Employment Law Update (November 2009)

New rights for agency workers to be pushed through before election

The government has announced that it will press ahead with getting legislation to improve the rights of agency workers through parliament before the general election next summer. However, the new rights will not come into force until October 2011, to allow businesses time to prepare.

Along with the proposed timetable, which now gives employers a good degree of certainty about what is happening and when, details have also been published for final consultation about how the scheme will work in practice.

Where do the proposals come from?

The proposals are based on a European Union requirement to give greater rights to agency workers, alongside a requirement for member states to end many restrictions on the use of agency staff.

An agreement between the CBI and the TUC - representing both sides of business - was reached in 2008. The main headline of this agreement was the facility to exempt agency workers from the new rights for the first 12 weeks of any assignment. After 12 weeks, agency workers will be entitled to parity in most of their terms and conditions with equivalent permanent workers.

What is likely to happen?

The draft proposals deal with such matters as:

• how the 12 week period is calculated for part-time workers (it is proposed to be 12 calendar weeks, regardless of work pattern);
• how long a break between assignments needs to be to stop the 12 week period running (it is proposed that a six week break will break the continuity); and
• importantly, which terms and conditions need to be "comparable" (it is proposed that this will include basic pay; overtime; shift allowances and certain bonuses).

The proposals will not give agency workers "employee" status, so businesses will still enjoy certain benefits from using agency workers, even after 12 weeks' work. However, it is acknowledged by the government and the employment agencies that businesses might begin to plan their work differently.

What will the impact be on business?

Businesses will need to consider how they co-operate better with agencies they use and look at the cost of longer-term agency workers compared to permanent staff. Employers who use agency staff for longer than 12 weeks will have co-operate with the agency by passing on details of the terms and conditions of their own employees who are doing comparable work to the agency worker. Employers are also likely to incur additional costs for staff employed longer than 12 weeks, as agencies may pass the cost of additional wages and benefits they must pay the worker on to the end user.

What happens next?

Following the consultation, the final Regulations are expected to be passed early in 2010, giving business over 18 months to prepare.

When the final details are known, Mentor will provide full information, but in the meantime, if you are concerned about how the new regulations will affect your business, speak to the Employment Law team.