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Over the past year, it has seemed like agency workers have hardly been out of the news. In 2008, we have seen a major decision on agency workers’ employment status, changes negotiated at a European level and, most recently, new domestic legislation in relation to agency workers’ sick pay. Jane Wallenstein draws together the various strands, and considers what you now need to know about your agency workers’ rights.
The question of the employment status of agency workers has been a matter of some controversy since the 2004 case of Dacas v Brook Street Bureau. In this decision, the Court of Appeal suggested that an employment contract may be implied after an agency worker had been engaged by the same organisation for a sufficiently long period of time. When, exactly, this transformation of contract would happen, was not specified.
In February this year, the case of James v London Borough of Greenwich looked again, in detail, at the vexed question of agency workers’ employment status. Still no definitive guidance was provided, but the Court of Appeal did provide some comfort to employers by ruling that,
- an employment contract between an agency worker will only be implied if it is necessary to do so;
- it will only be necessary to imply a contract if there is no express contract between the agency and its client; or
- if there is evidence of a sham or other unscrupulous conduct by the agency or end user client (for example, using a purported agency / client relationship to avoid tax or other liabilities).
As long as you have an express written agreement with the supplier of your agency staff which specifies that the staff supplied are employed by the agency, and there is no underhand behaviour, then it is likely that agency staff will remain employed by the agency.
As we reported in the summer, negotiations have been taking place in Europe on the rights of agency workers and, after many months of negotiation, agreement has finally been reached.
The European Parliament has now adopted the Temporary Agency Workers Directive. The key provisions are that,
- in respect of ‘basic working conditions’, agency workers will be entitled to be treated equally compared to a permanent employee after 12 weeks working on the same assignment;
- however, this does not mean that agency workers must be treated exactly like employees;
- they must be afforded the same basic working and employment conditions as employees; but
- benefits such as pension and contractual sick pay are excluded; and
- the UK has three years to implement these changes after the Directive comes into force.
Meanwhile, a UK private member’s Bill, the Temporary and Agency Workers (Equal Treatment) Bill (which had been working its way through Parliament), has now been withdrawn.
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More recently, the snappily-entitled Fixed-Term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations have come into force. From 27th October 2008, agency workers engaged on contracts of less than three months are now entitled to statutory sick pay. Before this change, agency workers had only been entitled to statutory sick pay after three months' engagement – which, it was argued, resulted in unfairness as agency workers make full national insurance contributions and so were not benefiting from their agency status elsewhere.
This does not mean that you must now start paying sick pay to your agency workers. The organisation supplying your agency staff should be responsible for making these payments. However, whether this additional cost will be passed on to you by the agency will be covered by your agreement with the agency. It may be sensible to review your current agreements for the supply of temporary staff, and to ensure to that any new arrangements with employment agencies will not result in this cost being passed on to you.
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After a year of change in relation to agency workers, what are the current practical implications for your business?
- As a result of James v London Borough of Greenwich, the likelihood of your agency supplied staff being deemed ‘employees’ has reduced considerably.
- Agency workers still do not have ‘equal rights’ with employees (as reported in the press over the summer) so there is no need to make any changes in that regard, as yet. However, you will need to keep an eye out for the implementation of the Temporary Agency Workers Directive, which will come into force in the UK in the next three years.
- Your agreements for the supply of agency staff will need checking, to ensure that you are not re-charged for additional statutory sick pay or, indeed, for any other statutory payments which are the primary responsibility of the employing agency.
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