New Agency Rules: Do we need Creative Contracts?

The government agreed to drop its resistance to the EU’s agency workers directive proposition, so long as it gave agency workers the right to “equal treatment”, i.e. basic pay, after working 12 weeks on assignment, and so long as the UK could continue it’s opt-out scheme under the working time directive. But what will the new agency rules mean?

What new rights would agency workers expect to receive?
Agency workers would be entitled to the same basic pay as comparable permanent employees from the 12th week of their employment. Benefits like company sick pay, share option schemes and the right to join an occupational pension scheme would not be included.

Who would be a comparable permanent employee?
These may be difficult to find since agency workers often do tasks that permanent workers are not qualified for or available to perform. The legislation will have to fix this problem and provide guidelines as there are no plans for the inclusion of hypothetical comparators. The pay that a worker with no comparator will be entitled to therefore remains to be seen.

Will any temps be excluded?
There is no clear explanation for whether contractors - individual workers who supply their services through limited companies - will be entitled to the new rights or not. However, it is likely that the directive will enable countries to exclude agency workers that are employed or paid between assignments by a staffing company. This model might be taken on by a number of agencies, or they might use ‘umbrella’ companies to avoid the legislation to draw in workers. Debate may arise over whether or not “minimum annual hours” contracts should be a part of this exclusion too. If it doesn’t apply in the UK there may be chaos, since any organisation (not just staffing companies) that was seconding employees to end-users would be caught.

Which employer will be liable for breaches?
Staffing companies are most likely to gain the duty of complying with the legislation rather than end-user organisations. To fulfill their obligations they will require full information from end-users about comparable permanent employees’ pay. This may cause difficulties if end-users are loathe to hand over detailed data describing pay, and may cause a breach of data protection laws.

Will employing agency workers become more expensive?
Employers using agency workers in engineering, IT and professional roles probably won’t be affected because these workers already have higher basic pay than comparable permanent employees. However, low-paid temps will notice the difference, and the costs paid by end-users’ are likely to increase as staffing companies will not want to soak up the extra costs if it means a profit loss.

Agreements in the workplace about what agency workers should be paid will be able to override the legislation, which may actually keep the expense down for employers, as agency workers aren’t likely to take part in the negotiation and it’s difficult to see permanent employees fighting for temps to be paid as much as them.

What way is best for end-users to avoid breaches?
1. Engage workers for only 11 week periods. But bear in mind that short breaks between assignments at the same company won’t count as breaks in the time period.
2. Ask staff suppliers to employ and pay temporary workers before seconding the workers to them.
3. Treat all temps as trainees when working out what pay they should receive. This is a popular solution in France.
4. Use limited company contractors more, in place of traditional PAYE agency temps.
5. Engage agency workers on a project basis so that they are paid for the work that they do rather than the time that they spend doing it. The worker, however, could not be controlled nor supervised by the end-user, nor forced to perform the work personally since that would suggest permanent employment.

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