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Christmas Bonus for Agency Workers

Under the Agency Workers Regulations which came into force on 1 October 2011, organisations must assign temporary agency staff the same levels of pay and basic terms and working conditions as their permanent staff once they have completed a qualifying period of 12 weeks. 

The first 12 week qualifying period which started on 1st October ended on 24th December so on Christmas Eve. Agency workers who were still in post and were in post on or prior to 1st October are entitled to the same pay and basic terms and conditions as any comparator permanent staff with the organisation to whom they were assigned.

Earlier this year it was thought that one in three employers would end agency workers’ contracts before the 12 week qualifying period to avoid having to afford them the same terms and conditions as their permanent staff.  However it appears that this is not the case and figures from the Recruitment and Employment Federation show that 81% of employers plan to either grow their agency workforce or keep it at existing levels.  Of those organisations, 31% plan to increase the size of their temporary workforce in the short term compared with 22% at the same point last year.

Some employers including Tesco and DHL are looking at different supply models rather than reducing their temporary workforce.  One model, known as the Swedish Derogation, means that the temporary worker as an employee of the agency is paid a minimum amount by the agency between assignments.  This is becoming popular in sectors such as retail and education.

The use of agency workers in education tends to be predominantly for security, catering and cleaning. 

Education institutions are advised to carry out preparatory risk assessments before entering into negotiations with temporary agencies for the supply of agency workers to make sure that their negotiations progress to a more successful outcome and to better inform them of their options. 

The hirer may want to consider the following:

1. Analyse the institution’s use of agency workers.  Identify the number of workers involved, the reasons for their use, costs and nature of any existing contractual commitments with the agencies. 

One very important point to note here is the institution’s use of agency workers if it is considering a service provision tender or a service provision change under the Transfer of Undertakings (Protection of Employment) Regulations 2006.  This is a complex area as agency workers can now be caught by TUPE and can transfer to a new service provider.  Essentially this could have a major impact on the cost of any contract to the education institution after Christmas Eve if the agency workers have the relevant 12 week qualifying period.  If the education institution has comparator staff then the agency workers will need to be paid the same level of pay, overtime pay and basic terms and working conditions such as holidays as the education institution’s staff.  As these tend to be at better rates than the agency workers’ rates, this could have an impact on the bids forthcoming in any tender process.  Essentially to avoid this situation, it would be better to speak to the agencies involved to see about negotiating a managed contract service which would stop the employees being agency workers.  Alternatively the education institution could ask the agency about using the Swedish Derogation for its agency workers.

2. Identifying the qualifying pay and holiday differentials between agency workers and comparable employees.  Skill matrices for each of the roles that the agency workers are assigned to carry out can be helpful in establishing whether the education institution has any comparator staff. 

3. Decide on the best approach drawing on the above information for the education institution.  Different approaches could be:

(a) Terminate all agency workers’ contracts before 12 weeks.  If you choose to do this and there is any further re-engagement, consideration must then be given to the anti-avoidance provisions in the Regulations.

(b) Set up an in-house “bank” of directly recruited casual workers.

(c) Use “managed service contracts” for the delivery of certain services such as catering, security or cleaning.

(d) Increase use of genuinely self-employed individuals or limited company contractors.

(e) Explore the Swedish Derogation possibility with the agencies.

The Government has also published some supplementary guidance relating to agency supply teachers.  It addresses a limited number of issues which relate only to temporary agency workers who are supply teachers.  It clarifies who the hirer is, how holiday pay would accrue, the circumstances if a qualified teacher is hired to cover a supervisor or teaching assistant role, and the impact of school closures for example, summer holidays on the qualifying period. 

If you have any questions on agency workers, TUPE or supply teachers, please contact Natalie Ruane, Partner, Education Team - telephone 01228 552222.


About the author

Natalie Ruane profile photo

Natalie Ruane

Natalie is a Partner and leads the Employment Law & HR team and specialises in education.

Published: Friday 13th January 2012
Categorised: Corporate Law, Education, Employment, Public Sector

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