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AWR - a big deal? Part III

31/08/2011

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United Kingdom

Neil Johnston continues his series of articles on the new Agency Workers Regulations

This article was first published in UK Recruiter, 31 August 2011.

Neil Johnston continues his series of articles on the new Agency Workers Regulations (“AWR”). Read the first and second in the series of Neil's articles on the Agency Workers Regulations.

As we have previously noted, the principle tenet behind the AWR is ensuring equality for agency workers.  The AWR provide that after 12 weeks temps are entitled to the same basic working and employment conditions as directly recruited permanent employees doing the same job.  We have seen that this principle of equality is limited in scope to conditions relating to pay, duration of working time, night work, rest periods, rest breaks and annual leave.  Last month we explored what equal treatment in relation to duration of working time, night work, rest periods, rest breaks and annual leave means in practice. This article will focus on what is meant by equal treatment in respect of pay and also how the 12 week qualifying period works in practice.

What is meant by equal treatment is relation to pay?

Pay includes a comparable permanent employee’s salary.  So, in practical terms, that employee’s annual salary should be converted to an hourly or daily rate and that information provided by the Hirer to the Agency.  Pay also includes overtime payments; unsocial hours or shift allowances; risk payments for hazardous activities; payments for not taking annual leave over and above the statutory minimum 5.6 weeks; bonus or commission payments directly attributable to the amount or quality of work done by the individual; vouchers or stamps which have a monetary value e.g. lunch vouchers and childcare vouchers provided that they are not part of a salary sacrifice scheme; and discretionary one off non contractual bonuses.

Pay does not include occupational or company sick pay over and above statutory sick pay; occupational or company pay in respect of maternity, paternity and adoption leave over and above an individual’s statutory entitlement; payments made to an individual’s pension (although it should be noted that temps will be covered by the new auto enrolment provisions which will be phased in from October 2012); contractual and statutory redundancy pay; shares, share options and long term incentive plans; season ticket loans; notice pay linked to loss of employment; payments for time off dealing with trade union duties; expenses such as accommodation and travel expenses; benefits in kind such as private healthcare and permanent health insurance; and bonus payments not linked to an individual’s performance e.g. those linked to the performance of the company and those based on long term service.

Many companies operate bonus schemes based on a combination of company and individual performance and the issue of bonus payments is an area which is likely to cause some confusion. Arrangements will need to be put in place between Agencies and Hirers for such payments to be made when they fall due.  Further, from a Hirer’s perspective arrangements will need to be put in place to assess the temp’s personal performance.  Whilst the guidance which accompanies the AWR does not require the integration of temps into the Hirer’s performance appraisal system, it does recommend that some system is put in place to assess an individual’s performance for bonus purposes. It would be prudent for Hirer’s to follow this advice.

How does the 12 week qualifying period work in practice?

It is simplest to view the 12 week qualifying period as a clock that starts ticking from the moment the temp starts to work for the Hirer.  The 12 week qualifying period will not be applied retrospectively from 1 October 2011.  The clock will start ticking in respect of all temps from 1 October 2011.  It does not matter whether the temp works the whole or part of a week (even if only for one hour in one week) the clock ticks on counting that period as one week. 

However, some events cause the clock to return to zero.  Where a temp begins a new assignment with a new Hirer; remains with the Hirer but starts to work in a substantially different role; or there is a break of six weeks or more between assignments the clock resets to zero.  It should be noted at this point that the AWR contain anti avoidance provisions designed to stop Hirers and Agencies avoiding the impact of the AWR.

Other events such as a break of less than six weeks between assignments; breaks of up to 28 weeks due to the temps ill health, injury or jury service; annual leave; strikes and breaks caused by a regular and planned shutdown e.g. over Christmas cause the 12 week clock to pause.

However, breaks due to pregnancy, maternity, paternity or adoption leave do not stop the clock and it continues to keep ticking through those absences.

Next month

In next month’s article we will examine the remedies available to temps for a breach of the AWR and where liability for a breach may fall.

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