Agency workers benefit from the same pay terms as permanent workers where employers' less favourable 'Swedish derogation' terms did not comply with law

Twenty-Four Seven Recruitment Services Ltd and others v Afonso and 190 others [2018] UKEAT/0311/17

Why care?

When assigned to do temporary work for hirers through temporary work agencies (TWAs), agency workers acquire rights under the Agency Workers Regulations 2010 (AWR). After 12 weeks of working for a hirer, agency workers are entitled to the same "basic working and employment conditions", including pay, that they would have been entitled to had they been recruited directly by the hirer.

The exception to this (known as the "Swedish derogation") is where agency workers enter into a permanent contract of employment with a TWA before their first assignment and continue to be paid a minimum amount between assignments for at least four weeks. The minimum scale or rate of remuneration or the method of calculating remuneration and the expected hours of work during any assignment must be set out in the contract. In this case the EAT had to consider whether a TWA's contract with the agency worker properly complied with the Swedish derogation requirements. The EAT held that it did not, and that therefore workers were entitled to the same pay rates as permanent workers.

The case

191 agency workers (Claimants) brought claims against two employer agencies and against two hirers. The Claimants complained to an employment tribunal that their contracts with their employers failed to comply with the requirements for the Swedish Derogation (Regulation 10) and so they were entitled to be paid at the same rate as the hirers' permanent workers under Regulation 5 AWR. The two employers' terms were essentially the same and stated that:

• The agency workers rate of pay during their assignment would be as agreed or varied but at least equivalent to the then National Minimum Wage (NMW) currently in force;
• Their hours of work likely to be involved for each assignment (but which were not guaranteed in respect of that assignment) would be "as notified to the worker prior to starting each assignment". Their expected hours of work on each assignment would be "any 5 days out of 7" or "Any 5 out of 7 days/nights as required".

The employment tribunal held that the contractual provision relating to pay did not adequately specify a ‘scale or rate of remuneration’ and the workers should instead have been provided with actual figures. Neither did the hours of work provision comply with the AWR as it did not set out what number of hours workers were expected to work in a day so workers had no information as to what hours they might be expected to work.

The employers appealed to the Employment Appeal Tribunal (EAT) which dismissed the appeal. It partially disagreed with the employment tribunal by finding the reference to pay rates being equivalent to the NMW was not vague or uncertain, and information about the current rate was readily available. However the EAT did uphold the employment tribunal’s conclusion that the contract did not specify the "expected hours of work during any assignment". Agency workers were not provided with their expected hours of work per week and should not be expected to have to work out what the information meant in terms of expected hours of work per week. As that part of their employment contract did not comply with the AWR, the "Swedish derogation" did not apply. The agency workers were therefore entitled to be paid at the same rate as the hirers' permanent workers under Regulation 5.

What to take away

Where employers are using the Swedish derogation then it must comply with all the requirements stipulated in the AWR. If, as in this case there is only partial compliance then the "default" AWR provisions kick in.

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