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How Does the AWR Affect My Business

The Agency Worker Regulations will affect any and every UK business that uses Temporary Workers. Since its introduction on 1st October, we have seen the four horseman of industry panic – misinformation, misunderstanding, poor advice and complicated legislation – ride forth with a vengeance. ContractorUmbrella has been an integral part of increasing industry awareness and reigning in these harbingers of doom since the original consultation prior to the introduction of the legislation. Now that the AWR have descended upon us, we would like to take this opportunity to answer some simple questions and debunk some of the myths that have developed over time.

This FAQ is specifically aimed to address the questions we have been asked by hirers of temporary workers.

  1. Are my temporary workers in scope?

The short answer is: probably. The test for in or out of scope is based on an individual’s working practices at the work site, not on the contents of a contract.To be out of scope a contractor must have a ‘business to business relationship’ in real terms with you. Some good questions to ask when deciding if this is the case are:

  • Does the temporary worker have a direct supervisor?
  • Does the temporary worker work set hours?
  • Would an agency provide a substitute worker if the contracted individual was unable to work?
  • Is the Agency Worker performing the same tasks as permanent members of staff?

If the answer to any of the above questions is ‘yes’ then it is extremely likely that your temporary worker is in scope. To provide a definitive answer to the question ‘will this affect me ‘ContractorUmbrella has produced a comprehensive risk assessment form that you can download here: http://www.contractorumbrella.com/pdf/AWR_Impact_Assessment_Form.pdf

  1. My temporary workers are all Limited Companies, this means they are outside of scope right?

Wrong. Remember that the test focuses on the working practices of the temporary worker and their contractual status is relatively unimportant. The AWR guidance officially states: “Simply putting earnings through a limited company would not in itself put individuals beyond the possible scope of the Regulations.”

  1. So my workers are in scope, what does that mean right now?

Under the legislation, hirers are immediately responsible for ensuring that any temporary worker in scope has access to certain facilities and job vacancies on site. These are known as “Day One Rights”. Simply put, temporary workers must be treated no less favourably than a permanent employee in terms of access to collective facilities such as a company canteen, crèche and common room. They must also ensure temporary workers have access to information regarding job vacancies from day one. It is important to understand that as the hirer, only you can be responsible for this and therefore the liability lies solely with you; contractual indemnity clauses will be ineffective.

  1. What does it mean in the future?

After 12 weeks in the same role, your temporary worker will qualify for extended rights which include the right to equal pay (unless they are involved with a company operating the Swedish Derogation Model), duration of working time, rest periods, rest breaks and night work. It is worth noting here that attempts to end contracts before the 12 weeks, or issuing multiple short term contracts may be viewed as avoidance.

  1. Who is liable for these rights?

According to the AWR guidance, everybody involved in the supply chain of a temporary worker is responsible. In the event of a claim, an employment tribunal would call all parties and apportion blame according to how much each party was responsible for the breach of the regulations. This is why ContractorUmbrella believes it is absolutely vital that we work closely with our clients to ensure mutual compliance and our policy of ‘best business practice’ ensures that the interests of CU and the client are mutual.

  1. What do you mean by equal pay? Is this going to cost me more?

A temporary worker who works through that 12 week threshold will be entitled to the same basic pay as a permanent, comparable employee. Unless the contractor is working through an Umbrella company operating the Swedish Derogation Model (As ContractorUmbrella do), you have no recourse against this. Even if you are secure in the knowledge that your temporary workers are paid the same (or even higher) as your permanent employees, in order to prove this you will be required to compile a log of ‘comparator information’ for each contractor. This is inevitably a long and tedious administrative process and must be completed for each temporary worker. If your worker has come from an agency that is not working with a Derogation Model Umbrella, they will also require this information

  1. That is the second time you have mentioned that Swedish thing! What is it?

The Swedish Derogation Model is an opt out of section 5 of the AWR regarding equal pay. This states that if an Umbrella Company has your worker under an over-arching Contract of Employment (which hosts a mutuality of obligation), the right to equal pay is waived. The Umbrella Company becomes the employer and the temporary worker simply provides his services to you, the client. This also means, barring some brief information regarding working practices, there is also little need for a lengthy comparator gathering process. ContractorUmbrella has always worked in this manner, so the adoption and implementation of the SDM was very natural for us. An extra benefit of the SDM is obviously that the employer is responsible for paid annual leave and in such situations; the employer would actually be ContractorUmbrella.

  1. Great! So the Swedish Derogation Model means we can opt out of the AWR?

Absolutely not! The SDM is not a ‘magic fix’ for the AWR and your temporary worker’s rights in every other respect must still be observed. Any company that presents the SDM as a mystical get out of jail free card should be avoided. It specifically relates to the right to equal pay and does not get anybody out of their other obligations required by the legislation.

  1. Can’t I just get an agency or Umbrella to indemnify me against action under the AWR?

Again, this is not possible. As explained above, the legislation and guidance make it very clear that responsibility will be adjudicated by an employment tribunal. Any company promising a client complete AWR indemnity should be rigorously checked as CU’s own legal advice has said that this can be promised, but it would not be enforceable in the event of a claim.

  1. This has been very helpful but I have more questions, can I contact you?

Of course! We have made it our mission to tackle the AWR head on and we are happy to give advice to whoever wants it. Likewise, we are always happy to work with clients who take compliance as seriously as we do and would love you to get in touch. Feel free to contact us by phone on 01206761326 or by email at info@contractorumbrella.com.