Consultation: Agency Worker Recommendations

08 February 2018

Government has published its response to the Taylor review along with four consultations to address recommendations on the key aspects of;

  • Employment Status;
  • Increasing transparency in the labour market;
  • Agency Workers; and
  • Enforcement of employment rights

To view our previous article on the Taylor review click here.

Consultation Three: ‘Agency worker recommendations’ covers;

  • How to increase transparency of contractual arrangements for agency workers
  • How umbrella companies or intermediaries could be brought within the scope of the Employment Agency Standards Inspectorate (EAS)

 The review identifies the government intent to address the following issues:

1. The worker needs to clearly understand who is responsible for paying their remuneration.

This seeks to address the confusion that workers experience when their agency contracts out the supply of their services to a contracting intermediary by clarifying the supply chain and the roles of each entity in it.

2. Rates of pay should be clear, highlighting any deductions that have been made e.g. margin.

This aspect would address what we consider is the potentially the biggest issue in the temporary labour market where the rate advertised by the agency does not reflect that the umbrella company will deduct the costs of employment before defining the gross pay of the employee.

3. Work seekers should be using the recruitment sector with confidence and have the knowledge to assert their rights.

The government seeks to ensure that both work seekers and hirers can use the recruitment sector with confidence.

The government intends to address these issues via the following four recommendations;

Recommendation One: The government should amend the legislation to improve the transparency of information which must be provided to work seekers both in terms of rates of pay and who is responsible for paying them.

The government have suggested that any contract or terms of business between a work seeker and an employment business should contain a ‘key facts’ sheet for issue at the time of registration or engagement with an employment business.

The fact sheet should include:

  1. Who will be responsible for paying the worker and how they’re engaged?
  2. Any costs, fees or charges that will be deducted and the reasoning for such    deductions. This includes statutory deductions.
  3. Who is the employer of the work seeker?
  4. How much the work seeker will be paid by the intermediary or umbrella company and any fees payable to the intermediary or umbrella?
  5. What additional benefits are there? E.g. benefit in kind scheme.

Recommendation Two:  The Director of Labour Market Enforcement should consider whether the remit of EAS ought to be extended to cover policing umbrella companies and other intermediaries in the supply chain.

The government is looking to bring certain activities of umbrella companies within the scope of EAS. This would enable the work seeker to have redress other than via the employment tribunal as the conduct of the umbrella company would be subject to independent inspection. Through legislative changes, the government could require umbrella companies and intermediaries to meet minimum requirements in line with legislation currently in place for employment businesses.

Recommendation Three:   The government should repeal the legislation that allows work seekers to opt out of equal pay entitlements (known as ‘Swedish Derogation’ or ‘pay between assignments’)

Recommendation Four:  The government should consider extending the remit of EAS to include compliance with the Agency Worker Regulations (AWR).

The consultation highlights the potential abuse of pay between assignments (PBA) contracts where workers have been forced to accept such contracts. Two considerations are proposed: 1) Repeal the exemption that allows agency workers to opt out of equal pay entitlements after 12 weeks (Regulation 10 of the Agency Workers Regulations 2010 (AWR)) or, 2) extend the remit of EAS to include compliance with the AWR and enforcement of PBA contracts.

The review was concerned that work seekers currently have to take tribunal cases alone if they feel the law has not been complied with. Extending the remit of EAS to include enforcement of AWR would mean oversight of the day one statutory and contractual rights and rights accruing after 12 weeks such as holiday pay. Enforcement would provide an avenue of complaint for employment businesses as well as work seekers.

The government have also published research undertaken by a third-party research group (Host) regarding PBA contracts which sets out some of the “abuse” that the use of these contracts is perceived to create.

See the full consultation here.  Responses should be made by 9th May 2018.

To see our news on the other consultations published by the government in response to the Taylor review, click here.

Aspire Comment

If the government recommendations following the Taylor review are implemented, it would have an immense administrative impact for both agencies and umbrella companies. Both would have to implement new standards, create fact sheets for every active worker and potentially adapt their employment model and contractual/communicational documentation if Swedish Derogation was repealed.

If you wish to discuss the consultation please email or call 0121 445 6178