Removal of the Swedish Derogation
The Agency Workers (Amendment) Regulations 2019 (the “Regulations”) were made on 28 March 2019 and will come into force on 6 April 2020. The practical effect of the Regulations is that they will remove “pay between assignment contracts” referred to in Regulations 10 and 11 of the Agency Worker Regulations 2010 in accordance with the commitments set out in the Good Work Plan. Such contracts have commonly become known in the industry as Swedish derogation contracts.
The Swedish Derogation has provided an exemption to the Agency Workers Regulations 2010, from the right of an agency worker to receive pay equal to a comparable employee of the end client (after a 12-week qualifying period on assignment) so long as certain conditions were met by the employer (i.e. the temporary work agency).
The requirement to provide a statement to existing agency workers
The Regulations contain a requirement that temporary work agencies must provide agency workers whose existing contracts contain a Swedish Derogation provision with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply. Temporary work agencies must provide this statement to applicable agency workers by no later than 30 April 2020 unless the contract of employment is terminated on or before that date.
The written statement must include the following information:
That the Swedish derogation in their original statement no longer has effect; and
The agency worker is entitled to rights relating to pay as part of the rights conferred by regulation 5 of the AWR 2010, subject to completion of the qualifying period as stated in regulation 7 of those regulations (12 continuous calendar weeks); and
An agency worker can bring a claim in the Employment Tribunal if the agency does not provide the required statement on the grounds that their right to the statement has been infringed.
Protection from detriment and unfair dismissal
The Regulations also contain protection if an agency worker (who is an employee), is dismissed if the reason or principal reason for their dismissal is that they have, or a temporary work agency believes or suspects that they have (or intend to):
Brought proceedings under the Agency Workers Regulations;
Given evidence or information in connection with proceedings brought by any agency worker;
Alleged that a temporary work agency (which is the employer of the agency worker) has breached the Regulations;
Refused (or proposed to refuse) to forgo a right under the Regulations; or
Done anything else under the Regulations in relation to a temporary work agency or another person.
In these circumstances, the employee will be unfairly dismissed.
Agency workers also have the right to not be subjected to a detriment for taking such action, or where a temporary work agency believes or suspects that they have or intend to take such action.
What does this mean for Employment Business’ and Clients?
As the written statement needs to be provided by no later than 30 April 2020 Agencies should begin identifying which workers will need to receive the written statement and the form in which this will be provided to workers. Agencies may also want to consider contracts for new workers and whether moving forward inclusion of the Swedish Derogation is going to be an option offered. Agencies will also need to identify appropriate comparators for workers to ensure compliance when workers are entitled to equal pay with comparable workers. Finally, Agencies will need to negotiate revised terms with their Clients for the supply of agency workers after 6 April 2020.
Clients need to be aware that the Swedish Derogation model will no longer be available after 6 April 2020 and start their preparations now. Leading up to the withdrawal date Agencies which currently operate this model may choose to stop supplying workers under a “pay between assignment contract” for the reasons set out above. In any event, Clients will need to negotiate fresh terms for the supply of agency workers in the post April 2020 “no Swedish Derogation” world which may necessitate a new supply tender.
Whilst Kelburn Recruitment Ltd have always shunned the use of Swedish Derogation contracts, which are essentially designed to avoid offering equal pay to agency workers, we have remained fully conversant with the emerging legislation and are regularly asked for advice by Clients on issues such as these.
If you would like to discuss this issue, or any of the other changes mentioned, then feel free to contact Kevin Maughan at Kelburn Recruitment Ltd.
The above is for general guidance only and should not be used for any other purpose. It does not
constitute, and should not be relied upon, as legal advice.