17 April 2019
In this case, the Court of Appeal held that agency workers have a right to receive the same pay and conditions as direct employees, not just to receive a document containing the same terms.
The hirer of the agency workers was liable to pay compensation directly to the workers even though it had already paid the arrears to the agency, which had not passed on the money to the workers.
Regulation 5 of the Agency Worker Regulations 2010 says that after 12 continuous weeks in the same role, an agency worker is entitled to the same basic working and employment conditions as if they had been directly hired, rather than through a temporary work agency.
Agency workers who have contracts giving them pay between assignments (otherwise known as the 'Swedish derogation') do not have this right.
If this right is breached, both the agency and the hirer may be liable. The tribunal will apportion the compensation between the two on a just and equitable basis, according to their responsibility for the infringement.
This is the first case which has tested how compensation should be assessed, and specifically what a worker's 'entitlement' to equalisation actually means.
In 2007, London Underground Limited (LUL) took control of several underground stations in Wembley. Trainpeople.co.uk Limited (TPL) provided agency workers to those stations and continued to do so.
When the Agency Workers Regulations came into force in 2010, LUL and TPL agreed that the 31 agency workers TPL supplied to LUL were on pay between assignments contracts, so were not entitled to the same pay and terms and conditions as direct hires.
When LUL realised this was not correct, LUL made a payment to TPL to reflect 10 months' arrears of pay for the affected workers. TPL did not pass on the back pay to them.
The agency workers brought a claim against both TPL and LUL for breach of the Regulations but by the time the case was heard by the tribunal, TPL had dissolved, leaving LUL the only respondent.
The tribunal held that LUL and TPL were equally liable for the breach of Regulation 5: but at what point did the breach actually occur, and what were the losses?
The tribunal (and the EAT) held that the Regulations gave a right to equality of terms, but were silent as to compliance with those terms.
The claimant agency workers could not recover the underpayments they were due because the losses were attributable not to the breach of Regulation 5, but to three subsequent events:
The tribunal held it would not be just and equitable to make LUL, who were 50% liable for the breach, pay twice.
The EAT found that given the claimants had not received the money, LUL should be required to make a payment but remitted the case back to the tribunal to determine the level of compensation due.
The Court of Appeal (Underhill LJ) disagreed with the findings of the tribunal and the EAT, holding that, "to say that a worker is "entitled to" the same terms and conditions as the comparator enjoys under his or her contract naturally connotes a right actually to receive the benefits in question… ".
The breach was the underpayment of wages. Compensation should be calculated according to the loss suffered by the workers, here on a pound-to-pound basis. The workers had a claim against whoever was responsible for the breach, which in this case was both LUL and TPL.
Even though LUL had tried to correct the underpayment, it still remained 50% liable, and it would not be just and equitable for the claimants to be deprived of their wages when they had done nothing wrong.
LUL had chosen to do business with TPL, so it should be them rather than the claimants who suffered from TPL's dishonesty.
There has been little case law on the Agency Workers Regulations, and to have a clear judgment from the Court of Appeal is helpful, particularly on the issue of apportionment.
Breach of Regulation 5 occurs at each instance in which an agency worker suffers a loss of benefit to which they are entitled under their right to equalisation (for instance, each pay-day in which they receive less than their comparators).
Where a breach has occurred, tribunals are likely to favour agency workers in awarding a 'just and equitable remedy' in circumstances where they suffer losses due to no fault of their own, notwithstanding any good-faith attempts by the agency/hirer to rectify the breach.
LUL's experience is a lesson for employers and parties to any kind of commercial agreement which may include a payment being made to one party to pass on to another: can you be sure that this will actually happen?
Does your agreement contain any provisions to ensure that the payment is actually paid and what happens if it does not? Would it be better to agree that the payment is made directly?