AWR Parity Assessment requires a Term by Term Approach

Posted on 28 March 2018

AWR Parity Assessment requires a Term by Term Approach

A recent case has confirmed what we have always advised, that ensuring equal pay for agency workers under the Agency Workers Regulations 2010 (AWR) requires a term by term assessment and cannot be based on the agency worker's overall remuneration package.

Some staffing companies take the view that the professional contractors they place on assignments with clients receive such high fees that they would not be able to claim that they are receiving less pay than a comparable permanent employee of the end user client and therefore bring a successful AWR claim that they should be paid more. Staffing companies will sometimes add that, although a comparator is entitled to a bonus based on personal performance, the comparator's salary and bonus totals less than the fees the staffing company pays to the contractors, and so they are not concerned about AWR claims from contractors. This is a dangerous approach to take as confirmed by the February 2018 case of Kocur v Angard Staffing Solutions Limited.

A contractor is an agency worker for the purposes of the AWR if they work temporarily for and under the supervision and direction of the end user client under a contract with a staffing company to perform the work or services personally. After twelve weeks on an assignment, a contractor who is an agency worker is entitled to the "same basic working and employment conditions" as those of a comparable permanent employee of the end user client. These include terms and conditions relating to pay (which includes elements such as salary, fees, bonuses, commission and holiday pay), the duration of working time, night work, rest periods, rest breaks and annual leave. Each individual element must be matched. The Employment Appeal Tribunal (EAT) confirmed this in the case of Kocur v Angard Staffing Solutions Limited. Here, it determined that Angard Staffing Solutions' failure to provide an agency worker with the same paid annual leave entitlement (28 days paid holiday instead of 30.5 days) and paid rest breaks (half an hour instead of one hour) as Royal Mail's comparable permanent employees could not be compensated by the agency worker's enhanced hourly rate. The AWR do not allow staffing companies to offset the failure to provide a specific entitlement with a higher hourly rate of pay or to argue that an agency worker's package as a whole is greater than that of a comparator.

The EAT also made an important observation on the Government Guidance on the AWR (which is not legally binding).  The EAT noted that the Guidance suggests that a staffing company is permitted to make a payment in lieu to an agency worker in respect of the paid holiday entitlement of a comparator in excess of the 28-day statutory minimum under the Working Time Regulations (WTR). It seemed to the EAT that the AWR are intended to confer an entitlement on agency workers, which is based not on WTR minimum requirements, but on that to which comparable employees of the end user client would normally be entitled. The EAT added that it would undermine that entitlement if staffing companies could simply make a payment in lieu, irrespective of whether the end user client could make such a payment to its employees. Payment in lieu can however be made in respect of unused paid holiday entitlement at the end of an assignment or where payment in lieu can be made to comparator employees under their contracts.

The EAT rejected the agency worker's claim that, after completing the twelve-week qualifying period, he should have been entitled to work a 39-hour week, the same as Royal Mail's comparable employees. The EAT's view was that the AWR phrase "duration of working time" means that an agency worker's working time should not exceed the working time of comparators, not that the number of weekly working hours should be matched. It gave the example of comparators working a maximum six-hour night shift, meaning that an agency worker could therefore not work an eight-hour night shift. It added that a requirement that an agency worker's hours match those of comparators would remove the flexibility inherent in the staffing company/end user client relationship.

This case serves as a reminder that staffing companies must take great care when assessing agency workers' pay and make sure they match all the elements of a comparator's pay. This is particularly important in relation to agency workers who work on temporary assignments in sectors where comparators have the opportunity to earn large bonuses based on personal performance.

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