The Swedish Derogation Model

The Swedish Derogation model is a clause in the Agency Workers Regulations (AWR) which removes the right to equal pay to a comparable permanent worker. It is applicable only to agency workers on a permanent contract of employment – that is, those employed directly by a recruitment agency or umbrella company – and is designed to better reflect the working practices of agency workers.

Losing the right to equal pay?

Although the right to equal pay to a permanent employee of the client is removed, it is replaced by the right to receive pay between assignments. The clause was inserted because agency workers are frequently engaged in short-term temporary roles – it’s a replacement of a right which applies to long-term contractors in favour of another right which helps those on short-term contracts.

So what is pay between assignments?

A temporary work agency (i.e. recruitment agency or umbrella company) employing workers under the Swedish Derogation model has a legal obligation to pay its workers between temporary assignments – even when they’re not working.

The minimum rate is half of the worker’s average pay over the last 12 weeks of work or National Minimum Wage – whichever is higher. The minimum period which must be paid is four weeks after the end of the temporary contract.

Are any other rights lost or gained under the Swedish Derogation model?

All other workers’ rights enshrined in the AWR are preserved – that is, the right to equal working hours, holiday entitlement, working conditions etc. as a comparable permanent employee. So if you’re working under this model and reach 12 weeks working with the same client, you’re still entitled to all of those – the entitlement to equal pay is the only one that’s replaced by the additional pay after the assignment ends.

What restrictions apply to employers using the Swedish Derogation model?

There are several contractual obligations and restrictions that must apply for the Swedish Derogation to be applicable.

• The employment contract with the recruitment agency or umbrella company must be signed before the first assignment begins.
• Either the flat pay rate or method of calculation for the pay between assignments must be explicitly set out within the employment contract, as must the expected working hours.
• The agency or umbrella must seek to place the worker on further suitable assignments after their current contract ends, and ensure that all offers are passed on to the worker.
• The Swedish Derogation cannot be applied to zero-hours contracts.

If you have any questions about the Swedish Derogation model, or how Contractor Umbrella can help you with your employment, please call 01206 591 000 or email jaime.thorpe@dolanaccountancy.com.