Reminder for recruitment agencies to check their agency worker contracts

Recruitment agencies which seek to exempt their agency workers from the right to equal treatment when compared to a permanent employee have been given a stark reminder to check their agency worker contracts. 

Right to equal treatment and the Swedish derogation

The Agency Worker Regulations (AWR) were introduced in the UK in 2010 because of the UK’s membership of the European Union. The AWR entitled agency workers to the same basic pay and conditions as permanent employees after completing 12 weeks’ continuous service. 

However, agencies could exempt themselves from this obligation if they agreed to continue to pay agency workers between assignments (this became known as the Swedish derogation as it had been requested by the Swedish government). The benefit of the Swedish derogation is that agency workers could be supplied on contracts lasting longer than 12 weeks and the agency would not be required to pay them the same as a permanent employee or provide them with the same benefits such as holiday entitlement. This could therefore reduce costs for the end client and the agency. 

For the Swedish derogation to apply, certain conditions had to be met and the agency workers had to be made fully aware that they would be relinquishing their equal treatment rights. The main conditions were that the agency worker’s contract had to:

  • specify the expected hours of work during any assignment; and
  • state the minimum rate of pay between assignments which had to be no less than the national minimum wage

All conditions must be satisfied for the Swedish derogation to apply. 

'Insufficient detail concerning hours of work'

In a recent Employment Appeal Tribunal decision, a recruitment agency called Twenty-Four Seven Recruitment Services Ltd sought to rely on the Swedish derogation when contracting with some its agency workers. However, its agency worker contract only stated that the workers’ hours would be 'any five days out of seven'.

The agency worker claimed equal treatment rights on the grounds that certain conditions had not been satisfied for the Swedish derogation to apply, namely, that the agency workers contract did not specify the expected hours of work between assignments. 

The Employment Appeal Tribunal agreed with the agency worker - stating that the agency worker would be required to work any five days out of seven was not specific enough. It did not provide the agency worker with sufficient detail of the total number of hours to be worked in a week. The conditions for the Swedish derogation to apply had not been satisfied and, therefore, the agency workers were therefore entitled to the same pay and certain terms and conditions as permanent employees.  

Time to review your contracts 

The case serves as a reminder that the courts will take a very strict approach when considering whether the Swedish derogation is engaged. As a result, recruitment agencies who seek to rely on the Swedish derogation should take the opportunity to review their standard agency worker terms to ensure those conditions are satisfied.

If you would like a review of your agency worker contracts or have any concerns over the application of the Swedish derogation please contact Charlie Barnes.

Please visit the contract changes section of the New Forces at Work campaign for more information on how to proactively manage your workforce.