This consultation document sets out the Government’s proposed approach to implementation of the Agency Workers Directive in the light of our policy consultation earlier this year. It provides a synopsis of responses to the previous consultation, sets out the way in which we now intend to proceed, and seeks comments on draft regulations. The key elements of the Government’s proposed approach are as follows:

(a) legislation will be on the basis of the CBI-TUC agreement of May 2008, providing agency workers with a right to equal treatment after 12 weeks in a given job;

(b) the Regulations will come into force on 1 October 2011. We recognise that implementation of the Directive will entail some potentially significant changes in practice for hirers and agencies, who will need time to prepare;

(c) implementation will apply to people finding temporary work through a “temporary work agency” which will be based upon the existing concept of an “employment business. The definition of “agency worker” will based on that used for “workers” in the Working Time Regulations 1998, adjusted to reflect the distinctive triangular relationship between an agency worker, the employment business and the hirer. This will exclude workers who are genuinely one of the following: the self-employed; those working through their own limited liability company; or those employed on “Managed Service Contracts”;

(d) the scope of the definition does, however, include agency workers contracted to an “umbrella company”, or who operate a personal service company but are not genuinely self-employed, or who are supplied through “intermediaries” such as Master/Neutral Vendors and any similar “chain” arrangements. Despite concerns expressed by some respondents, we are concerned that not to include these structures would provide a relatively straightforward way for the unscrupulous to evade the regulations;

(e) agency workers qualifying for equal treatment will be entitled to paid holiday entitlement, including any entitlement above the statutory minimum requirements. To address practical issues we will, however, make it possible for payment to be made in lieu of entitlement above the statutory minimum;

(f) “pay” will essentially mean basic pay plus other contractual entitlements directly linked to the work undertaken by the agency worker whilst on an assignment. This will include payment for overtime, shift allowances, unsocial hours premiums/bonuses, payments for difficult or dangerous duties, and some commission payments and bonuses. It will, however, exclude bonus payments that are based wholly or partly on organisational performance, that are linked to a performance appraisal process designed for long-term management, motivation and retention of staff, or would not be due for payment to the agency worker concerned within his or her time with that hirer had he or she been recruited directly.  It will also exclude other aspects of remuneration that are provided in recognition of the long-term relationship between employer and permanent employee such as profit sharing and share ownership schemes and, consistent with the CBI-TUC agreement, occupational pension contributions or schemes and occupational sick pay;

(g) the 12-week qualifying period will be 12 calendar weeks, regardless of working pattern (eg part-time as opposed to full-time). A new qualifying period will begin only if a new assignment with the same employer is substantively different; with a minimum six week break between assignments in the same job before the 12 week clock should start again;

(h) on establishing “equal treatment”, the “basic working and employment conditions” to which equal treatment will apply will be those that “apply generally” in the workplace. The draft regulations describe this as those terms and conditions that are ordinarily incorporated into contracts of employment of employees of the hirer whether by collective agreement or otherwise. This will include collective agreements, pay scales and company handbooks or similar, but also extend to terms generally included in employees written employment contracts and other matters of custom and practice in the workplace concerned. In recognition of the fact that deciding equal treatment will in practice often entail comparison with a ‘flesh and blood’ comparator, the draft regulations also expressly provide that treatment consistent with that given to a true comparable employee will be deemed to mean compliance with the regulations. To aid understanding, an initial draft of guidance on this important point is also provided at 'Annex A: AWD Comparator: Possible Guidance', complete with illustrative examples;

(i) on liability, the agency will be responsible for any breach of a right in relation to equal treatment related to basic working and employment conditions but will have a reliable defence if they have taken “reasonable steps” to obtain the necessary information from the hirer and acted “reasonably” in determining the agency worker’s basic working and employment conditions. Any party in the “chain” of relationships can be named at the outset or joined to a claim and would be liable to the extent that they are to blame for the infringement;

(j) on the provision of information about equal treatment on basic working and employment conditions, we propose not to specify the nature of the information that should pass from hirer to agency, but to give agency workers the ability to ask their agency for information relating to their equal treatment rights. After the 12 weeks have elapsed, the agency worker can request a written statement from the agency (and subsequently from the hirer, if they do not receive a response from the agency, both of whom will have 28 days in which to respond) about any aspect of equal treatment which they do not believe they are receiving. There will be no separate right of enforcement if any agency worker does not receive these details. But if the agency worker goes on to make a claim under the regulations, the Employment Tribunal can draw an adverse inference from the fact that the written statement was not provided. We do not propose a specific timescale for the agency to obtain information from the hirer – this is likely to vary in different circumstances;

(k) liability in relation to access to employment and collective facilities, will be the sole responsibility of the hirer as the agency has no role in delivering these entitlements;

(l) on dispute resolution, the regulations will enable an agency worker to bring a claim to an Employment Tribunal. They will also be added to the list of jurisdictions covered by the Employment Appeal Tribunal. To help resolve matters without the need for court intervention, Acas (the Advisory, Conciliation and Arbitration Service) will be able to deliver pre- and post-claim conciliation. In terms of remedies if a Tribunal upholds an agency worker’s complaint it will generally be able to order compensation, make a declaration setting out the agency worker’s rights in relation to the matters to which the complaint relates, and/or recommend that the hirer/agency takes certain action to remove the adverse affect on the agency worker;

(m) on the protection of pregnant women and new mothers we clarify that liability for ensuring women are provided with alternative work or paid where this is not possible should reside primarily with the agency; we are extending the right to paid time off for ante-natal appointments to agency workers;

(n) we clarify our approach regarding the Directive’s provisions on access to employment (including the implications for our current legislation on “temp to perm” fees), collective facilities and vocational training for agency workers;

(o) we propose that agency workers should count towards thresholds for the establishment of representative bodies in the agency (as opposed to the hirer) and provide some additional clarification regarding our proposals on the provision of information on the use of agency workers to workers’ representatives; and

(p) finally, we intend to take advantage of flexibility allowed under the Directive to permit alternative arrangements in the case of agency workers on permanent contracts of employment who are paid between assignments, and where the alternative arrangements are agreed by workers’ and employers’ representatives.
 

Responses are requested by 11 December 2009.