The Agency Workers Regs and the law of unintended consequences

The Temporary Agency Work Directive (2008/104/EC) is the third piece of legislation to come from the EU to protect the rights of atypical workers.  The other two directives, relating to fixed-term and part-time employees, have already been enacted into UK law.  The focus of the directive is to provide agency workers with equal rights on pay and employment conditions as regular, 'permanent' employees carrying out the same work in the same business.  The rights will be implemented into UK law by the Agency Workers Regulations 2010, which will come into force on 1^st October 2011.  

This seems a fairly straightforward proposition, intended to address the issue of exploitation of workers in certain, not insignificant sections of the temporary workforce, such as in catering, cleaning,  and seasonal agricultural work, where unskilled, vulnerable workers are often poorly paid and treated.  

However, as in any complex system, an intervention will have unintended consequence.  With this legislation, there is the potential to impact on the employment status of agency workers.   While the rights extended to agency workers under the regulations are fairly limited and narrow in scope, if they start to become legally an employee of the end-user that confers a whole other set of rights and liabilities which employers using agency workers as a flexible, peripheral workforce are keen to avoid – most notably the right to protection from unfair dismissal. 

The employment status of agency workers is an area which has been debated in the courts since Wickens (1) in 1984, with a tirade of confusing and contradictory cases not helping to make the situation any clearer.  While the court in Wickens found that an agency didn't have sufficient control or mutuality of obligations for an employment relationship to exist, even when their contract expressly stated it was a contract of service, McMeecham (2) in stark contrast found that a worker can be the employee of the agency on each individual assignment, even where the contract expressly stated that the individual was self-employed!  Later decisions, plus the rewriting of agency contracts, now mean that it is unlikely that a worker will be found the employee of the agency, unless there are exceptional circumstances.  To further muddy the waters, the courts have also on several occasions implied a contract of employment between the agency worker and the end-user.   

The Agency Worker Regulations do not apply to those ‘genuinely in business on their own account’ – ie to the self-employed, who make up a high proportion of agency workers in more skilled areas such as engineering and IT.  But it is still up to the courts to decide whether a worker engaged via their own service company through an agency to the end-user is genuinely self-employed or an employee of the end-user or agency.  A particularly concerning case for end-users of agency workers is Cable and Wireless plc v Muscat.   In this case, the worker provided his services to the end-user via his own service company through an independent employment agency, the contracts expressly stated that he was "self-employed", but the Court of Appeal still found that he could be an employee of the end-user.  Despite the existence of a chain of contracts, the elements of control and mutuality of obligation were found to be strong enough to disregard the fact that the end-user did not directly pay the agency worker.  The general pattern in recent cases is to look for what has been called the 'irreducible minimum ' of control and mutuality of obligations, and also to the degree to which the agency worker is an integral part of the organisation.  This is the part where the AWR might have an impact.

The regulations are likely to have the effect of forcing end-users to more fully integrate agency workers into their organisations by allowing them access to staff facilities and treating them equally in terms of working hours, breaks.    It is likely that following the implementation of the regulations, more agency workers will start to look increasingly like employees of the end-user as they become treated more like their own staff.  It will be interesting to see how the first post implementation cases on unfair dismissal look and whether in the long-term this could mean the demise of agency workers as a cheap and flexible solution to fluctuating workloads.

(1)Wickens v Champion Employment [1984] ICR 365, EAT

(2)McMeecham v Secretary of State for Employment [1995] ICR 444, CA

(3) Cable and Wireless plc v Muscat [2006] ICR 975, CA

APL : a giant leap for womankind

Fathers of babies born in the UK yesterday are the first to benefit from the right to Additional Paternity Leave and Pay under the Additional Paternity Leave Regulations 2010, but the real beneficiaries of this change will be working women.

My jaw dropped one day when I worked as a recruitment consultant.  I was myself pregnant at the time and when taking a job spec from a client, he told me that he would not consider any women between 25 and 35 for the role (a professional role in an engineering company) as he didn't want them going off on maternity leave.   It has long been established in common law that discrimination on the grounds of pregnancy is a form of sex discrimination, and this was written into statute in a 2005 amendment to the Sex Discrimination Act 1975.  Despite this, a survey conducted by the EOC in the same year found that 45% of women experienced some form of tangible discrimination at work during their pregnancy, and for 7% this resulted in an involuntary or constructive dismissal (Equal Opportunities Commission).  This study looked at women who were already in employment, but it is clear that if prejudice is ingrained to this extent, it inevitably spills over into the recruitment and selection process, as evidenced by my blatantly discriminatory client.  Despite it being illegal (not to mention immoral and illogical), many employers still try to avoid hiring women who are pregnant or of childbearing age, for fear of the perceived additional burden of recruiting and managing temporary cover while they take leave. 

Now that fathers can also take up to 6 months' leave, it makes even less sense to discriminate against young women in the recruitment pool: men are now just as able to take an extended period of leave as their partners on the birth of a child.  Of course, the people who hold the prejudices will likely believe that men will seldom take this leave, as they may perceive men as the breadwinners and women the child-rearers, but in fact this very piece of legislation could help to redress this imbalance.  Previously there was no choice in the matter so the genders were forced into these traditional roles, but increasingly we live in a society of dual career families, and the gender pay gap, although still unacceptable,  continues to narrow every year (Office for National Statistics): so for many couples it will make practical and financial sense for the mother to return to work sooner and the father to take leave.  Once this legislation has had time to bed in and it becomes commonplace for fathers to take APL, the playing field for men and women applying for the same jobs will become a little more level.