New rights for agency workers

The government is to scrap the so-called Swedish derogation, which enables some firms to pay agency workers less than permanent staff.

The move was announced this morning as part of a package of reforms in the government’s ‘Good Work Plan’ by the Department for Business, Energy & Industrial Strategy. The plan is in response to the Taylor Review and the Labour Market Strategy set out by director of labour market enforcement Sir David Metcalf.

New proposals introduced today will ensure:

  • closing a loophole by repealing the Swedish derogation, which currently allows agency workers to be employed on cheaper rates than permanent counterparts
  • extending the right to a day-one written statement of rights to workers, going further to include detail on rights such as eligibility for sick leave and pay, and details of other types of paid leave, such as maternity and paternity leave
  • to ensure workers are paid fairly by providing agency workers with a ‘key facts page’ when they start work, including a clear breakdown of who pays them, and any costs or charges deducted from their wages.

Commenting on government’s repeal of the Swedish derogation, Jacqueline McDermott, consultant solicitor at Keystone Law, told Recruiter: “At the moment, agency workers after 12 weeks working have the right to the same terms as permanent workers. Agency workers acquire the same rights after a 12-week contract.

“The Swedish derogation avoids that because under the Swedish derogation the agency has the worker under a contract, whereby they agree to pay them in between contracts when they are not actually working, so they don’t acquire the same work rights as employees.”

McDermott explained it appears some agencies have abused the loophole created by the Swedish derogation to put in place terms where they require agency workers to work anywhere and offer them contracts they can’t carry out.

“So they might for example offer them night shifts when they have childcare and they can’t do them or offering them jobs in other areas. If they don’t accept the work, they don’t have to pay them.”

Elaborating on what the repeal will mean for recruitment agencies, Christopher Tutton, partner at Constantine Law, urged recruiters to amend any existing contractual arrangements relying on the Swedish derogation with clients and agency workers, and cease offering this option to clients going forward as a way of reducing temporary labour costs.

“The next immediate task is to review and update their on-boarding packs and processes to ensure that they comply with the new requirements to inform agency workers about their rights from day one and including the key facts page,” Tutton explained.

He advised that to avoid indirect discrimination claims from agency workers, it would be best to create a policy on how the agency handles requests for more predictable hours, and to train staff on this.

Other measures announced by the government include:

  • the quadrupling of maximum employment tribunal fines for employers who are demonstrated to have shown malice, spite or gross oversight from £5k to £20k
  • extending the holiday pay reference period from 12 to 52 weeks, ensuring those in seasonal or atypical roles get the paid time off they are entitled to
  • a commitment to legislate to improve the clarity of the employment status tests to reflect the reality of modern working relationships
  • to bring forward proposals in early 2019 for a single enforcement body to ensure vulnerable workers are better protected
  • to provide more resource for the Employment Agency Standards Inspectorate (EASI)
  • to create new powers to impose penalties for employers who breach employment agency legislation like non-payment of wages
  • to bring forward legislation to enforce holiday pay for vulnerable workers
  • to consult on the recommendations on non-compliance in supply chains
  • to enforce vulnerable workers’ holiday pay for the first time
  • to introduce a list of day-one rights including holiday and sick pay entitlements and a new right to a payslip for all workers, including casual and zero-hour workers
  • to introduce a right for all workers, not just zero-hour and agency, to request a more predictable and stable contract, providing more financial security for those on flexible contracts
  • for the Secretary of State for Business, Energy and Industrial Strategy to take a new responsibility to the ensure the ‘quality of work’
  • to revise Gangmasters and Labour Abuse Authority (GLAA) licensing standards to ensure that they reflect current worker rights and employer obligations
  • to introduce a new naming scheme for employers who fail to pay employment tribunal awards
  • to take further action to ensure unpaid interns are not doing the job of a worker.

Commenting on the government’s Good Work Plan as whole, Matthew Potter, partner at law firm Howes Percival called it no more than a wish list with no draft legislation annexed to the headline proposals or a timetable for implementation. 

“Agencies at this stage will need to be aware of potential changes on the horizon (possibly next year) but until such time that it is clear what the legislation is, then there are no steps they can realistically take – to do so would be akin to shooting in the dark. In any event, Parliament could be caught up with more pressing issues in the meantime.”
Joanna Parry, solicitor at Tozers Solicitors, agreed, adding while government has called the changes the biggest reform of employment law in 20 years, in practice they are likely to be fairly modest.

“There is currently no draft legislation, nor any dates or commitments to legislate so this is just a list of proposals. That said, agencies and employers should consider reviewing policies and procedures in readiness for the possible introduction of these reforms,” she added.
Also commenting, Recruitment & Employment Confederation CEO Neil Carberry said agencies have always been clear that the Swedish derogation should not be an excuse for poor treatment. 

“We favoured reforming the rules to ensure those whom were being adversely affected by the model were protected. Now that government has decided to remove Swedish derogation, it is essential that ministers engage with the recruitment sector to ensure that the transition away from this model is smooth for workers, agencies and clients.”

Meanwhile Julia Kermode, CEO of The Freelancer & Contractor Services Association (FCSA), welcomed government’s proposal for all workers to receive key facts statements and the clarity it will bring.

“However, it will be challenging for recruitment businesses to implement, given that they will be responsible for producing information on behalf of the supply chain if there are intermediaries involved, and our members stand ready to work in partnership with agencies to ensure this is as smooth as possible. We hope that this new requirement will go some way towards stamping out poor practices, in particular disguised remuneration schemes which place workers at significant personal financial risk.”

Kermode also welcomed plans to expand the remit of the EASI to encompass umbrella firms, adding the FCSA has already been working with BEIS in how best to shape such a policy.  

“Care needs to be taken on the operational detail to ensure that it is fit for purpose, particularly as many agency workers opt out of EAA regulations and therefore are outside the current remit of the EASI.”

Reproduced from : Recruiter magazine