Is it classed as a substantially different change of role when you move someone who was hired on a factory production line to a different part of the line, with a different manager? Businesses will need to tread carefully, and only case law will show real clarity on this.”
Technically, the recruitment agency, and not the FD of the hiring company, is liable for any unequal treatment. However, all that agencies need to do is prove they have taken reasonable steps to obtain the information they need from the hirer and, if the FD has not produced this, the hiring company will be in breach as well.
The government has also announced it will monitor how the rules work over the next two years. “We support this because it’s imperative the AWD is implemented in a business-friendly manner,” says a spokesman at recruitment firm Hays.
Tully concludes: “This law is a lot less scary than it looks. There’s a lot of panic out there, but all FDs really need to do is understand the profile of their workforce, what their agency worker spend is, and how long they stay in roles.
“Twelve weeks is still a long time. Those who use agency staff for shorter than this will have no change to deal with at all.” ?
What can you do to ensure your employees know the company policy and stick to it? Hear from other CFOs and experts in our free-to-view video
Three former Tesco executives, including the former finance director of Tesco UK, have denied charges of fraud and false accounting in relation to a £326m accounting scandal at the supermarket
The UK’s imminent exit from the EU that may now put the audit committee to the ultimate test
Governance concerns have been raised at courier firm Hermes, over allegations about it paying less than the minimum wage