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Paying Twice: Agency Worker Rights - Who Pays?

Posted on 13 March 2019

Paying Twice: Agency Worker Rights - Who Pays?

Last month's somewhat controversial decision of the Court of Appeal in London Underground Ltd v Adelaide Amissah and others [2019] EWCA Civ 125, 2019 WL 00659002, highlights the joint responsibility of both hiring businesses and temporary worker agencies to protect agency workers' "Week 12 Rights".  

What Are 'Week 12 Rights'?

Regulation 5 of the Agency Worker Regulations 2010 (the "Regulations") entitles agency workers to the same "basic working and employment conditions" as the hirer's own staff for doing the same job.

Agency workers only qualify once they have performed the same role with the same hirer for 12 continuous calendar weeks. At that point they become entitled to the same terms and conditions they would have ordinarily been entitled to if they had been recruited directly by the hirer, whether as an employee or worker. 

The right extends to terms relating to salary, overtime, bonuses and commission that are linked to individual performance, enhanced holiday, night work, rest periods and breaks. The Regulations only cover terms ordinarily offered to the hirer's own staff. They do not cover one off arrangements negotiated with individual members of staff. Certain benefits and provisions related to notice are also excluded.

Compliance is judged by employment tribunals on a term by term basis rather than taking a holistic approach to the comparative value of the overall package. The case below highlights that workers are able to bring claims to obtain their "equalised benefits" directly under the Regulations: the Regulations do not operate merely to set out what terms they would then seek to enforce under other areas employment legislation (such as, for example, by way of an unlawful deductions claim). The starting point for compensation in relation to pay should be pound for pound.

Who is liable?

Agencies and hirers are jointly liable for any breach of Week 12 Rights. It is a two stage process. Once an infringement has been established and responsibility has been apportioned, it is then for the Tribunal to award compensation based on what is 'just and equitable', having regard to the extent of the agency's and hirer's respective responsibility for the breach.

The immediate challenge for an agency is the extent to which it has access to information about the hirer's basic working and employment conditions after the qualifying period to enable it to comply with the Week 12 Rights. Agencies have a potential defence if they can show that they took reasonable steps to obtain relevant information from the hirer, but the hirer failed to provide it.

The London Underground Case

In the London Underground case, the agency workers had worked for LUL for several years via an agency. However, they were paid less than LUL's own staff in the period 24 October 2011(when the Regulations came into force) to October 2012. After some delays, the correct pay information was provided to the agency and the rate of pay was changed. From December 2012 to May 2013 LUL then paid arrears of pay for the workers direct to the agency.

Critically, the agency failed to account to the workers for the back pay before going into involuntary liquidation in 2013. Various issues were raised about alleged dishonesty of the agency.

The Tribunal found LUL to be 50% responsible for the breach.  However the Tribunal concluded that LUL should not have to pay compensation related to the infringement, as (amongst other factors) it had already paid the arrears of pay to the agency. In effect, it should not have to pay twice.

The Employment Appeal Tribunal overturned the Tribunal's decision and sent the case back to the Tribunal for re-hearing. LUL appealed. The Court of Appeal held that the Regulations conferred a right to equalised benefits, enforceable under the remedy provisions of the Regulations themselves. It also decided that, even though LUL had paid the arrears of pay to the agency, the Tribunal was wrong to conclude that, on a just and equitable basis, it should not be required to pay 50% compensation to the workers.

Whilst the Court of Appeal accepted in principle that it may be possible for a respondent to be required to pay less than the amount of compensation for which it was responsible, such cases would be exceptional. In this case there was no question of worker misconduct and it was LUL's decision to use an agency. While it may not have been LUL's fault that the agency had failed to pay the workers the correct amount, it was certainly not "the workers' fault" either, and they should not suffer. The case was remitted back to the Tribunal to determine the correct amount of compensation payable based on LUL's 50% responsibility for the breach.

As well as clarifying how liability is handled under the regulations, the case highlights the vulnerable status of agency workers in the workforce as stressed by the Taylor review and the government's subsequent Good Work Plan. For those engaging temporary workers beyond the qualifying period on behalf of their hirer clients, the advice remains to ensure they have a full understanding of the terms and conditions offered by the hirer after the qualifying period to avoid any breaches.

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