The Agency Workers Regulations. A Contractors Guide

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1 The Agency Workers Regulations A Contractors Guide

2 The AWR Basic Employment Conditions The regulations give agency workers the same access to certain facilities provided by the hirer (end client). Day One Rights Anyone keeping an eye on contractor press over the past couple of years will have seen a large increase in the coverage devoted to the Agency Workers Regulations (AWR), a new piece of legislation that is coming into effect in October The AWR has the potential to significantly impact the current contracting market, however from our research we are aware that the majority of contractors remain in the dark over what the AWR is and what it means for contractors, interims and temporary workers. Intentions of the AWR The AWR was introduced in order to protect vulnerable workers from exploitation and to ensure that they are rewarded with the same basic employment conditions as their permanent equivalents after 12 weeks of service (or for some cases, immediately from the 1st of October 2011). This is mainly the same pay, working hours and holidays. The Agency Workers Directive was first raised during the Greek EU presidency in Since then there have been a number of attempts to raise the bill however they have been unsuccessful. In 2008 the bill was finally passed and became European Law. The UK and other Member states were put in a position where they had to adopt the AWR. Agency Workers are entitled to: Access to Internal Job Opportunities Access to collective features (e.g. Transport Services, Car Parks, Canteens, Child-Care Facilities, Prayer Rooms) It is the hirer, or end client, who is solely responsible for providing access to these facilities. NonStop Recruitment will be working closely with all hirers (clients) in order to make them aware and aid the process. Equal Treatment After 12 Weeks This comes into effect after 12 weeks in the same assignment with the same hirer. After the AWR Qualifying Period is over agency workers will also be entitled to the same basic employment conditions as their comparable permanent equivalent. Included as basic employment conditions: Pay and bonuses Holidays Hours of Work Night Work Rest Periods and Breaks Access to Internal Job Opportunities Paid Ante-natal Appointments

3 Whilst NonStop does not tend to provide what we would consider Vulnerable Workers the legislation is still effective on every worker that is deemed an Agency Worker (even workers direct to clients are deemed Agency Workers, this is explained later on). However the legislation has not made a distinction between the two ends of the agency worker spectrum: The vulnerable agency workers who deserve the protection that the AWR offers, and the highly skilled, high-earning contractors who provide their services to a client through an agency or their own limited company. Comparable Pay The AWR guidance released by The Department of Business, Innovation and Skills is clear in stating that comparable pay does not have to be a direct comparison made to a worker and can actually be referenced to the internal pay scales within the hirer s organization. NonStop Recruitment will be working closely with clients in order to gain all the information that allows for compliance to these rights. What is Excluded from the AWR Occupational Sick Pay Occupational Maternity/Paternity pay or adoption pay Pensions Share Schemes Long Service Award Schemes or Benefits in Kind The AWR legislation has made a definition of what pay is considered to be. In effect it is the basic payment received for work undertaken and anything else given a monetary value. So: Pay = General Rate of Pay, Holiday Pay, Overtime, Shift Allowances, Bonuses (see below), Commission and any other benefits of a monetary value that are not under a salary-sacrifice scheme (e.g. Luncheon Vouchers). Bonuses are very tricky to define. Under the AWR the bonuses given to encourage loyalty or for any reason not directly related to the work done will not be included. We also find that most permanent employees that get a bonus are actually getting a bonus that is not contractually guaranteed and discretionary. Therefore unless there is a guaranteed bonus, it is unlikely that Bonuses will really come into play much in the Pay calculation.

4 What does this mean to you? Limited Company Often referred to as a Personal Services Company (PSC) or Limited Liability Company (LTD) NonStop considers contractors who utilize a Ltd Company as being in business of their own account. The definition of an agency worker excludes those who are in business on their own account, where the status of the hirer is that of a client or customer of a profession or business undertaking i.e. they are considered to have a Business to Business relationship and that they have taken on the legal responsibilities of operating their own limited company and complying with the rules that apply to the legal structure. The questions can be answered in a number of different ways. firstly however it is important to define how you are employed i.e. Limited Company Umbrella Company PAYE Temporary Worker for contractors Interims and temporary workers Any disputes by contractors whom are contracting through a Limited Company of their own will potentially lead to a dispute having an impact on their current and historic tax status. According to the BIS genuine contractors should have few fears that the AWR will apply to them. Please be aware that if you are a contractor who is subcontracting client work to other contractors your limited company could be classified as a Temporary Work Agency, even if the other contractor is working through their own Ltd Company or an umbrella company.

5 Umbrella Company The AWR guidance specifically states that contractors trading through an Umbrella Company are within scope of the AWR. When the AWR is implemented there will be two variations of Umbrella Solutions available: The Traditional Umbrella solution (that is currently operating) This continues to be legally viable if it can be shown that the worker is receiving equal pay to a comparable employee. The Swedish Derogation Umbrella Model (that is currently operating) Will be used when the end client or agency is unable to show that the worker is receiving equal pay through the information not being provided. Or in fact when the worker is lower paid than a comparable worker. As a consequence there are other benefits built in to the AWR for workers going through the Swedish Derogation Model. NonStop will seek to get the relevant comparator pay information from all hirers. This will be part of the recruitment and contract generation process. However there will be cases where hirer wishes not to disclose sensitive information and therefore the Swedish Derogation Model is a valuable alternative for workers, NonStop and hirers. The Traditional Umbrella Model This model will continue to work well once the AWR is implemented in the case where NonStop is aware the temporary worker is receiving equal treatment as defined by the AWR. It is important to note that whilst the rate paid may be equivalent, it will not be recorded in the way that an Umbrella Company remunerates its workers. The total comparable remuneration will include Basic Pay, and Bonus/Commission as well as any reimbursed expenses. Workers will need to provide the Umbrella Company of an understanding of the level of anticipated expenses. Umbrella companies will also obligate workers to inform them as soon as the worker becomes aware of any issues over pay, or any other aspect of the equal rights (from Day One or After 12 Weeks).

6 The Swedish Derogation Umbrella Model Often also referred to as the Pay Between Assignments Model (PBA), this new model is being implemented as a direct result of the AWR. It is essential that this model is utilized where there is no comparator data available or received, or where the data indicates that the pay may be below comparison. The difference is that although workers have the same rights to equal treatment, the pay rights are removed. In compensation for that there must be a payment available to workers for down-time also known as pay between assignments (PBA). The BIS guidance suggests that for at least 4 weeks the worker should be paid 50% of the assignment pay rate achieved in the last 12 weeks. The PBA is only payable when the worker is available to work, the employment contract remains in place and the worker is between assignments. Rolled Up PBA If you are experienced with using Umbrella Companies, you will be aware that it is common place for Holiday Pay to be paid throughout the assignment, rather than at the point of holiday being taken. Most workers prefer this and the holiday pay is clearly documented separately within a pay slip. It is likely that most Umbrella companies will adopt a Rolled Up PBA approach to their workers. In short the PBA amount will actually be paid during the assignment. Your Umbrella Company will explain the workings of the PBA/Swedish Derogation model to you as their approach towards it may differ slightly. PAYE Temporary Worker A Pay-As-You-Earn Temporary Worker is generally not provided to end-hirers by NonStop due to the nature of the industries NonStop works within. It is only a worthwhile solution to you as a contractor if you are paid under 7.75 per hour. Otherwise your take-home pay is better through an Umbrella Company or your own Ltd Company. Provisions will be made for contractors to work as PAYE temps either within the comparator method of pay, or alternatively under the PBA model, if no comparator data is available.

7 Any Questions? Don t hesitate. Get in touch. NonStop Recruitment Ltd. P: +44 (0) Mill House, 8 Mill Street London SE1 2BA Copyright 2013 NonStop Recruitment Ltd All rights reserved. NonStop Recruitment Ltd, a company registered in England and Wales. Registered Number , Registered Address Mill House, 8 Mill Street, London SE1 2BA. Vat Number :

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