I have heard that a nearby factory has accepted the 'Swedish derogation' as a way to avoid the Agency Worker Regulations. What is it and is it true?
The Swedish derogation is so named due to the Swedish government's insistence on its inclusion in the Temporary Agency Workers Directive that came into force last October, under the Agency Workers Regulations (AWR) 2010. However, those hirers seeking to rely on this derogation to avoid the 'equal pay' part of the regulations should bear in mind that these regulations contain strict anti-avoidance provisions.
Under the derogation, an agency worker can be employed under a permanent contract of employment with a temporary work agency. This must be in place "before the beginning of the first assignment under that contract". The terms of the employment contract must meet the conditions set out in regulations 10 and 11 of the legislation. It is important to note that only pay is affected and all the other entitlements under the regulations remain. Also, the permanent employment contract with the agency gives rise to a variety of employment rights, including the right to claim unfair dismissal and to redundancy pay.
The contract with the agency must specify expected hours of work, location and the nature of the work that can be offered. In addition, the agency must pay a minimum amount between assignments. This has to be at least 50% of the highest level of pay paid to the agency worker in the 12 weeks preceding the end of the last assignment, subject to the payment being no less than the national minimum wage.
So, anyone who is seeking to rely on the Swedish derogation will have to comply fully with regulations 10 and 11 and make sure they carry out AWR-specific due diligence on any providers who attempt to offer Swedish derogation-compliant solutions.