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Government tightens rules on agency workers

26 January 2010

The government has tightened up the rules on agency workers in its final version of the regulations, which will come into force on 1 October 2011.

From that date, agency workers who have served three months in a post will win the right to the same treatment as their directly employed colleagues, including the same pay and holiday entitlement.

Under new anti-avoidance measures, employers that attempt to circumvent the rules by rotating agency workers will face having to pay compensation of up to £5,000.

The regulations set out a general minimum award of two weeks’ pay, subject to tribunal discretion.

As expected, agency workers will not be entitled to profit-sharing schemes, occupational pension contributions, sick pay, redundancy or maternity pay.

However, in a further change from the draft regulations, the government has decided that they will qualify for bonuses that are directly attributable to the quality or quantity of work done.

James Davies, joint head of employment at Lewis Silkin, said he did not anticipate a large number of claims and the regulations could turn out to be a “damp squib”.

He said the unions had originally argued that there should be no time limit before agency workers qualified for equal treatment.

“Workers hired for longer than 12 weeks will still not have unfair dismissal rights. It will be more difficult to pay them less but otherwise I’m not sure it’s a big issue.

“Those who want to employ them because they’re easy to dismiss will continue to do so.”

Robert Riley, partner at Addleshaw Goddard in Leeds, said agency workers were widely used in the construction and utility industries, where flexibility was crucial.

He agreed that the regulations were unlikely have a huge impact.

“Employers have had a long time to get used to this concept,” he said. “They will try and maintain the status quo, and ensure that any financial consequences are absorbed by the worker or the agency.”

He said that the pay of agency workers who received more than permanent staff might be reduced, as might the rates of commission charged by the employment agencies.

The government abandoned its opposition to greater rights for agency workers in May 2008 and a directive on the issue was adopted in October that year by the European Parliament after six years of negotiations (see 28 October 2008).

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