Temporary workers – the legal aspects

The law governing temporary workers is governed predominantly by case law because legislative sources such as the Employment Rights Act 1996 (ERA) as amended does not provide temporary workers with many freestanding rights.

The Agency Workers Regulations 2010 (the Regulations) came into force on 1 October 2011 must also be taken into account as they made significant changes to the law governing temporary agency workers.

The purpose of the Regulations is to provide agency workers with equal treatment in terms of basic working and employment conditions as if they had been employed directly with a hirer (otherwise known as the end-user client).

What is a temporary worker?

• An individual who works under a contract for services with an agency, where there is a contract between the agency and the hirer (end-user client), but there is no contract between the worker and the hirer.
• An individual who works on a freelance basis direct with a company.
• An individual employed on a casual basis direct with a company.
• An individual employed at home.

To whom do the Regulations apply?

Under the Regulations, protection is afforded to an “agency worker” who is defined as someone who:

• is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer; or
• has a contract with the temporary work agency which is either a contract of employment with the agency; or any other contract to perform work and services personally for the agency.

The Regulations do not apply to:

• individuals employed on managed serviced contracts;
• individuals working under the supervision and direction of the supplier rather than the hirer;
• individuals who are hired via their own personal service company if they are self-employed; or
• individuals who are genuinely self-employed.

Consequently, temporary workers who do not have a contract with a temporary work agency do not fall within the scope of the Regulations as they are not “temporary agency workers”. The Regulations will, however, capture agency workers contracted via an umbrella company or other intermediary arrangements (such as a master or neutral vendor contract).

What is a hirer?

The hirer (end user) is defined as an entity that is engaged in economic activity and which books agency workers via a temporary worker agency.

What rights does a temporary worker have?

The right not to be unlawfully discriminated against on grounds of sex, race, disability, religion or belief, sexual orientation or age.

There are other rights which apply generally to workers such as the right not to be paid less than the minimum wage, not to work more than a 48 hour week unless by agreement and to have 28 days paid holiday each leave year.

Under the Regulations, from day one of the worker’s assignment, an agency worker has the right to be treated no less favourably than a comparable employee or worker in the hirer’s business in relation to its “collective facilities and amenities.”

Less favourable treatment can, however, be objectively justified.

Collective facilities and amenities

Collective facilities and amenities include (but are not limited to) access to canteen facilities, transport services, prayer rooms, car parking, etc. However, to qualify for the more specialised employment rights such as the right to claim unfair dismissal, redundancy or statutory sick pay a temporary worker must come under the definition of an employee as defined by the section 230(1) of the ERA.

Is a temporary worker an employee?

The points that need to be considered are:

• Does the employer control what the individual does, and when, where and how they do the work?
• Can the individual send a substitute?
• Is the individual integrated into the permanent workforce?
• Are the duties and terms of the individual’s employment consistent with the job done by an employee?
• Is there a commitment from the employer to provide work in return for pay, and in return a commitment from the individual to provide services (referred to as mutuality of obligation)?

Who is the employer?

The courts have been quick to find that an individual is in fact an employee and not a worker in circumstances where there is mutuality of obligation, the employer controls the way the individual works and there is no right for the individual to send a substitute, irrespective of the label the parties put on the employment relationship.

Until 2004 case law generally took the view that temporary workers were neither employees of the employment business nor of the end user. However, the courts have ruled that while an employment business or agency would not normally be deemed to be a temporary worker’s employer because the relationship lacks day-to-ay control and mutuality of obligation, an end user can, in certain circumstances be shown to be the employer.

In particular, the courts have said that dealings between parties over a period of time eg 1 year can be capable of creating an implied contractual relationship and more often than not such a relationship will exist between the temporary worker and end user. Even when a third party remunerates the temporary worker for the work done for the end user, this does not allow the end user to cease being the employer.

What can employers do to prevent temporary workers becoming employees?

Employers can take the following steps to limit the risk of liabilities:

• prevent the relationship becoming one of ‘day to day control’ by allowing individuals to work flexible hours and to perform their job as they see fit;
• avoid using terminology such as ’employees’ or ‘staff’ when referring to temporary workers;
• do not provide individuals with promotion, hold appraisals, train them, discipline them, or give them access to general employee benefits;
• try to avoid employing individuals for long periods of time, as little as a year maybe enough to imply that there is an implied contract of employment and that they are employees.

The Regulations provide “qualifying agency workers” with the right to equal treatment with permanent employees in the same job in respect of “basic working and employment conditions”.

Equal treatment rights for “qualifying” agency workers

The right to equal treatment in respect of “basic working and employment conditions” is subject to certain qualifying conditions: that is, the agency worker has undertaken the same job with the same hirer for 12 calendar weeks. Calendar weeks will accrue regardless of how many hours the individual works each week.

“Basic working and employment conditions” encompass terms and conditions relating to:

• pay (subject to certain exclusions);
• duration of working time;
• night work;
• rest periods;
• rest breaks; and
• annual leave.

“Pay” includes basic pay; overtime pay; shift/unsocial hours allowance or risk payments for hazardous duties; payment for annual leave; bonuses or commission payments which are directly attributable to the amount or quality of the work done by the individual; discretionary, non-contractual bonuses; and vouchers or stamps with a monetary value (and which are not otherwise provided through salary sacrifice schemes)

“Pay” excludes (among other things): occupational sick pay; occupational pensions; occupational maternity, paternity or adoption pay; redundancy pay (statutory or contractual); notice pay (statutory or contractual); bonuses which are not directly linked to the contribution of the individual; share ownership schemes, phantom share schemes; expenses etc.

12 week qualifying period

The 12 week qualifying period of service can, in certain circumstances, be broken, suspended or otherwise continue to accrue.

Continuity will break where:

• agency work starts a new assignment with a new hirer; or
• agency work starts a new substantively different role with the same hirer that is, a genuine or real difference to the work and duties which make up the whole or main part of the role such as a difference in: the line manager; location; skills and competencies; pay rate; or the role requires extra training and/or a specification qualification that wasn’t needed before. A role can only be considered to be “substantively different” once the hirer has notified the temporary worker agency of the changes to the job duties and the agency has informed the agency worker in writing of the type of work they will be required to do in the new role; or
• there is a break of at least 6 calendar weeks either during or between assignments.

Continuity will be suspended where:

• the break is for any reason but is not more than six calendar weeks;
• there is a break of up to 28 weeks because the agency worker is incapable of work because of sickness or injury;
• there is a break (of any duration) which is for the purposes of taking leave to which the agency worker is entitled (eg annual leave); and/or
• a break of up to 28 calendar weeks to allow the agency worker to perform jury service.

Continuity will continue to accrue where:

• the break is due to pregnancy, childbirth or maternity (which takes place during pregnancy and up to 26 weeks after childbirth); and/or
• the break is due to the agency worker taking maternity leave, adoption leave or taking paternity leave.

Anti-avoidance provisions

Hirers should be aware that the Regulations specifically address arrangements that are put in place to avoid agency workers attaining the 12 week qualifying period. These anti-avoidance provisions will be triggered where a pattern of assignments emerge which are designed to intentionally deprive an agency worker of their entitlement.

For further advice, contact us at enquiries@ibblaw.co.uk.