The Agency Worker Regulations (Awr) 2010

THE AGENCY WORKER REGULATIONS (AWR) 2010

‘Regulation 10’

NUT GUIDANCE TO REGIONAL OFFICES

APRIL 2012

INTRODUCTION

The AWR came into force on 1 October 2011 and is the enactment of an EU directive on temporary agency workers. The basic aim of the Regulations is that agency workers should be treated similarly to their directly employed colleagues who are doing the same type of work. The protection given by the Regulations is limited, notably requiring 12 weeks continuous engagement and applies only to basic terms of employment.

Agencies have sought to maximise their use of a ‘loophole’ contained within Regulation 10 of the AWR which is otherwise known as ‘the Swedish Derogation.’

Regional Offices have received a number of member queries raising concerns that their agencies have been asking them to ‘opt out’ of the AWR by signing these Regulation 10 permanent contracts of employment.

This guidance is intended to supplement the earlier NUT Guidance on AWR.

THE ‘SWEDISH DEROGATION’

Regulation 10 of the AWR provides that where agency workers are employed on permanent contracts of employment that provide a minimum amount of pay in the event of no available work, they will be exempt from the ‘equal pay’ rights in Regulation 5.

It is important to note that this type of contract does not affect the worker’s other Regulation 5 rights to equal conditions that are not pay related, i.e., hours of work, etc.

As long as an agency complies with the provisions of Regulation 10, it can offer these contracts to workers which means they would not have to provide STPCD pay rates even after the 12 week qualifying period.

In order to comply with Regulation 10, the contract must comply with the following requirements:

it must be a permanent contract of employment;

it must contain a term which expressly states that Regulation 5 AWR is disapplied; and

it must provide that the worker will receive a minimum payment during periods (after the end of the first assignment under the contract) when no suitable work is available. That ‘minimum’ amount must not be less than 50 per cent of the highest (e.g., weekly) earnings in the previous 12 weeks of the assignment. (Or where the previous assignment lasted for less than 12 weeks, 50 per cent of the highest pay during that assignment). Where the minimum payment is lower than the minimum wage for the number of hours worked, the minimum wage must be paid.

The contract must also confirm the following:

the scale and rate of remuneration or the method of calculating remuneration;

the location or locations where the agency worker may be expected to work;

the expected hours of work during any assignment;

the maximum number of hours of work during any assignment;

the maximum number of hours of work that the agency worker may be required to work during each week of any assignment;

the minimum number of hours’ work per week that may be offered to the agency worker provided that it is a minimum of one or more hours;

the nature of the work the agency worker may be expected to be offered including any relevant requirements relating to qualifications or experience.

Although these permanent contracts of employment smack of anti-avoidance, the Regulations provide that as long as the above requirements are met then these contracts are legal and are a valid and lawful tool for agencies to use. On this basis, there is little we can do to legally challenge them.

We take the view that members should not have to sign away their rights to equal pay. Unfortunately, as there is provision in the Regulations to offer permanent contracts of employment there is little we can do to legally challenge an agency’s decision not to offer the worker further work if the worker doesn’t sign the contract.

On this basis, it would be for the member to make an informed decision for themselves whether or not they wanted to sign the permanent contract of employment offered by their agency. On one hand, if they sign the contract they will have employee status and be guaranteed a defined minimum paymentwhen no suitable work is available, but with no right to equal STPCD pay. On the other hand, if they refuse the contract they will retain their right to receive equal STPCD pay after the 12 weeks qualifying periodbut risk the agency not giving them any further work.

It should also be noted that although the contract must have provision for minimum pay during weeks where no work is available, there is no requirement for the agency to do this indefinitely, and the Regulations allow an agency to terminate the contract after an aggregate of four such weeks.

CONCERN OVER ‘UNLAWFUL TERMS’

Notwithstanding the above, there are concerns that some agencies are asking members to sign permanent contracts of employment which have additional questionable terms which we may be able to challenge.

We have seen contracts which purport to include a ‘lay-off’ clause which would be in clear conflict with the ‘minimum pay’ clause. ‘Lay-off’ is a specific term in the Employment Rights Act (s147) and is a mechanism for avoiding redundancies where work temporarily dries up. It only applies to contracts where there is no ‘minimum guaranteed payment’ in the event of there being no work – the ‘minimum payment’ clause required by Regulation 10 means there cannot also be a ‘lay-off’ clause.

We have also been informed that members have been offered an ‘employment contract’ by a company called RACS which is an umbrella company whooffers various administrative services to agencies and contractors (including pay roll). RACS appear to have devised an ‘employment contract’ aimed at allowing self-employed contractors to benefit from PAYE arrangements and other tax benefits. We do not think this arrangement actually reflects a genuine ‘employment’ relationship, as it stipulates that the ‘employee’ bears all responsibility for finding their own work.In addition, the contract does not meet the criteria required by Regulation 10 - for example there is no provision for minimum payment between assignments, and there is no clause explaining that the equal pay provisions for Regulation 5 will not apply. We believe it is unlikely that anEmployment Tribunal would find this was a true employment contract.

We have also seen contracts containing terms which assert that school teachers lie outside the ‘scope’ of the AWR because they are professionals. It is not the ‘profession’ which is relevant to scope but the nature of the relationship between the parties. Any worker who is subject to the supervision and direction of the hirer will be within scope of the Regulations.

Should members sign these types of contract?

The NUT feel strongly that members should not feel pressurised into signing potentially unlawful contracts, however, in practice, if they refuse to sign it is possible they will get no further work. Unfortunately, as there is provision in the Regulations to offer permanent contracts of employment there is little we can do to legally challenge an agency’s decision not to offer further work if the worker doesn’t sign the contract.

LEGAL CHALLENGE?

‘Lawful’ Permanent Contracts of Employment

Permanent contracts of employment are legal and are a valid and lawful tool for agencies to use as long as they comply with the requirements of Regulation 10. On this basis, we have no avenue to legally challenge them. It is therefore down to the member to make an informed decision for themselveswhether or not they want to sign the permanent contract of employment offered by their agency taking into account the points raised above.

‘Unlawful’ Permanent Contracts of Employment

However, where the permanent contract of employment does not comply with Regulation 10 or where it contains a questionableterm which arguably makes the contract unlawful, where the member decides to sign it we may seek to legally challenge the validity of the contract depending on the circumstances and facts of the case.The time limit for issuing a claim in the Employment Tribunal pursuant to the AWR is within 3 months of the infringement, detriment or breach.

SCHOOL ‘CLIENT COMMITMENTS’

We are aware that some agencies are offering schools low cost supply teachers on permanent contracts of employment in return for the school signing a ‘client commitment’ whereby they guarantee to hire the teacher for a specified amount of time. This arrangement could be attractive to schools wishing to save costs.

WHEN SHOULD THE CONTRACT START?

The Regulations state that an agency worker’s permanent contract of employment must commence before the beginning of the first assignment under that contract. This means that an agency will not be able to ‘transfer’ a worker whohas already started an assignment with a school to a permanent contract of employment during that assignment i.e. a worker cannot transfer to a permanent contract of employment part way through an assignment.

So where a school has engaged a member on assignment as an agency teacher from an agency but the agency then tries to introduce a permanent contract of employment at some point during that assignment, our view is that the agency is effectively breaching the Regulations.

However, we are aware that some agencies have started doing this asserting a view that once the permanent contract of employment is entered into then the ‘continuing’ assignment effectively becomes the first assignment under the new permanent contract of employment. We have encountered situations where members have been asked to sign permanent contracts of employment in the middle of an assignment under the veiled threat that if they didn’t sign it then their assignment would be terminated.Regulation 10 states clearly that the contract of employment must have been ‘entered into before the beginning of the first assignment under the contract’ so the agency will not have complied with the Regulations if it introduces a permanent contract after the beginning of the first assignment under the contract.

Again, it is for the member to decide whether or not to sign a new contract or refuse and risk their assignment being terminated It is not an ideal situation but until this issue is determined by the courts this is the position in which we find ourselves.

If a member comes to you in these circumstances, for example where the member has refused to sign the permanent contract of employment in the middle of their assignment and had their assignment terminated or where the member has felt pressured into signing the permanent contract of employment in the middle of the assignment and then not received equal STPCD pay we may consider a legal challenge on this issue depending on the circumstances and facts of the case.

CONCLUSION

We have prepared a model letter at Appendix 1 for Regional Offices to sendto members outlining the above points upon receipt of a member query regarding permanent contracts of employment. Please feel free to amend the text according to the specific circumstances.

We have also prepared a model letter at Appendix 2 for members to send to head teachers should they decide not to sign the ‘permanent contracts of employment.’ Please feel free to amend the text according to the specific circumstances.

APPENDIX 1

[Dear member]

Agency Worker Regulations 2010 – Permanent Contracts of Employment

Thank you for your query regarding the permanent contract of employment your agency has asked you to sign. We understand and acknowledge your concerns.

The Agency Worker Regulations 2010 (‘AWR’) allows agencies to put its workers on permanent contracts of employment as long as the following requirements are met:

it must be a permanent contract of employment;

it must contain a term which expressly states that Regulation 5 AWR is disapplied; and

it must provide that you will receive a minimum payment during periods when no suitable work is available. That ‘minimum’ amount must not be less than 50 per cent of the highest (e.g., weekly) earnings in the previous 12 weeks of the assignment. (Or where the previous assignment lasted for less than 12 weeks, 50 per cent of the highest pay during that assignment). Where the minimum payment is lower than the minimum wage for the number of hours worked, the minimum wage must be paid.

Signing this type of contract means that you are ‘opting out’ of the Regulations in respect of equal pay and so you will not be entitled to receive equal STPCD pay even after the 12 week qualifying period. It is important to note that this type of contract does not affect your other rights to equal conditions which are not pay related i.e. hours of work, etc.

In addition to the above, the following requirements must also be set out in the contract you have been asked to sign:

the scale and rate of pay or the method of calculating pay;

the location or locations where you may be expected to work;

the expected hours of work during any assignment;

the maximum number of hours of work during any assignment;

the maximum number of hours of work you may be required to work during each week of any assignment;

the minimum number of hours’ work per week that may be offered to you provided that it is a minimum of one or more hours;

/Cont’d…

-2-

the nature of the work you may be expected to be offered including any relevant requirements relating to qualifications or experience.

Please read the contract you have been offered carefully to ensure that all of the above requirements have been met.

The NUT has become aware that some agencies have introduced a new practice of seeking the commitment of a school to a certain period of hire of an supply teacher worker on the understanding that the agency will keep costs down by employing the teacher on a permanent contract of employment. You may wish to write to your head teacher to ascertain whether your school has signed a ‘client commitment’ to this effect or whether they are happy to pay equal STPCD rates to comply with the AWR.(Please see attached template letter).

The NUT is also aware that some agencies are offering permanent contracts of employment which do not meet the above requirements, or have additional ‘suspicious’ terms which may be unlawful, e.g.:

there may be a ‘lay off’ clause;

the contract makes assertions that school teachers lie outside the scope of the AWR because they are ‘professionals’;

there is no provision for minimum pay during periods where no work can be found, or the provision doesn’t meet the amount specified above.

In addition, even if the contract is legal, the Regulations state that it should commence before the first assignment under the new contract, so where an agency tries to introduce a contract of employment part-way through an existing assignment our view is that the agency is effectively breaching the Regulations.

In the above circumstances, or where there is a potentially unlawful term within the contract we may be able to help you challenge the legality of the contract in an employment tribunal. However, this would depend on the facts and circumstances of the case.

Whilst the NUT believes that members should not be pressurised into signing away their rights to equal pay, we appreciate that in practiceif you do refuse to sign such a contract it is possible that you won’t receive any further work from your agency. Unfortunately, there is little we can do to legally challenge an agency’s decision not to offer you further work in this situation.

/Cont’d…

-3-

Because of this, it will fall to you to decide whether or not you sign the contract you have been offered. On one hand, the contract gives you employee status, and a defined minimum payment when no suitable work was available but with no right to equal STPCD pay. On the other hand if you refuse the contract offered, you would retain the right to receive equal STPCD pay after the 12 weeks qualifying period but risk the agency not giving you any further work.

It should also be noted that although the contract provides for minimum pay during weeks where no work is available, there is no requirement for the agency to do this indefinitely, and the Regulations allow an agency to terminate the contract after an aggregate of 4 such weeks.Please consider these facts carefully when making your decision.

If you are reluctant to sign the permanent contract of employment you have been offered by your agency we have drafted a template letter you can send to your head teacher outlining your concerns. This template may need amending to fit the circumstances of your particular case but we can help you to do this. *Remember if you decide not to sign the contract and are offered no further work by your agency there is little we can do the challenge the agency’s decision not to offer you further work.