CWS 3.0: January 15, 2014

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Agency Ruling Casts Doubt on AWR

Last month, the Employment Appeals Tribunal (EAT) in the U.K. upheld an Agency Workers Regulations (AWR) ruling that may affect buyers of open-ended contract staff through staffing firms.

In Moran v. Ideal Cleaning Services Ltd and Celanese Acetate Ltd., the tribunal upheld a ruling that the AWR did not apply to permanent workers assigned to other companies. This 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 agency workers on open-ended assignments do not, among other things, have equal pay rights. If the tribunal’s decision is upheld further, it will be simple for companies to circumvent the AWR by:

  • Saying the AWR only applies to limited assignments or those 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 U.K. This would be good news for users and suppliers of agency workers, who currently have to try to equalize pay for agency workers and comply with the other requirements of the AWR.

However, Osborne Clarke has issued the following words of caution for buyers and suppliers:

“If the [tribunal’s] Moran decision is followed by other U.K. 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 purpose of the 2008 Agency Workers Directive (from which the AWR stems) 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).

Osborne Clarke’s guidance continues: “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).”

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,” Osborne Clarke continued.

Therefore if a case relating to a normal agency working situation (on open-ended contracts) were appealed to the European Court of Justice, Osborne Clarke believes it quite likely 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. U.K. 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 equalizing 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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