Solutions Recruitment - Agency workers presentation - 1 june 2011


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Solutions Recruitment - Agency workers presentation - 1 june 2011

  1. 1. Agency Workers > Paul Scope, Partner Katie Armstrong, Solicitor 1 June 2011
  2. 2. Agency Workers – issues > Katie Armstrong, Solicitor 1 June 2011
  3. 3. The “Temporary Work Agency” >• Defined in regulation 4(1):"A person engaged in the economic activity, public orprivate, whether or not operating for profit, andwhether or not carrying on such activity in conjunctionwith others, of –(f) supplying individuals to work temporarily for and under the supervision and direction of hirers; or(g) paying for, or receiving or forwarding payment for, the services of individuals who are supplied to work temporarily for and under the supervision and direction of hirers."
  4. 4. The “Temporary Work Agency” >Who is covered?• Meaning of a “temporary work agency” based on the existing concept of an “employment business”, as opposed to an “employment agency”• Businesses may, without realising it, fall within the definition of an “employment business”
  5. 5. The “Temporary Work Agency” >An “employment business”• Supplies people in the employment of the person carrying on the business, to act for, and under the control of, other people in any capacity• Commonly associated with the supply of temporary secretarial and office staff, but extends into professional and industrial occupations
  6. 6. The “Temporary Work Agency” >Key features of an employment business• Maintains a relationship with each of its workers – labour is supplied to clients for particular jobs or periods of time• Workers have a contract with the employment business• Workers are paid by the employment business• Employment business has a contract with each client, who pays for the supply of workers
  7. 7. The “Temporary Work Agency” >An “employment agency”• Provides services for the purpose of finding workers employment with employers, or supplying employers with workers for employment by that employer• Covers the traditional recruitment agency set up, entertainment and modelling agents and executive search consultants
  8. 8. The “Temporary Work Agency” >Key features of an employment agency• Engaged by its client to find individuals for employment by the client• Client enters into a direct contractual relationship with the individual and is responsible for paying them• The client pays a fee to the agency• The agency’s relationship with the individual comes to an end
  9. 9. The “Temporary Work Agency” >Importance of distinction• The term “employment agency” is often used to describe both types of organisation – but they are distinct and separate• However, some degree of overlap: – some organisations operate as both types – individuals can be supplied for temporary, fixed-term or casual work on an “employment agency” basis• But, employment businesses are those intended to be covered by the Agency Workers Regulations
  10. 10. Existing regulations >• Conduct of Employment Agencies and Employment Business Regulations 2003 – regulates the conduct of employment agencies and employment businesses
  11. 11. Existing regulations >Regulation 5 – Additional services• Prohibits an employment business making the provision of its work-finding services conditional upon the worker using any additional services that it provides – such as CV writing, training or the provision of equipment
  12. 12. Existing regulations >Regulation 7 – Industrial disputes• Prohibits employment businesses from providing agency workers to clients to replace individuals taking part in an official strike/industrial action• Also includes replacing individuals who have themselves been transferred by the client to perform the duties of the person on strike/taking industrial action
  13. 13. Existing regulations >Transfer fees• Typically payable when an agency worker, introduced to a client, is subsequently: – engaged directly by the client (“temp-to-perm”) – supplied to the client through a different employment business (“temp-to-temp”) – introduced by the client to a new employer (“temp-to-third-party”)
  14. 14. Existing regulations >Regulation 10 – prohibits unreasonable use oftransfer fees• Employment businesses cannot automatically impose a fee in “temp-to-perm” or “temp-to- temp” situations – client must be given opportunity to agree extended hiring period, at the end of which the worker transfers without charge• Transfer fee not permissible if worker starts working directly for the client after the later of: – 8 weeks, starting the day after the last day of assignment – 14 weeks, starting with the first day of the assignment
  15. 15. Existing regulations >Regulation 15 – Terms with workers• Employment business must agree, with the worker, the terms that it will apply between itself and the worker – before providing any services
  16. 16. Existing regulations >Key terms to disclose• Whether the worker is or will be employed under a contract of service, apprenticeship or contract for services and the terms of employment/engagement• An undertaking to pay the worker, regardless of whether the employment business is paid by the client• The length of notice the worker is required to give and entitled to receive• The rate of pay• When payment will be made• The amount of paid holiday
  17. 17. Employment status of agencyworkers >• “Employee” or “worker”?• Of whom?• Why does it matter? – certain important legal rights only apply if an individual is an employee, including: • protection from unfair dismissal • right to statutory payments such as sick pay, maternity pay and a redundancy payment
  18. 18. Employment status of agencyworkers >Definition of an “employee”• “an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment” – s.230(1) Employment Rights Act 1996• A contract of employment means “a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing” – s230 (2) ERA 1996
  19. 19. Employment status of agencyworkers >Definition of a “worker”• “an individual who has entered into or works under (or, where the employment has ceased, worked under) – a contract of employment; or – any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual” – s230 (3) ERA 1996
  20. 20. Employment status of agencyworkers >Test for a “contract of service” – Ready-MixedConcrete• An agreement exists to provide the servant’s own work or skill in the performance of service for the master (‘personal service’) in return for a wage or remuneration (‘mutuality of obligation’)• There is control of the servant by the master (‘control’)• The other provisions are consistent with a contract of service (‘other factors’)
  21. 21. Employment status of agencyworkers >• The greater level of protection afforded to “employees” has led to a series of cases in which agency workers have claimed that they are employees of either the employment business or the client
  22. 22. Employment status of agencyworkers >Old case law• Employment business as employer?• McMeechan v Secretary of State for Employment [1997] – M held to be employed by the employment business for the duration of the most recent client assignment – mutuality of obligation present• Montgomery v Johnson Underwood [2001] – M not an employee because there was little or no control, direction or supervision by the employment business during two-year assignment
  23. 23. Employment status of agencyworkers >Old case law• Client as employer?• Motorola v Davidson & Another [2001] – D was assigned to M for 2 years. He was held to be an employee of M – despite the lack of a written contract - as M’s staff in practice told him what to do and when. He was also subject to M’s disciplinary procedures• Hewlett-Packard v OMurphy [2002] – OM worked through a personal service company and via an employment business for HP. HP had no contractual relationship with either OM or his personal service company. Held not to be an employee of HP
  24. 24. Employment status of agencyworkers >Brook Street Bureau (UK) Limited v Dacas[2004]• D (the agency worker) was supplied by Brook Street (“BS” - the employment business) as a cleaner to Wandsworth Borough Council (“WBC” - the client)• D signed a “Temporary Worker Agreement” with BS – stated that it did not give rise to a contract of employment either with BS or the client• WBC provided her with cleaning materials, equipment and its staff gave D day-to-day direction• BS responsible for discipline and administering holidays and pay
  25. 25. Employment status of agencyworkers >Brook Street Bureau (UK) Limited v Dacas[2004] (cont’d)• Held that D did not have a contract of employment with BS – lack of mutuality of obligation between BS and D, and BS did not exercise any relevant day-to-day control over D
  26. 26. Employment status of agencyworkers >Brook Street Bureau (UK) Limited v Dacas[2004] (cont’d)• However, a majority of the Court of Appeal said that it would have found D to have been employed by WBC if it had been asked that question – contractual relationship implied between D and WBC – high degree of control exercised by WBC over D was crucial – mutuality of obligations present - WBC was under obligation to pay D for her work (albeit via BS) and D had to do what she was told by WBC
  27. 27. Employment status of agencyworkers >Post-Dacas cases• Client as employer?• Cable and Wireless plc v Muscat [2006] – M held to have an implied contract with C&W – agency arrangement was ‘superimposed’ on an existing contractual relationship – Court of Appeal held that tribunals should follow guidance of Dacas – does not direct tribunals to reach a particular decision, only to consider the possibility that an implied contract might exist – Tribunals should examine all the evidence in context to see whether it spelled out an employer-employee relationship
  28. 28. Employment status of agencyworkers >• Dacas and Muscat led to concern for organisations using agency staff – agency staff afforded them flexibility that direct employment contracts did not – organisations would reconsider their use of agency staff if an employment contract with the workers could be readily implied
  29. 29. Employment status of agencyworkers >James v Greenwich Council [2008]• J worked for the Council until 1997. She later worked for the Council again, but through an employment business. Two years later she switched agencies, joining BS Project Services Limited (“BS”)• J had a Temporary Worker Agreement with BS• BS had a contract with the Council – BS received sums to pay the workers but workers would be under supervision, direction and control of the Council while they were working for it• J returned after two months’ sickness absence to be told that another agency worker had taken her place. J claimed unfair dismissal against the Council
  30. 30. Employment status of agencyworkers >James v Greenwich Council [2008]• The tribunal dismissed her claim (appeals also dismissed by both the EAT and Court of Appeal) – an implication of a contract between agency worker and client must only arise if it is a “necessary inference” – Dacas guidance did not suggest that the inference could be readily made
  31. 31. Employment status of agencyworkers >Guidance arising from James v Greenwich Council[2008]• Is the implication necessary?• Is the way in which the contract is performed consistent with agency arrangements, or an implied contract between worker and client? If no agency relationship, would the implication of a contract be inevitable?• The money paid by a client (to employment business) in a genuine tripartite agency relationship does not only cover worker’s wages, but includes other elements such as expenses and profit – client often has no idea what the worker is paid
  32. 32. Employment status of agencyworkers >Guidance arising from James v Greenwich Council[2008]• In a genuine tripartite relationship, the client cannot insist on a particular worker being provided by the employment business• A genuine agency relationship may change – they no longer dictate or reflect how the work is being performed. Necessary to show that the worker is no longer working pursuant to agency arrangements• Passage of time itself does not establish mutual obligations between worker and client• Circumstances such as those in Muscat (a ‘sham’ agency arrangement) are more likely to require the implication of a contract
  33. 33. Employment status of agencyworkers >In summary• An agency worker who claims they are employed by a client will need to carefully consider why it is necessary to imply a contract between them, on the facts of their case• Subject to it being necessary to imply a contract (including circumstances amounting to a sham), parties to tripartite agency working arrangements can expect to have their declared contractual positions respected
  34. 34. Employment status of agencyworkers >Relationship with the Agency WorkersRegulations• AWR provide agency workers with increased protection - but do not intend to confer ‘employee’ status upon agency workers• Case law still stands
  35. 35. The agency workers regulations > Paul Scope, Partner 1 June 2011
  36. 36. Background >• Implements the Temporary Agency Workers Directive 2008/104/EC• Regulations have been published• Due to come into force on 1 October 2011• Draft guidance was published on 1 April 2011
  37. 37. Scope of the regulations >• The regulations will apply to: – individuals who work as temporary agency workers; – individuals or companies (private, public and third sector) involved in the supply of temporary agency workers, either directly or indirectly, to work temporarily for and under the direction and supervision of a hirer; and – hirers (private, public and third sector).
  38. 38. Scope of the regulations >• The regulations will not apply to: – genuinely self-employed individuals; – individuals working on managed service contracts; – individuals working for in-house temporary staffing banks; – individuals who find direct employment with an employer through an ‘employment agency’; and – individuals on secondment or loan from one organisation to another.
  39. 39. Scope of the regulations >• If there is a dispute about whether someone is within the scope of the regulations, the court will consider if the description of the arrangements reflects the reality of the relationship
  40. 40. The Temporary Work Agency(TWA) >• A TWA is a person in business, whether for profit or not and including both public and private sector bodies, involved in the supply of temporary agency workers• Includes traditional agencies, but also intermediaries such as an umbrella company or a master or neutral vendor• Agency workers are supplied to work temporarily for a third party (the hirer)
  41. 41. The Temporary Work Agency(TWA) >• The regulations do not cover agencies that introduce workers to employers for direct or permanent employment; once a worker is placed with a permanent employer, their contractual relationship with the agency ends
  42. 42. The agency worker >• The three key elements for an individual to be considered an agency worker are: – there is a contract (an employment contract or an agreement to provide services personally) between the worker and a TWA – that worker is temporarily supplied to a hirer by the TWA; and – when working on the assignment, the worker is subject to the supervision and direction of that hirer
  43. 43. Day 1 rights >• From the first day of their assignment, agency workers must the same rights as comparable permanent workers and employees with regard to: – access to facilities; such as the staff canteen, transport facilities, car parking and child-care facilities – access to vacancies; the right to be notified of any job vacancies within the hirer
  44. 44. Day 1 rights >• These are not rights to special treatment• For example, if a crèche is full and any permanent recruit has to go on a waiting list, this will also apply to the agency worker. A similar situation could also occur with regard to car park spaces
  45. 45. Comparator: access to facilities >• A worker is a comparable worker if: – they do the same or broadly similar work to the agency worker; and – they work alongside the agency worker or at another location owned by the hirer
  46. 46. Comparator: access to vacancies >• As above, but limited to where there is a comparable employee or worker currently based at the same establishment as the agency worker
  47. 47. Objective justification >• Less favourable treatment with regard to access to or provision of facilities may be justified on objective grounds, for example, if the hirer is seeking to achieve a genuine business objective and the treatment is a necessary and appropriate way of achieving that objective• Cost may be one factor to take into account but hirers are unlikely to be able to rely on cost alone to justify different treatment
  48. 48. After 12 weeks in the same job >• After completing a 12 week qualifying period with the same hirer, in the same role, an agency worker (A) will be entitled to: – the same basic working and employment conditions as A would have been entitled to for doing the same job had A been recruited by the hirer – • other than by using the services of a temporary work agency; and • at the time the qualifying period commenced
  49. 49. The ‘basic conditions’ >• These include: – pay related to work undertaken on assignment; – duration of working time – night work – rest periods – rest breaks – annual leave – paid time off for ante natal appointments
  50. 50. Pay >• Pay includes: – Basic pay, overtime payments, shift/unsociable payments, risk (hazardous) payments, bonus, commission, payment for annual leave, vouchers/stamps which have a monetary value (not salary sacrifice schemes)• Pay does not include: – Occupational sick pay / pensions / maternity pay / paternity pay / adoption pay, redundancy pay, notice pay, benefits in kind
  51. 51. Comparator >• A directly-recruited comparator is required (whether real or hypothetical) at the hirer’s organisation• The agency worker will need to identify relevant terms and conditions that are ordinarily included in such a person’s contract• The comparator may be a worker or an employee
  52. 52. Deemed compliance >• Hirer will be deemed to have complied with the equal treatment provisions if: – they can identify an actual comparator who is working under the same relevant terms and conditions and those terms and conditions are ordinarily included in comparators’ contracts
  53. 53. Example >• Hirer has pay scales or pay structures – agency worker is recruited on the production line and has several years relevant experience – the agency worker is paid at the bottom of the pay scale – this will be equal treatment if the hirer would have started that worker at the bottom of the pay scale if recruiting him or her directly – but, if the workers experience would mean starting further up the pay scale if recruited directly, the agency worker would be entitled to the same treatment
  54. 54. Example >• Hirer has no pay structures – a hirer has ten permanent employees and 3 agency workers, doing the same work. The work involves no specialist skills and only minimal on-the-job training – the permanent employees are paid between £8 and £10 per hour; those recruited most recently are paid £8 per hour and those who have gained experience on the job having moved up to £10 per hour – the agency workers are recruited at a rate of £6 per hour. After 12 weeks the agency workers would be entitled to at least £8 per hour – and more if they have the same experience on the job as the permanent employees
  55. 55. Calculating the 12 week period >• A calendar week will comprise any period of seven days starting with the first day of an assignment – for example, if the worker begins work on a Tuesday, all the work done up to and including the following Monday counts as one calendar week.• Calendar weeks will be accrued regardless of how many hours the agency worker works per week
  56. 56. Calculating the 12 week period >• An agency worker will qualify for equal treatment if they have worked in the same role for the same hirer, regardless of whether they have been supplied by more than one agency for part of the assignment• It is not retrospective; the 12 week qualifying period will only begin to accrue after the regulations come into force on 1 October 2011, even if the assignment commenced before then
  57. 57. Breaks between assignments >• When the qualifying period clock will re-start: – if an agency worker begins a new assignment with a new hirer – where an agency worker remains with the same hirer but is moved to a substantively different job role – if there is a break of 6 weeks or more between assignments with the same hirer
  58. 58. Breaks between assignments >• When the qualifying clock will ‘pause’: – if there are any breaks of less than 6 weeks between assignments with the same hirer – where the absence is related to pregnancy or sickness, or beyond the agency worker’s control (such as jury service or workplace closure)
  59. 59. “A substantively different role” >• Must be a genuine and real difference to the role• Key considerations: – are different skills and competences used? – is the pay rate different? – is the work in a different location/cost centre? – is the line manager different? – are the working hours different? – does the role require extra training and/or a specific qualification that wasn’t needed before? – is different equipment used?
  60. 60. Example >• Bar staff -> Sommelier = Likely to be considered a different role• Bar staff -> General waiter = Unlikely to be substantively different
  61. 61. “Swedish Derogation” >• The right to equal treatment on pay will not apply if the agency worker is given:- – a permanent contract of employment by the Agency; and – pay between assignments• Note – other equal treatment protection still applies
  62. 62. “Swedish Derogation” >• Pay must be greater of 50% of average assignment pay and NMW• TWA must give contract which includes: – minimum pay rates – location of work (based on agency worker’s wishes) – minimum / maximum expected hours (based on agency worker’s wishes) – type of work agency worker is willing to accept
  63. 63. “Swedish Derogation” >• TWA can terminate contract if agency worker refuses offer of suitable assignment• To terminate contract, TWA must give 4 weeks (paid) notice• If agency worker resigns, TWA must pay 4 weeks notice
  64. 64. Enforcement >• Day 1 rights:• Hirer is responsible - TWA has no control• 12 week rights:• TWA is responsible, unless the fault is the hirer’s• TWA’s defence to a claim: – obtained or took reasonable steps to get details from the hirer – reasonably relied on hirer’s information• Minimum 2 weeks’ pay (uncapped) for breach of 12 week rights
  65. 65. Requests for information >• The TWA should contact the hirer to obtain information on the hirer’s basic working and employment conditions• The agency worker can request the information once the 12 weeks have elapsed: – from the TWA in the first instance – TWA has 30 days to respond to request – if the TWA does not respond, the agency worker can write to the hirer requesting the same information – hirer then has 28 days to respond
  66. 66. Anti-avoidance provisions >• Nothing in the regulations to prevent a hirer releasing an agency worker after 11 weeks, or for assignments of 11 weeks to be the usual practice of the hirer• However, regulation 9 contains anti-avoidance provisions which address any situation where a pattern of assignments emerge that are designed to deliberately deprive an agency worker of their entitlements
  67. 67. Contact us >Paul ScopePartner, Employment0191 204 4352paul.scope@wardhadaway.comKatie ArmstrongSolicitor, Employment0191 204