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UK – Is AWR dead in the water?

10 January 2014

The decision by the Employment Appeals Tribunal to uphold a ruling that the Agency Workers Regulations (AWR) are not applicable to permanent contracts has caused concern in the staffing industry.

As a result of the case of Moran vs Ideal Cleaning Services Ltd and Celanese Acetate Ltd, the ruling by the EAT means that AWR only applies to ‘temporary’ agency workers, and that other agency workers are not protected by the legislation. 

According to Kevin Barrow of international law firm Osborne Clarke, this means that non-temporary agency workers do not, among other things, have equal pay rights. If the EAT decision is correct it will be simple for companies to circumvent the AWR by:

  • Saying it only applies to assignment for a limited period or intended to be for a limited period; and
  • Engaging/supplying all agency workers on open-ended assignments terminable on notice, which is what a vast proportion of agency worker contracts specify.

Osborne Clarke believes that it would render the AWR redundant in a large proportion of situations where agency workers are used in the UK. This would be good news for users and suppliers of agency workers; who currently have to try to equalise pay for agency workers and comply with the other requirements of the AWR.

But before suppliers and buyers of agency workers start to celebrate the latest turn of events, Osborne Clarke has issued the following words of caution.

If the EAT Moran decision is followed by other UK Courts and Tribunals, the Unions will be up in arms. Given the general media and cross-party political sympathy for lower paid agency workers, it may lead to legislation that would ensure the AWR applies to agency workers engaged on open-ended assignments, as well as those engaged on limited duration assignments. That legislation would not need to be primary legislation (i.e. an Act of Parliament, which is a lengthy process). The changes could be introduced quickly by statutory instrument.

The view of Osborne Clarke in the meantime is that the purpose of the 2008 Agency Workers Directive (from which the AWR stems, and in light of which the English Courts and Tribunals are required to interpret the AWR) was to give those agency workers who do not have full employment rights a right at least to equal pay (in addition to a few other rights). The AWD was the last in a series of measures introduced by the European Commission as part of the Social Chapter to give atypical workers additional rights (with Fixed Term Workers and Part-Time Workers also being given rights in separate directives). The idea of the Social Chapter seems to have been to leave no atypical workers without some sort of right.

The Osborne Clarke recruitment team led staffing industry discussions with the UK government about, and helped the CBI with their response to, the Agency Workers Regulations in 2007-2010. The law firm asked the government at the time of discussion of the AWR what was intended by the word “temporary” and there was no clear answer. It seems that the AWR included the word because that is what the AWD said.

Arguably the use of the word “temporary” in the AWD (and AWR) was merely to distinguish “here today, gone tomorrow” agency workers from those workers who (by dint of length of service and direct contract with hirer) have, across all EU countries, statutory employment rights with such protection against termination that it is hard to terminate them (so called “permanent” workers). In other words, the word “temporary” means “relatively easy to terminate” and is merely a corollary of “permanent” (meaning “hard to terminate by dint of statutory employment rights”). This seems to us be what paragraph (15) of the preamble to the AWD intends. Therefore, it is arguable that the wording of the AWD means that UK agency workers on open-ended assignments are protected by the AWR, contrary to the decision of the EAT in the Moran case.

Osborne Clarke also feels that if it had been intended that agency workers engaged on open-ended assignments should fall outside AWD (and AWR) protection then the definition of “temporary agency worker” in the AWD would have included further clarification of the word “temporary” with detail about what would and would not be deemed to constitute “temporary”.

Therefore if a case relating to a normal agency working situation (on open-ended contracts) were appealed to the European Court of Justice it seems quite likely to Osborne Clarke that the decision would go the other way and the agency workers would be found to have rights under the AWR.

Osborne Clarke issued one final word of caution about the Moran case – the workers engaged in this case were on site for a long time – it is an extreme example and often cases with unusual facts throw out funny decisions. UK Courts and Tribunals may not follow this decision with future cases if they involve more typical circumstances.

In light of the above, Osborne Clarke considers that buyers and suppliers should wait to see what develops in the next few months before abandoning their AWR compliance. If they stop equalising pay and other compliance measures too soon, they may face a test case which could go the other way leaving them with liabilities.

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