Up close and personal

The Agency Workers Regulations 2010 came into force on 1 October, with significant implications for manufacturers that use agency workers. The Regulations give agency workers key new rights, including, after 12 weeks on the same assignment, the right to the same basic employment conditions as direct recruits and, from day one, equal access to facilities, amenities and information on relevant vacancies with the hiring company. For some manufacturers, the impact and increase in costs will be substantial and may result in changes to how they use agency workers and agencies. There are particular issues that manufacturers need to consider: Relationship with the agency Ensure you use a reliable agency that understands your business, offers sensible terms and understands its own obligations under the law. Consider reducing the number of agencies used and streamlining contact so that one person or team is responsible for managing agency relationships. New processes may be required for taking on, terminating or extending contracts of agency workers – and line managers will need to be trained in these. Employment status of agency workers Agency workers' employment status tends to be an issue for the agency, rather than the hirer. However, it is worth hirers noting that claims from agencies that the Regulations do not apply to their agency workers because they are engaged via limited companies, and are therefore genuinely self-employed, may be incorrect. Engagement via a limited company is not determinative of self-employed status and the usual employment status tests will apply. If agencies claim the Regulations do not apply, you should ask for warranties and indemnities regarding agency workers' self-employed status. Ask agencies for warranties/indemnities to the effect that agency workers are not employees. This may already be done in some cases, but given the new obligations on hirers, it should now be standard practice. Agency fees Agency fee charging and structure is important for hirers. Consider how an increase in agency worker pay will affect the overall cost of using the worker: will fees increase when the worker completes the 12-week qualifying period? Ask how the agency will handle issues such as performance pay and bonuses. Pay-between-assignments contracts It may be useful to select agencies that use pay between assignments (PBA) contracts, as these mean agency workers do not have the right to equal pay under the Regulations. Instead, the worker gets the security of a contract of employment with the agency and a certain amount of guaranteed pay when they are between assignments. However, PBA contracts will not always be suitable – and may not reduce costs if the agency passes on the payment made between assignments. What's more, if a PBA contract is deemed invalid, the agency worker would be able to claim the pay they should have received (as if recruited directly by the hirer), and the hirer may share liability for this. So, seek an indemnity from the agency for claims arising from invalid PBA contracts. Holidays If you are concerned about the cost of holiday (which the hirer will usually ultimately bear) and/or the effect of the agency worker's absence, the agency can be asked to invoice only for holiday accrued to date or refund any taken in excess of the accrued amount. You may also ask the agency only to supply workers whose contracts allow holiday periods (eg shutdowns) to be specified and vetoed. Provision of information Once agency workers have completed the 12-week qualifying period, manufacturers need to inform the agency of basic employment terms. Given the potential liability for failing to provide this, it makes sense to formalise the process with the agency. For example, ask for an agreement that the agency will request information about basic employment terms a certain number of weeks before the qualifying point. And ask the agency to provide reminders to keep it informed of any pay rises, bonuses, or performance pay at specified times of the year. You should also ask for agreement to indemnities for losses arising from failures to comply with the above. From day one, you must provide information on access to relevant facilities and amenities and how vacancies are advertised. You could ask for an agreement that the agency provides this information on your behalf and, if so, an indemnity for any losses resulting from failure to provide this to the agency workers. Beth Unwin is senior legal adviser at EEF: www.eef.org.uk