With an ever changing economic climate, temporary workers have played an important role in providing flexibility for U.K. businesses. However, that may change as a result of the Agency Workers Regulations 20101 ("the Regulations"), which came into force on October 1, 2011. Indeed, employers have been awaiting their introduction with unease. Essentially, these regulations give temporary agency workers who work on assignments of 12 weeks or more the same entitlement to basic employment terms and conditions as comparable permanent employees.
The Regulations are derived from the E.U. Temporary and Agency Workers Directive,2 a directive proposed by the E.U. in 2002 but whose enactment was blocked by several EU countries – including the U.K. – until 2008. The Directive is the third piece of legislation the E.U. has passed in order to protect the rights of what are called "atypical workers" in the United Kingdom, the other protections being for part-time and fixed-term workers. The ultimate aim of this legislation is to advance equal opportunity in the workplace regardless of a person's employment status, but only time will tell if the Regulations have any real effect.
Who Is Covered in the Regulations?
There are three players: a temporary worker agency (TWA); an agency worker; and a hirer. A TWA is a supplier of agency workers who will work temporarily for a third party – the hirer.3 Not only are agencies that actually engage agency workers included in the definition of a TWA, but so are intermediaries who assist in supplying agency workers to a hirer. For example, the hirer may hire one agency – a master vendor – to manage its recruitment process. The master vendor may then use other recruitment agencies to provide the hirer with agency workers. Such an intermediary would be a TWA because of its role in supplying agency workers and if they forwarded wage payments to these agency workers. That said, the Regulations are not intended to cover employment or recruitment agencies who introduce workers to employers for direct and/or permanent employment.
An agency worker is someone who works temporarily under the supervision and direction of the hirer but has a contract with the TWA.4 The definition of an agency worker excludes individuals who are in business on their own account, are free to have other clients, and are hired by their clients or customers to perform specific services, for example specialized consultants, doctors or lawyers.
Finally, the hirer is a person who is engaged in an economic activity and who hires agency workers using a TWA.5 The hirer must supervise and direct an agency worker in order to fall within the scope of the Regulations. If a contractor was hired by a company to provide a certain service, such as cleaning, and as a result the contractor used its own workers to provide those services at the company's premises, the company would not be a "hirer" so long as the contractor was genuinely engaged in supervising and directing its workers on-site on a day-to-day basis and determined how and when the work was done.
In-house temporary staffing banks will likely not be considered TWAs (i.e., where a company employs its own temporary workers directly and the...