Discussion notes Employment law: Are you up to date? Office Angels July 2011 01 ARE YOU UP TO DATE?2011 EMPLOYMENT LAW:ARE YOU UP TO DATE? About our presenterWith the implementation of the Equality Act, the abolition of Andy Smith is the Head ofthe default retirement age, changes to maternity and paternity Regulation and Employmentrights, and the introduction of the Agency Workers Regulations for the Adecco Group UK(AWR), the UK employment landscape is undergoing and Ireland, responsible forconsiderable change. coordinating the Adecco Group’s response to legislativeWith a pressing responsibility on businesses to understand developments. A key focus ofand implement these new laws, Office Angels recently hosted this has been the UK’s recenta number of informative webinars to help HR professionals implementation of the EUplan for the wider business implications that such changes Agency Workers Directive.are likely to prompt. Andy has been employed byThe session – presented by Andy Smith, Head of Regulation the Adecco Group for over 20and Employment for Adecco Group UK and Ireland – offered years; performing a number ofvital information on the latest legislation, whilst providing the valuable functions within thegroup with an opportunity to pose questions, share Group’s Legal and HR teams.approaches, and voice concerns. He is a member of the CIPD and has an LL.M (with distinction) in employmentAbout our webinars law from Middlesex University.An important part of our role is to share our knowledge andexpertise with our network of valued clients. These webinarsare a reflection of our promise to add value to yourorganisation, by really getting to the heart of the issuesaffecting your business.The Office Angels webinars took place on11, 12 and 18 May 2011.
Discussion notes Employment law: Are you up to date? Office Angels July 2011 02Overview If an internal vacancy is open to employees of theDespite the government’s commitment to deregulation, HR organisation only, are we now required to allow agencyprofessionals are being kept increasingly busy this year; and workers to apply, and can we still say ‘internal applicantswith a steady pace of legislative change on the horizon, the only’?next six months are going to be key for British employers. The Regulations don’t give agency workers an automatic right to apply for internal vacancies, but rather a right to expectThe webinars focused on the four most important business information on vacancies.issues, as voted for by attendees: The intention of the directive is to give agency workers the- Agency Workers Regulations (46%) same opportunity to access permanent work as direct- Equality Act (32%) employees. It is no longer permissible to state ‘internal applicants only’, as agency workers must now be considered- Abolition of the default retirement age (14%) as internal applicants. Some companies will have their own eligibility criterion and the Regulations will not affect them.- Additional paternity leave (8%) Is the onus to provide information about vacancies on the agency or the organisation?To provide clarity around key issues – and to help delegates It is exclusively the responsibility of the organisation (‘hirer’),understand how the Regulations are likely to affect their as only the hirer can be liable for any failure to adhere to thebusiness – attendees were encouraged to pose questions Regulations. If temporary workers apply for vacancies and areand prompt discussion during each of the webinars: successful, will the agencies still charge an introduction fee? The Regulations will not impact the current law that sets outAgency Workers Regulations 2010 the circumstances under which agencies can charge a fee for the introduction of candidates for permanent employment.In order to comply with the 2008 EU Directive, new lawssurrounding the equal treatment of agency workers will come What is the difference between the AWR and the IR35?into effect across the UK on 1 October 2011. If an individual works under the umbrella of their own limitedWith many of our clients relying on a temporary workforce, company – and they are compliant with the HMRC test ofthe Agency Workers Regulations (AWR) are presenting a real self-employment as set out in the IR35 – they will fall outsidechallenge. From the discussions that we’ve had with our of the scope of the AWR, as they are genuinely self-employed,clients however, it’s clear that while many feel confused by rather than agency workers.and concerned over the impending changes, those in receiptof the full facts feel the challenge to be a manageable one. We don’t foresee a mass rush towards limited companyIndeed, the impact of the new legislation can be significantly working as a means to avoid the Regulations, becausemitigated before it comes into effect - providing employers if the individuals that stand to be affected could haveact now. operated outside of the tax regime for a limited company, most would have done so already. If the nature of an individual’s work is such that they can’t opt out of the income tax – which is generally what limited company working involves – there is unlikely to be any disruption to the proportion of agency workers.
Discussion notes Employment law: Are you up to date? Office Angels July 2011 03Does it differ for freelancers who are sole contractors (don’t If the need for the agency worker no longer exists, and theyhave a limited company) and are invoicing for themselves? have been with the firm for more than 12 weeks, can their contract be terminated?Under existing tax law, sole traders that find work throughagencies would have to be treated as employees and must Yes. The AWR will not impose restrictions if their services arehave tax deducted under PAYE. For this reason, they are not no longer required.generally supplied by agencies. Will notice periods be in line with an organisation’s policy orIf permanent members of staff are given a pay increase, will with what is agreed with the agency?an agency worker qualify for the same increase if they have Equal treatment does not extend to notice periods.been in an assignment for longer than 12 weeks?If an agency worker has been in their post for a significant Every company’s holidays are different, so how will agenciesamount of time – and they would have been entitled to a manage AWR?pay increment if they had been recruited directly by the The Regulations aren’t specific in terms of equal treatment inorganisation – then the rise in salary should apply to the relation to holidays. We anticipate that the most commonagency worker as well. It’s vital that agencies and hirers response is going to be to adjust the rate by which agenciesmaintain regular contact so that both parties are aware currently charge clients for the accrual of annual leavewhen such changes are taking place, so as to ensure entitlement. For example, if the current charge is based on 28equal treatment. days, but equal treatment confers the right to 33, the simplest method is to change the accrual rate. Alternatively, the valueCan an agency worker’s contract be terminated on health of the additional holiday pay can be added to the agencygrounds for sickness that is termed a “disability”? worker’s hourly rate.The Regulations are not relevant in this case; there ishowever an existing law which provides protection against If an agency worker has passed the 12-week qualifyingdiscrimination on the grounds of disability. period, are they entitled to annual leave and will the hirer be expected to pay for any days taken as holiday?In order to comply with the equal treatment of agency work- Holiday entitlement is covered by the right to equal treatmenters, should they be given access to such benefits as childcare – subject to the constraint that equal treatment relates to thevouchers, where the saving is made through payroll? terms and conditions that would have applied if the sameVouchers that are linked to salary sacrifice schemes are out of worker had been employed directly by the client. The cost ofscope of the Regulations. holiday pay is generally built into the agency’s hourly charge, but the new legislation says nothing about who should fund it.Do agency workers qualify for healthcare or pensions after the12-week qualifying period? Do agency workers have to use up all of their annual leaveHealth insurance is not covered under the new legislation. entitlement, or can remaining days be converted into pay?Pensions are expressly excluded from the definition of pay – Any excess over and above the statutory minimum could bewhether as an alternative benefit, or as a contribution towards converted into pay. The Regulations say nothing about howemployee pension entitlements. or when this might be agreedIf direct employees are provided with a parking permit free If an agency worker is paid more than direct employees, andof charge, will agency workers be entitled to the same permit the over payment is enough to cover any extra holiday that theafter 3 months? agency worker might be entitled to, would they still have to beEqual treatment would not extend to a requirement for the paid for holiday on top of this?hirer to pay for off-site parking; it only covers facilities and The Regulations do not provide for any offset; it’s a term-by-amenities provided by the client and operated by the client. term right.
Discussion notes Employment law: Are you up to date? Office Angels July 2011 04What happens if an organisation changes its agency worker Phasing out the default retirement ageevery 12 weeks? What does the abolition of the default retirement age meanThe Regulations make specific provisions to prevent abuse of for UK businesses?the qualifying period by manipulating patterns of assignment;this however only applies where an agency worker is engaged Most employers will no longer have the option to dismisson two or more assignments, and the gap between two employees simply because they reach a certain age, withoutassignments is longer than six weeks. facing consequences of age discrimination; such as unfair dismissal claims.Will the new legislation affect the rate that an organisation ischarged by its agency for the provision of the temporary staff? Our company life assurance does not cover any employee over the age of 65. Do we have to amend this policy?The Regulations say nothing about agency charges, but wherea statutory change in the law results in an increase in the Group risk insured benefits are exempt from the principle ofagency’s cost – and if an increase in pay is made to an equal treatment.agency worker in order to comply with equal treatment –the cost is likely to be passed by the agency to the client. Additional paternity leave and payAfter an agency worker has completed their 12-week Who qualifies for additional paternity leave?qualifying period and returns after a break of more than 6 The granting of an additional 26 weeks paternity leave appliesweeks, would they be entitled to equal treatment automati- to biological fathers or the person responsible for the child’scally, or would they start from 0 weeks again? care. The right only applies if the mother returns to work; andIf the gap between assignments amounts to more than 6 it can be begun no earlier than 20 weeks before the birth ofweeks, this resets the qualification clock; meaning that the the child to be cared for.agency worker would have to re-qualify for equal treatment. How does this affect statutory paternity pay?Equality Act 2011 Separate provision applies to additional statutory paternity pay: if the mother returns to work with the balance – or someWhat is different about the new Equality Act that differs from parts of the balance – of the 39 weeks of statutory maternityexisting laws? pay, then that can transfer and be taken by the father.In April 2011, a specific provision of the Equality Act cameinto effect, stating that under certain limited circumstances, Do you anticipate that many fathers will take advantageemployers can choose to employ or promote an individual of this new law?because that individual possesses a ‘protected characteristic’ The previous government didn’t expect this to have aas defined by the Equality Act, such as sex or race. particularly high take up, and believed it would start at between 4% and 8%. Recent developments from theHow is ‘proportionate’ discrimination determined? current government suggest that they might be looking atAs this is a new law, there is no definitive answer because something more radical to build on this going forward;there is yet to be any tribunal or court rulings on what perhaps with a view to introducing a more flexible regime.‘proportionate’ means in this context. Can you suggest a way that employers can verify that the mother has indeed returned to work? The system is based on ‘self certification’.office-angels.com