The Potential Impact of AWR
BIS AWR Guidance released 6 May 2011
by Tim Johnson and Jennifer Sole, Tim Johnson/Law Solicitors
The long-awaited Department of Business Innovation and Skills (BIS) Guidance (Guidance) on the Agency Workers Regulations 2010 (AWR) was finally published last week, 21 weeks prior to AWR coming into force.
Many employment agencies and their customers have been waiting for the Guidance before finally deciding how to respond to AWR. The impact of AWR will vary across industries, according to their use of temporary workers, with sectors such as construction, education and healthcare likely to face some of the greatest challenges.
Now the Guidance has been published it is vital that all businesses that are likely to be affected by AWR take steps to ensure that they are ready for the 1 October 2011, when workers will become entitled to Day 1 rights and the 12 week Qualifying Period will begin.
Although the law has not changed and the Guidance is not law, the government hope that the Guidance will help hirers and agencies understand the requirements of AWR and there are some noteworthy points from our first impressions on our initial reading of the Guidance.
The Guidance hints at the importance of comparable workers (Access to facilities (p. 15), Access to vacancies (p. 16) and Identifying comparables (pp. 22-26)). There is advice regarding appraising agency workers (pp. 29-30) and precise instructions in relation to dealing with pregnant agency workers (pp. 35-36).
In contrast, the Guidance skims over the Swedish Derogation, emphasising only the fact that the agency worker has to agree to a contract of employment under regulation 10 (p. 38 and p. 40). This indicates the government’s preferred practical implementation of AWR.
The illustrative examples are in plain English and easy to comprehend. Useful tables include a summary of “pay” under AWR (p. 32), types of breaks that cause the clock to “pause for 12 week Qualifying Period (p. 20) and liability (p. 45).
The Guidance has provided some clarity regarding factors a Tribunal is likely to take into account when establishing whether a worker has moved to a “substantially different role” (pp. 22-23).
The Guidance clarifies the position regarding intermediary involvement of other parties in the supply of agency workers (p.7 and 43). BIS recognises that sometimes the supply of agency workers is managed on behalf of a hirer by a master or neutral vendor, which manages the recruitment process and supplies temporary workers through other agencies, or workers are supplied via an umbrella company. However, the Guidance confirms that provided there is an identifiable tripartite relationship between worker, agency and hirer AWR apply. All those involved in the chain of supply will need to work together to ensure that the correct information from the hirer is shared to ensure that the worker receives equal treatment under AWR.
The Guidance provides an explanation of “those who are likely to be outside the scope of AWR” (p. 10) which does not advocate the use of the HMRC IR35 Employment Status Indicator. Clearly, the decision as to employment status of a worker always has been and always will be up to the Tribunal.
Unfortunately, the Guidance provides no real clarity in respect of MSCs (p. 11), again because the status of the Guidance is not legislation, merely a tool to help understanding. Tribunals will make decisions on the reality of the relationships between the parties and whether the MSC is genuinely responsible for managing and delivering a service rather than merely supplying temporary staff.
It is time to consider undertaking risk assessments and make amendments to terms and conditions. Now businesses are aware of the likely impacts and potential repercussions of AWR have been raised, agencies are likely to find that hirers are more receptive to their terms of business being revised. It is advisable that agencies and other intermediaries adopt a system of due diligence, taking reasonable steps to gather information from hirers, which will in turn allow them to agree new terms with the workers before the 1 October, so as to comply with the regulations prior to this date.
Taking reasonable steps now in accordance with the Guidance will mitigate the effect of AWR and reduce the risk of liability for compensation.