October 11th 2011 may seem like a very long way away right now, but it marks a landmark date that affects every business that recruits freelance workers through a recruitment agency or business Most of you that are reading this article will have not heard of ‘The Agency Workers Directive' (AWD), but it will no doubt impact you to some degree or another, if not immediately and directly, then latterly through your department, or the business you work for, or own.
So what is AWD and why do you need to know about it?
The AWD sets out new regulations derived from European legislation designed to give temporary agency workers parity in pay and employment conditions, as they would have been entitled to had they been recruited by the hirer directly to do the same job permanently.
Who qualifies under the regulations?
Every agency worker that is engaged for 12 weeks' of service, or more, with the same hirer, in the same role, will qualify if they are paid PAYE, either via the agency, through an umbrella company or their own owned Limited Company. They can be full time or part time and a new qualifying period will only begin if a new assignment with the same hirer is substantively different, or if there is a break of more than six weeks between assignments in the same role. Those that are outside of the scope of the AWD are the self-employed and those operating a corporate vehicle of their own. Therefore it is important those hirers:
• Understand the scope and implications of the regulations.
• Assess the potential impact the proposed regulations will have on their business or organisation
• Start as early as possible to develop plans with their temporary staffing suppliers to minimise the costs and potential disruption the implementation of the proposed regulations may cause.
Will agency workers be entitled to the same rights and benefits of employees?
The new regulations will not change the employment status of agency workers who will still not have the rights to claim unfair dismissal, redundancy pay or maternity leave. Nor will agency workers be entitled to the same benefits such as occupational sick pay, company pension schemes, financial participation schemes and bonus payments based upon organisational or company performance. These are considered a reflection of the long term relationship between an employee and an employer. Agency workers will therefore remain a flexible labour resource for hirers.
What will the agency worker be entitled to after 12 weeks?
Agency workers will be entitled to the same basic pay and working conditions. This includes:
• The basic hourly/daily rate and any additional entitlements that are linked to the work done by the agency worker.
• Overtime and shift allowances, unsocial hour's premiums, payments for difficult or dangerous duties and lunch vouchers.
• Bonuses which are directly attributable to the quality and quantity of work completed.
• Agency workers will also be entitled to the same rest breaks and annual leave allowance.
Whilst the above benefits are only given after 12 weeks, there are some benefits which agency workers will be entitled to from day one of an assignment.
• Firstly, you will need to ensure that agency workers are made aware of vacancies that arise in your organisation.
• Secondly, agency workers will also be entitled to access a number of collective facilities including;
o Crèche and childcare facilities
o Canteen facilities
o The provision of transport services but access to these can be refused if there are ‘objective grounds' for doing so.
How will I establish equal treatment?
In many cases there will be a ‘flesh and blood' comparator to establish parity in pay and working conditions. For example; a worker recruited directly by the employer. Where there is a like for like, ‘flesh and blood' comparator the hirer and the agency will be deemed compliant with the regulations. If a ‘flesh and blood' comparator cannot be found, then there may be an identifiable pay scale or a starting rate which could be used as a reference point. Sometimes the agency worker may be a unique hire and there may be no easily identifiable comparator, pay scales or starting rates. In this circumstance, parity does not need to be established. However, in all scenarios agency workers will be entitled to benefits which ‘apply generally' in the workplace. Benefits outlined in company handbooks, employment contracts and collective agreements will be taken into account by the courts in determining parity in pay and working conditions.
Who is liable for establishing equal treatment?
The recruitment agency will be liable for any breach of a right in relation to equal treatment for which they are responsible. However, they will have a defence if they have taken ‘reasonable steps' to obtain the necessary information from the hirer. This will mean the hirer and the agency will need to work together closely to share appropriate information to ensure the agency worker is receiving equal treatment.
What if I pay agency workers higher than my employed staff?
If the agency workers you are supplied with are on a higher rate of pay than your own employees, then that is fine. The AWD's purpose is to ensure that agency workers are not treated detrimentally, in comparison to those employed directly. Therefore, and agency workers pay rates do not need to be lowered to bring them in line with permanent staff or direct hires.
Should I just hire freelancers directly and thus circumvent the Directive?
Unlike workers employed directly, agency workers do not have rights to claim unfair dismissal, request maternity or paternity leave or claim redundancy pay. This makes them a flexible resource for employers to meet unexpected peaks in demand and cover for absences. Employing workers directly, even on zero hour contracts, means workers may well qualify for those additional rights.
October 11th 2011 is a long way off, but be prepared to work with your recruitment agency. A professional recruitment agency should already be working closely with you, so that they have a good understanding of your business and can supply candidates to match your recruitment needs. The new regulations will mean that this close relationship will be become even more important. As the legislation is deployed, agencies will need to ask for you to be increasingly detailed around your benefits and payment structures. This will be their due diligence and their legal obligation. In turn you'll be required to supply that information and work with them to protect the rights of the agency workers.
So, only one question remains. Is your current freelance supplier aware of the AWD right now?.....If not, you might want to consider changing your supplier!