AWR Regulations

Factsheet summary

No government department or independent body has been tasked with policing and enforcing the Regulations. Instead the Regulations will be enforced by agency workers pursuing claims in the Employment Tribunal. Such claims can either be brought against the client or agency or both, depending on the particular breach in question. Generally the liability will lie with the party that is responsible for the breach. In this dosument we look at the different issues relating to liability. Additionally we also look at the steps that agencies should take to minimise their liability, in particular in terms of the information that should be sought from clients to ensure that agency workers receive equal treatment. This document provides a sample of those questions. It also looks at the remedies available to agency workers in the event of breaches of the Regulations.

Introduction to the Agency Workers Regulations 2010

The Agency Workers Regulations 2010 came into force in England, Scotland and Wales on 1 October 2011. The Agency Workers (Northern Ireland) Regulations 2011 came into effect in Northern Ireland on 5 December 2011. In this Factsheet we use the term “the Regulations” to refer to both sets of regulations. Save for the commencement dates, the Regulations are the same in all of England, Scotland, Wales and Northern Ireland.
The Regulations give agency workers the right to the same basic working and employment conditions they would receive if they were engaged directly by an end user client to do the same job; this is limited to conditions that relate to pay and working time. Agency workers are also entitled to access facilities and amenities that an end user client provides to its own workers and to be advised by a client of vacancies which arise in the client’s* business (* the term “hirer” is used in the Regulations to mean the entity using the services of the agency worker. We use “client” throughout the Factsheets).
This factsheet is the fifth in a series of 7 which will look at the Regulations in detail. They have been written for REC Members that operate as employment businesses.
For the purpose of this Factsheet “agency” means an employment business (which engages workers and supplies them to a client to work under the clients control and supervision). Employment agencies in the strict legal sense, which introduce candidates to a client to be engaged directly by that client, are not affected by these Regulations.
A reference to an “agency worker” means the individual engaged by the agency and supplied to work for the client under the client’s supervision and control (for further details on who is an agency worker see Factsheet 1).
For the purposes of these factsheets, “the Guidance” means the guidance on the Regulations produced by the Department of Business, Innovation and Skills (BIS) which can be downloaded here or the guidance on the Northern Ireland Regulations produced by the Department of Employment and Learning (DELNI) available here. References to “the Guidance” are to both guidance documents.

Enforcing the Regulations

Failure to provide equal treatment (basic working and employment conditions)

The Regulations state that if a qualifying agency worker does not receive equal treatment (basic working and employment conditions), then s/he can pursue a claim in an Employment Tribunal against either the agency or the client (or both). An Employment Tribunal will analyse the facts to determine to what extent each party is responsible for the breach of the Regulations.
This means that when determining what compensation will be awarded to an agency worker who is successful in bringing a claim, the Employment Tribunal can apportion the award against the party or parties which it concludes is responsible for the failure to provide equal treatment.
In practice this is likely to result in the agency that has the direct contractual relationship with the agency worker bearing primary liability for the breach since it will be responsible for paying the agency worker and agreeing the terms and conditions that apply to the agency worker.

The agency’s statutory defence

Regulation 14 provides a specific defence for agencies if:

  • the agency either obtains information from the end user client about the basic working terms and employment conditions in the client’s business or takes reasonable steps to obtain this information; and
  • acts reasonably in determining what working terms and employment conditions the agency worker should be engaged under once the 12 week qualifying period has been reached; and
  • ensures that it provides the agency worker with those working and employment conditions. If the agency complies with the above it will not be liable if the agency worker does not receive equal treatment. If the client is at fault because, for example, it has provided incorrect information to the agency, then the client rather than the agency will be liable (see section 12 on Indemnities). 2.2.1. Case law update- Stevens v Northolt High School (ET/3300621/2014) This case centered around the provisions in Regulation 5 of the AWR. Agency workers that qualify for equal treatment are entitled to receive equal pay and working conditions. Regulation 5 provides that a qualifying agency worker is entitled to the “same basic working and employment conditions as [she/he] would be entitled to for doing the same job had [she/he] been recruited by the hirer…” In order for an agency to comply with Regulation 5 they must either obtain information from the end user client about the basic working terms and employment conditions in the client’s business or takes reasonable steps to obtain the information. Ms Stevens was supplied to the school as their head of music. The agency requested equal treatment information from the school on a number of occasions and even reminded them of their obligations under the Regulations but the school ignored the agency’s requests and the teacher was not paid at the higher rate when she qualified for equal treatment. Unfortunately the teacher was underpaid by £10,878 and proceedings were issued.

The agency relied on their defence under Regulation 14 and demonstrated that they took reasonable steps to obtain the information from the school who did not cooperate.
The Employment Tribunal held that the school was solely liable for the underpayment and was ordered to pay the above amount to the teacher. This raises an interesting question about underpaid tax and NICs but these do not concern the Tribunal.

Information that agencies should obtain from the client

The REC has produced a model information request form Document G which agencies can use to request the necessary information from the client. We set out below a non-exhaustive list of the information that an agency should request when taking instructions from a client including:

  • Is there a comparable employee in the client’s business? If yes, what terms is that comparable worker or employee engaged under?
  • If there is no comparable employee, then what terms would the client have engaged the agency worker on if they were to engage them directly? In particular agencies need to know about pay, working time and any time the agency worker has already spent working in the same assignment for that client. The agency should obtain the necessary information in sufficient time to allow it to comply with its obligations under the Regulations. We would recommend therefore obtaining the information from the client either prior to the commencement of the assignment, or as soon as the agency knows the assignment will last more than 12 weeks.
  • Pay
    • What are the hourly rates payable to a direct recruit or comparable employee? Alternatively, if a salary is paid, what hourly rate does that equate to?
    • Is commission payable? If yes, how is this calculated?
    • What bonuses are payable, on what basis and when?
    • What rates are paid for overtime and/or unsociable hours?
  • Working time
    • What are the anticipated hours of work?
    • What rest breaks does the client give to other workers?
    • Annual leave – what contractual holiday is the comparable employee or direct recruit entitled to – is it equal to or greater than the statutory entitlement?
  • Previous working time for the client
    • Has the worker worked in the same role at that client previously, even through another agency? This is important because the agency worker may have already accrued some time towards the qualifying period

Liability of other intermediaries in the supply chain

It is increasingly common for recruitment businesses to supply agency workers to clients via intermediaries, including master or neutral vendors or umbrella companies. For the purpose of the Regulations all of these are “temporary work agencies”. Where more than one “temporary work agency” is involved in the supply of the agency worker who alleges that there has been a failure to provide equal treatment, an employment tribunal shall consider the extent to which each is responsible for the alleged breaches. The various intermediaries which may share the obligation to provide equal treatment include:

  • Second tier suppliers – in order to rely on the agency defence an agency must take reasonable steps to obtain information about equal treatment from the client. This will be more difficult where an agency acts as second, or even third tier supplier and does not have a direct relationship with the end user client. In such cases, the agency will need to ensure that it obtains the relevant information in sufficient time from master/ neutral vendor or from the entity immediately above it in the supply chain if a third tier supplier.
  • Master or neutral vendor – these intermediaries also need to take reasonable steps to obtain information from clients about equal treatment in order to rely on the defence. Additionally master and neutral vendors will need to consider how and when they pass the relevant information to second tier suppliers and whether their terms need to be revised, particularly whether they currently obstruct second tier suppliers from having any contact or obtaining any information which they may also need from end user clients;
  • Umbrella companies – they usually have the direct contract with the agency worker and will also be responsible for ensuring that the agency worker receives equal treatment. An umbrella company wishing to limit its liability may also seek to obtain information regarding equal treatment from the client or via the agency.

Failure to provide access to collective facilities and information about vacancies

Under the Regulations the client will be liable for any failure to provide the agency worker with access to its collective facilities and amenities or to provide information about job vacancies that the client has. An agency worker is entitled to these rights from day one of their assignment.

Helping clients meet their obligations under the Regulations

Whilst the agency has no liability for ensuring that the agency worker has access to collective facilities and information about vacancies, it will be able to prompt its clients to meet their obligations by asking the following questions on receipt of instructions to supply an agency worker:

  • What collective facilities are available to the client’s own workers? These include, for example canteens, child care facilities and transport services;
  • Can the client justify on objective grounds withholding access to these collective facilities from agency workers?
  • How does the client advertise any vacancies which arise? An agency can assist the client by advertising any vacancies the client has but this does not take away the client’s liability to provide the Day One rights under the Regulations.

What steps can an agency worker take before issuing a claim in the Employment Tribunal?

Requests for information to the agency/client

Day One rights are the sole responsibility of the client so the agency worker should address requests for information to the client. REC recommends dealing with any other queries about equal treatment on an informal basis. However, if an agency worker believes that s/he has not received his/ her equal treatment rights, the Regulations allow the agency worker to request a written statement from an agency requesting information about the treatment that the agency worker has received (though s/he can only do this once s/he has completed the 12 week qualifying period).
To trigger this formal procedure, the agency worker must make the request in writing. Once the agency receives this request it will have 28 days to respond and in order to comply with the Regulations the written response must include the following information:

  • relevant information relating to the basic working and employment conditions of the client’s workers;
  • the factors the agency considered when determining the basic working and employment conditions which applied to the agency worker at the time s/he allegedly did not receive the equal treatment they claim they were entitled to receive;
  • relevant information which explains the basis on which the client’s comparable employee was identified and the relevant terms and conditions applicable to that employee. If the agency does not comply with this request, the agency worker can instead request a written statement from the client as to the information about the relevant basic working and employment conditions that apply to the client’s own workers, once 30 days from the date of the original request to the agency has passed.
Requests for information regarding Day One rights

If an agency worker believes that the right to access the client’s collective facilities and amenities, or to receive information about relevant client vacancies has been breached, the agency worker can request information directly from the client about the access facilities and vacancies which is offered to the client’s own workers. The agency worker can go directly to the client in respect of these rights without contacting the agency in the first instance.

What happens if the agency or client fails to respond to the request for information?

The failure to respond to an agency worker’s request for information by either the agency or client may have serious consequences in the event that an agency worker makes a claim to an Employment Tribunal for either a failure to provide equal treatment (basic working and employment conditions) or a failure to provide access to collective facilities and amenities and vacancies. If an Employment Tribunal finds that the agency or client deliberately and without good reason failed to provide the information requested, or that any written statement given in response to an information request is evasive or equivocal, it will be able draw an inference that the agency worker’s rights have been breached.

Failure to comply with the contract terms for agency workers employed on a Regulation 10 contract

Agency workers may also be employed by an umbrella company. A temporary work agency’s liability rests with the part or parties responsible for the breach. Agency workers who are engaged by an agency under a permanent contract of employment that provides for pay between assignments are not be entitled to equal pay provisions under the Regulations, provided that certain conditions are met.
In the event that the agency breaches one of the terms of the agency worker’s contract or fails to comply with one of the relevant conditions relating to the use of the contract, the agency will be liable.
On the face of it, if the agency worker’s contract does not meet the conditions that are required in order for the equal pay provisions to not apply, the agency worker may also have a claim in respect of the failure to provide equal treatment (basic working and employment conditions) if the rate of pay the agency worker received after the qualifying period is less than the rate of pay that is paid, or would be paid, to a client’s directly engaged worker undertaking the same or broadly similar work.

Bringing a claim for a breach of the Regulations in the Employment Tribunal

Regulation 18 of the Regulations sets out the circumstances in which an Employment Tribunal (ET) will consider a claim for a breach of the Regulations. The Regulations provides that an agency worker must bring a claim within three months from the date of the infringement, breach or failure to act, or if there has been a series of breaches, from the date of the last breach. An example of a series of breaches could be if the agency worker has not been paid the correct rate of pay for several weeks. The three month time period will begin from the last time the agency worker did not receive the correct rate of basic pay s/he should have received as part of his/ her equal treatment under the Regulations. This right to bring a claim applies to any breach of Regulation 5 with regards to pay, duration of working time, night work, rest breaks, rest periods and annual leave The three month time period also applies in the same way in relation to a breach of Regulation 12 (access to collective facilities and amenities) and the new maternity rights under the Regulations (the right to reasonable paid time off to attend antenatal care appointments and the right to be offered suitable alternative work).
The three month period for a breach of Regulation 13 (the right to receive information relating to relevant job vacancies) will start from the date, or if more than one, the last date, on which other individuals, whether or not employed by the client, were informed of the vacancy. However, it will be the client who is solely liable for a breach of the Day One rights (Regulation 12 and 13), not the temporary work agency.

Compensation for breach of the Regulations

An agency worker will be compensated for any loss of earnings related to their equal treatment entitlements or an appropriate level of compensation if they have been denied access to a collective amenity or facility. An Employment Tribunal (ET) may take the following steps as it considers just and equitable in response to a breach of the Regulations:

  • make a declaration as to the rights of the agency worker bringing the claim in relation to the relevant breach;
  • order the party found guilty of the breach to pay compensation to the agency worker;
  • recommend that the client or agency take reasonable action to end the breach or reduce any adverse effect to the agency worker. The ET may also recommend a time frame for this action to be taken.

If the ET decides to award compensation to the agency worker, there is a minimum award of two weeks’ pay. However, the ET may award a higher amount if they consider it just and equitable to do so. The ET may also decide to reduce the amount if the agency worker has acted unreasonably. The compensation awarded will be based on tangible loss suffered by the agency worker as a result of the relevant breach of the Regulations and will be awarded against the agency and/or client in so far as they are responsible for the breach. Whilst there is no upper limit to the compensation which can be awarded, the compensation will only be for the loss actually suffered by the agency worker and there is no compensation for injury to feelings (unlike, for example, compensation in discrimination cases).

Liability- the right not to be unfairly dismissed/right to not be subjected to a detriment

Protection is provided for employed agency workers who are dismissed for asserting or seeking to assert certain rights associated with the Regulations. If an employed agency worker has been dismissed on certain grounds, s/he will be treated as an automatic unfair dismissal regardless of his/ her length of service. These grounds are that the agency worker:

  • brings proceedings under the Regulations;
  • gives evidence or information in connection with proceedings under the Regulations brought by another agency worker;
  • requests a written statement on the treatment s/he received or should have received (see section 6); · alleges that an agency or client breached the Regulations;
  • refuses to give up any of their rights under the Regulations; or
  • is suspected by either the agency or the client to have done or to have proposed to do any of the above. An employed agency worker will be able to bring a claim for unfair dismissal against the agency in an ET. Additionally, if an agency worker (whether an employee or not) is subjected to a detriment (i.e. loss or disadvantage) by an agency or client as a result of any of the grounds above, the agency worker can bring a claim against the party responsible for causing the detriment (client/agency or both) in an Employment Tribunal.

Liability for breach of the anti-avoidance provisions

Prior to the drafting of the Regulations, concerns were raised about the possibility that agency workers could be prevented from receiving equal treatment if they were unable to reach the 12 week qualifying period as a result of the way that their assignments were structured by either agencies and/ or clients. In order to combat this possibility, the Regulations include specific provisions (set out in Regulation 9) which entitle the agency worker to be treated as if the equal treatment provisions apply even if s/he has not reached the 12 week qualifying period. The provisions also protect agency workers who having reached the 12 week qualifying period, then have their assignment arranged in such a way which results in their entitlement to equal treatment coming to an end.
In the event of an agency worker successfully pursuing a claim against an agency and or client for failure to provide equal treatment and the ET finds that the either the agency or client arranged the agency worker’s assignment in contravention of the anti-avoidance provisions (see Factsheet 3), the ET can award the agency worker additional compensation of up to £5000.
At the time of writing, we are not aware of any cases which have looked at the antiavoidance provisions.

Indemnifying clients for breaches of the Regulations

Given that the liability for various breaches of the Regulations may rest with the end user client as well as one or more agencies or other intermediaries involved in the supply of the agency worker, it is inevitable that the various parties will try to limit their liability through the use of indemnity provisions in contracts. This may be by introducing contractual provisions which specifically relate to the Regulations or very general provisions which are wide enough to deal with liability under the Regulations.
The REC is aware that clients and other intermediaries have sought indemnities from our members in relation to the Regulations. Though we recognise the commercial realities faced by members, the REC recommends that agencies resist agreeing to terms with onerous indemnity provisions, particularly where the agency indemnifies the client or an intermediary in the supply chain for their own breaches of the Regulations, for example, Day One rights which are the clients’ sole responsibility under the Regulations. An agency worker who does not receive equal treatment (basic working and employment conditions) can pursue a claim in an Employment Tribunal against the temporary work agency or client (or both). The Tribunal will analyse the facts to determine to what extent each party (the client, the agency and any other party in the supply chain) is responsible for the alleged breach. This means that when determining what compensation will be awarded to an agency worker who is successful in bringing a claim, the Tribunal can apportion the award against the party or parties which it concludes is responsible for the failure to provide equal treatment. In terms of overall risk an agency will also need to take into account what other provisions are in place to limit liability under the Regulations. Finally, we recommend that members seek their insurer’s advice on indemnities sought by clients or other intermediaries. If there is a call on an indemnity and the insurer refuses to pay out on it, the agency would have to pay this out and this would inevitably effect the financial health of the agency.