Agency Workers Regulations (AWR) - CLIENT FAQS
AWR came into effect on 1 October 2011. Please find below our responses to FAQs from our clients which you will hopefully find useful.
The Government guidance on AWR is not legally binding but does give an indication as to how AWR may be interpreted. Case law developments will be key to resolving any uncertainty.
Our responses are not formal legal advice. We recommend that you seek advice from your company solicitors/legal advisers in respect of any specific queries you may have as your individual circumstances will be relevant.
You can view the full list of FAQs below.
2. Day 1 rights: access to collective facilities and amenities and information on job vacancies
2.1. Access to facilities
2.2. Access to information on job vacancies
2.3. Risks of non-compliance
3. 12 weeks rights: equal treatment to pay and other basic working conditions
3.1. 12 week period
3.2. Comparators
3.3. Pay
3.4. Bonus
3.5. Holidays
3.6. Pregnancy, childbirth and maternity leave etc.
3.7. Appraisals
3.8. Terminating assignments
3.9. Risks of non-compliance
frequently asked questions
1. Who is protected by AWR?
1.1. If temporary workers are paid more than our permanent employees, will they be protected by AWR?
Yes, but there would be reduced risk of any complaint or claim. These temporary workers couldn’t bring a claim for equal pay. They could still be entitled to other equal rights provided by AWR such as holiday and bonus. Please see below for further guidance on holidays and bonuses.
1.2. If we contract with temporary workers directly, would they be protected by AWR?
No, because there has to be an ongoing relationship between the temporary worker and a recruitment agency. However, if you enter into direct contracts with temporary workers, and are responsible for paying temporary workers, this could risk temporary workers being deemed your employees. You should seek legal advice before entering into a contract directly with a temporary worker.
1.3. Are limited company contractors protected by AWR?
Depends. Contractors who are not genuinely self-employed will be protected by AWR. The courts will look at your relationship with the contractor and how he or she performs services for you to determine whether they are genuinely self employed or not. The tests will be similar to tests that determine IR35 status. If a limited company contractor is genuinely IR35 compliant, they should be out of scope of AWR. For example, if they have no fixed working pattern and can choose how and when they perform the services (being able to send a substitute to perform the services on their behalf should they wish to do so). If, however, the contractor is expected to perform services personally (i.e. can’t send a substitute), and you control how he/she performs the services, they will most likely be in scope of AWR.
1.4. If we have contracts with limited companies directly, would the limited company contractors be protected by AWR?
No. An agency would need to be involved in the contractual arrangement for AWR to apply. However, if a limited company is considered by a court to be “in business involved in the supply of temporary agency workers”, it could potentially be considered a temporary work agency which would bring the contractors in scope of AWR. It seems unlikely that a limited company would be considered a temporary work agency if it only supplied one contractor but we will need to wait and see how the courts interpret this.
1.5. Can temporary workers (or limited company contractors) opt out of AWR?
No.
1.6. Are temporary workers working through an umbrella company protected by AWR?
Yes. Even if that temporary worker is an employee of the umbrella company, and has full employment rights, if they have found work with you through an agency, they will be protected by AWR.
1.7. What is the Swedish Derogation?
Where a temporary worker has a permanent contract of employment with an agency, and is paid between assignments, they will not be entitled to the same pay as permanent employees during an assignment.
The rate of pay between assignments must be at least 50% of the assignment pay and at least the national minimum wage.
The agency must take reasonable steps to find the temporary worker another assignment. If the temporary worker refuses a suitable assignment, after 4 weeks their contract can be terminated.
2. Day 1 rights: access to collective facilities and amenities and information on job vacancies
2.1.1. If a facility is only available to some employees, do we need to give access to that facility to ALL temporary workers?
For example, access to an on-site medical centre only available to employees in the company medical plan scheme.
No. Temporary workers aren’t entitled to enhanced rights to facilities and amenities. The same eligibility/qualification criteria for access to a particular facility or amenity should apply to temporary workers. In this particular example, since temporary workers wouldn’t have the right to join your medical plan scheme, they wouldn’t be able to use the on-site medical centre.
2.1.2. Can we charge temporary workers for using a facility or amenity if we don’t charge our employees?
Not if they are entitled access to that facility or amenity under AWR. You could charge temporary workers for using a facility or amenity that they aren’t entitled to access under AWR (such as the example above).
2.1.3. We allow our permanent employees to apply for golf and other sporting events that we sponsor. Do we need to allow temporary workers to apply?
Yes. The same application process should apply equally to permanent employees and temporary workers. You could consider restricting applications for events to employees with a certain level of continuous service. This restriction would then also apply to temporary workers.
2.2. Access to information on job vacancies
2.2.1. We advertise vacancies on our intranet. Do we have to give temporary workers access to our intranet?
No. You could publicise vacancies on a notice board in a communal area, for example. But temporary workers must know where to find your current vacancies.
2.2.2. Do temporary workers get preferential treatment to jobs?
No. Temporary workers have the right to be informed about vacancies. You have no obligation to offer them a job and they aren’t entitled to preferential treatment in the recruitment process.
2.2.3. Are Swedish Derogation temporary workers entitled to ‘day 1 rights’?
Yes. The only exception is equal treatment to pay. Temporary workers on a Swedish Derogation contract will also be entitled to equal treatment in terms of holiday entitlement, working time and rest breaks.
2.3.1. What happens if we don’t provide a temporary worker with access to facilities or amenities or information on job vacancies?
You would be responsible for a breach of this obligation. Not the recruitment agency.
If you charged a temporary worker for using a facility, you would have to pay this back. If the temporary worker incurred any expenses as a result of not being offered access to a facility, they could be compensated for this also. For example, if a temporary worker had to pay for a nursery when they should have been allowed access to an on-site crèche. Total compensation payable to a temporary worker would be a minimum of two week’s pay unless the temporary worker had behaved unreasonably. There is no maximum level of compensation.
A tribunal can also recommend that you take certain action to ensure temporary workers are treated equally going forward. If you fail to take this action, the tribunal may order you to pay more compensation to the temporary worker(s).
You can potentially justify not offering temporary workers access to certain facilities or amenities if there is good reason. Cost alone is unlikely to be a good reason. Legal advice should always be sought if you are considering refusing temporary workers access to any facilities or amenities.
3. 12 weeks rights: equal treatment to pay and other basic working conditions
3.1.1. If a temporary worker is transferred to a different group company, does the clock continue to run?
No, unless the temporary worker has been moved to a different group company specifically for the purpose of re-starting the clock and preventing them from gaining 12 week rights (i.e. avoiding AWR). The key issue is the motive behind the move.
3.1.2. If a temporary worker only works a half day, or a couple of hours a week, will that count towards the 12 week qualifying period?
Yes. Even if a temporary worker only works one hour in a week, that whole week would count towards the 12 week qualifying period.
3.1.3. If a temporary worker works some hours in a week, and takes some holiday that week, would that week count towards their 12 weeks service?
Yes since they will have worked some hours that week.
3.1.4. What happens if a temporary worker’s assignment starts before we close over Christmas and continues when we re-open one week later?
The ‘clock’ would be paused during the Christmas closure and would start again when the office re-opens. A temporary worker’s clock will be paused during a regular or planned shut-down.
3.1.5. The 12 week clock continues to run when a temporary worker has a break in their assignment due to pregnancy, childbirth or maternity. What’s the difference between those three things?
A break due to pregnancy could include sickness absence linked to the pregnancy or ante-natal and other pregnancy related medical appointments. A break due to childbirth would be where a temporary worker’s baby was born before the temporary worker’s chosen date to start maternity leave. This is because in those circumstances, maternity leave would start the day after the birth. The clock would continue to run during maternity leave.
3.2. Comparators
3.2.1. Do temporary workers have to point to a comparator in order to bring a claim?
No. They only need to show that they would have been paid more or be entitled to more holiday, for example, if they had been recruited directly as an employee. Without a comparator, a temporary worker could refer to standard practice within the company. For example, if you give all permanent employees 6 weeks paid annual leave and paid time off for bank holidays, the temporary worker should be entitled to the same. A temporary worker may also be able to point to company pay scales or structures. If salaries vary considerably depending on individual circumstances and negotiation, it could be harder for a temporary worker to argue their pay should be increased.
3.3.1. Our annual pay reviews are discretionary and based on personal performance. How do we deal with temporary workers?
If pay rises aren’t awarded to your permanent employees, temporary workers’ pay need not be increased. If any pay rises are awarded, you must notify the recruitment agency so that they can make any adjustments to temporary workers’ pay as appropriate. You could potentially justify giving a permanent employee a better pay rise – for example, to reflect skills and experience. This is another reason why appraisals for temporary workers (see below) may be useful.
3.3.2. Are temporary workers entitled to overtime pay?
Yes if a comparable permanent employee is paid overtime, or if the temporary worker would have been paid overtime had they been recruited directly as an employee. The same overtime rules that apply to permanent employees would apply to temporary workers.
3.3.3. Can we reduce temporary workers’ pay so that it’s more in line with our permanent employees?
Potentially, yes. AWR seeks equal pay; not better pay. Changing pay rates would be more straightforward for new temporary workers, although not entirely risk free. Changing pay rates for existing temporary workers would be more difficult and risky. We would recommend legal advice is sought before any attempt to change pay rates.
3.4.1. Are temporary workers entitled to bonuses?
Temporary workers will be entitled to contractual bonuses directly linked to personal performance. There’s also an argument that temporary workers would be entitled to bonuses linked to team performance. Temporary workers are not entitled to bonuses linked to company performance.
If your bonuses are based partly on company performance and partly on individual performance, guidance suggests that the proportion linked to individual (and possibly team) performance should be identified as far as possible and the temp paid the appropriate individual/team performance-based proportion.
Where your employees' bonuses are based on appraisals, some form of appraisal (probably less full-form) should be implemented for temporary workers, to ensure consistency.
Temporary workers only have a right to be considered for these bonuses. Based on individual performance and appraisal, you may be justified in not paying a temporary worker a bonus; or a lower bonus.
Temporary workers are not entitled to purely discretionary bonuses. There’s not much guidance on what a purely discretionary bonus is. If your contracts refer to a discretionary bonus based on individual performance but the reality is such bonuses are paid with regularity and have become custom and practice, they will most likely be in scope of AWR. A discretionary bonus is more likely to be an ad-hoc surprise bonus with no set formula or assessment process, that you may pay your employees to thank them for a good job.
Bonuses are a tricky and grey area. We would recommend you seek legal advice on how best to deal with your bonus payments.
3.4.2. If there is a 12 month qualifying period before permanent employees are entitled to a bonus, do temporary workers have to wait 15 months (i.e. 12 months plus the 12 week qualifying period) before they become eligible to such a bonus?
No. The 12 week qualifying period counts towards the 12 month qualifying period.
3.4.3. Can we pay temporary workers bonuses at the end of their assignment?
Potentially. A failure to pay bonuses at the same time as permanent employees would be a breach of AWR but if the temporary worker receives the bonus at some point, they may not wish to bring a claim. Breaches of AWR attract a minimum two weeks' pay compensation, but unless the temporary worker can show further financial losses arising from not being paid at the same time as permanent employees the risk appears small. You are less likely to face claims if the temporary workers are clear at the start of their assignment that, subject to the bonus scheme rules, they will be paid any bonus entitlement at the end of their assignment.
3.4.4. If a temporary worker resigns and is working their notice or has already left the business when the bonus payments are paid, would they be entitled to a bonus?
If permanent employees would be entitled to a bonus in these circumstances, so would the temporary worker. If permanent employees would not be entitled to a bonus in these circumstances, neither would the temporary worker.
3.5.1. If temporary workers’ holiday entitlement has to be increased due to AWR, can we increase their base rate or pay them in lieu instead?
Yes. Holiday entitlement over and above the statutory minimum (28 days a year, which can be inclusive of the 8 bank holidays) can be rolled up in a temporary worker’s base pay or paid in lieu. For example, at the end of their assignment. For longer assignments, it might be more practical to pay additional holiday entitlement every 6 months, or at the end of the holiday year. If you are rolling up in base pay, the temporary worker should be made aware of that.
3.5.2. Are limited company contractors entitled to the same holidays as our permanent employees?
Potentially. See our response above dealing with whether limited company contractors are protected by AWR.
3.6. Pregnancy, childbirth and maternity leave etc.
3.6.1. Are temporary workers subject to the same eligibility requirements in respect of statutory maternity, paternity and adoption pay?
Yes. For example, a temporary worker would need to have 26 weeks continuous service at the end of the 15th week before the expected week of childbirth in order to be eligible for maternity pay. After the 12 week qualifying period, temporary workers will also be entitled to paid time off to attend antenatal appointments.
3.7.1. Do we need to carry out appraisals with temporary workers?
Not necessarily. This is not a requirement of AWR but it may be easier to appraise temporary workers if they could potentially be entitled to a bonus in order to assess what bonus they should be paid. The appraisal process for temporary workers can be different to your appraisal process for permanent employees. We would recommend a different, most likely shorter process to avoid any risk of temporary workers being deemed your employees.
3.8.1. Does AWR make it harder for us to get rid of a temporary worker if they’re not performing?
No. If you’re not happy with a temporary worker, even after they have achieved 12 weeks service, you don’t necessarily need to manage their performance and can terminate their assignment should you wish. As before AWR, you can’t terminate an assignment on discriminatory grounds (e.g. because a temporary worker is pregnant).
3.8.2. Does AWR give temporary workers rights in a redundancy situation?
No. You should always seek legal advice, however, if you are contemplating redundancies.
3.9.1. What happens if a temporary worker isn’t paid the same as our permanent employees, or isn’t paid a bonus?
Both the hiring company and the recruitment agency can be liable for breach of ’12 week rights’ to the extent that each is responsible for the breach. If you fail to provide information to us when asked about your basic working and employment conditions, or provide incorrect information, you could be solely responsible for the breach.
You may have to pay compensation to the temporary worker. Compensation would reflect any financial loss the temporary worker had suffered as a result of the breach (e.g. loss of earnings if they had been paid less than permanent employees). Total compensation payable to a temporary worker would be a minimum of two week’s pay unless the temporary worker had behaved unreasonably. There is no maximum level of compensation.
A tribunal can also recommend that you take certain action to ensure temporary workers are treated equally going forward. If you fail to take this action, the tribunal may order you to pay more compensation to the temporary worker.