Workers and agents are each victors of the AWR in court

AWR cases: Workers 1, Recruiters 1

Two recent legal cases involving the interpretation of the Agency Workers Regulations (AWR) have resulted in a score draw for workers and recruiters. Interestingly for IT contractors, one involved temporary workers for a computer hardware giant and the other should also make them sit up if they use an umbrella company’s ‘Swedish derogation’ solution, writes David Buckle, consultant employment solicitor at Cubism Law.

AWR ruling for the IT sector

The first case was triggered by a claim from the union PCS against recruiter Kelly Services in respect of temporary workers placed with IT giant Hewlett Packard.  Four workers had all been employed prior to October 1^st 2011 with lengths of service ranging from 15 months to 4 years.

After being given a pay rise to HP employees on lower wages because of performance issues, the workers asked for pay equal to regular employees. The result, in court, was that the union won and the workers were given the pay rise, reinforcing that under the AWR holiday pay must be calculated on the basis of equal pay.

On the face of it this case was merely confirmation of the right to pay and holiday equal to that of the hirer’s employees.

Swedish derogation contracts

The second case, Bray and others v Monarch Personnel Refuelling (UK) Ltd, was more complex. Monarch supplied tanker drivers to BP using “Swedish derogation” contracts. This is where agency workers lose the right to equal treatment if they are employed by the agency on contracts that meet the requirements of Regulation 10 of the AWR. These requirements include an obligation to pay workers for at least 4 weeks when they are not on assignment and that:

“the contract of employment was entered into before the beginning of the first assignment under that contract...” (Regulation 10(1)(a)).

The drivers had worked for BP on a series of assignments for years. They were however paid 70p less than drivers recruited by BP directly. The non-agency drivers at BP demanded more pay than the agency drivers so BP instructed Monarch to employ the agency drivers under Regulation 10 to avoid escalating pay arguments. Monarch held meetings with the drivers and issued new contracts on the completion of their current assignment with BP. The drivers signed and returned these before their “new” assignment.

All-clear to flip agency workers

The Employment Judge held that “assignment” within the AWR did not necessarily mean the total period that a worker had been engaged by an agency and previous contracts didn't stop a new assignment starting under the new contracts.

In short, the drivers had been on multiple assignments. The Judge also held that, "that contract" in Regulation 10 meant the new contracts before the first assignment under that contract. The judgment also held that it did not matter if the contract was a new contract, an existing contract or a variation of an existing contract. The interpretation would apply to all of them. Again, in short, there was no need for a Regulation 10 compliant contract prior to the first ever assignment with a hirer.

This decision is important because, whilst it is not binding, it means you can transfer – or ‘flip’ - an agency worker from an agency contract to a ‘Swedish Derogation’ contract.

Little stock in AWR guidance

Although this development has not gone unnoticed, less reported are the judge’s comments on the Guidance on the AWR issued by the Department for Business Innovation and Skills. ContractorUK readers may remember production of this guidance took some time and a number of redrafts. The workers relied on this guidance to support their argument.

But in this decision, the Employment Judge was having none of it. Rejecting their interpretation, the Judge also stated the AWR Guidance had “no statutory backing” and it was to be given the same weight as “observations from any other informed commentator”. The AWR guidance is therefore not definitive and may be ignored if it differs from the courts own interpretation of the AWR. With this in mind, it appears we are even worse off now than we were before in respect of what the AWR means.

No doubt the case will be appealed but leave was refused to go to the European Courts, which is unfortunate as the derogation found its origins in our European cousins in the first place.