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Case law: Employers cannot avoid giving agency workers same rights, term for term, as permanent employees simply by paying them more

Employers should ensure that agency workers enjoy the same rights, term for term, as permanent employee. They cannot argue that lesser rights in one area are compensated for by paying a higher hourly pay, as this breaches the legal requirement that agency workers' basic working and employment conditions must be the same.

April 2018

This update was published in Legal Alert - April 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

An agency worker was paid a higher hourly wage of £10.50 compared to permanent employees, who were paid £9.60 per hour. However, he was only paid for half of his rest break, and his contractual right to holidays was only 28 days, compared to 30.5 days for permanent workers. He claimed this breached UK laws which say agency workers are entitled to 'the same basic working and employment conditions' as permanent workers doing the same job.

The employer argued that his higher hourly pay offset his lesser rights in other respects so that, as a whole, he enjoyed equivalent rights to permanent workers.

The Employment Appeal Tribunal (EAT) ruled that agency and permanent workers' rights had to be compared term by term (so that each term applicable to the agency worker is at least that which applies to the employee) when deciding whether they enjoyed equal rights. They were not to be compared as an overall package (so that a less favourable term in one area can be balanced by a different more favourable term in another).

However, in relation to annual leave, the EAT pointed out that the agency worker laws do not require rights to be delivered in an identical way. An agency worker could, for example, have the same holiday pay entitlement but have it paid by way of a lump sum when their period of agency work ends, or by using rolled up holiday pay – ie, giving them a higher hourly rate of pay generally instead of paying them at the time the leave is taken – provided they are paid at least the same as a permanent employee in respect of the same holiday entitlement. That is not a package-based approach. It merely varies how remuneration is paid for annual leave.

The EAT emphasised that any such arrangement must be transparent – the agency worker must be able to see which aspect of their pay relates to their annual leave. But it said that, in this case, ‘the payment said to compensate for the 2.5 days' leave was neither transparent nor readily comprehensible. It was not clear precisely how the enhanced hourly rate compensated for the 2.5 days' shortfall in leave’.

In relation to rest breaks, the EAT ruled that even though the agency worker was entitled to the same break as permanent workers, the fact he was only paid for half an hour's rest was a breach of the requirement that he enjoy the same basic working and employment conditions as them. His terms of employment were not the same and merely paying him a higher hourly rate could not remedy this.

Operative date

  • Now

Recommendation

  • Employers should ensure agency workers receive the same rights, on a term by term basis, as permanent employees, and cannot argue that lesser rights in one area (such as rest breaks) are compensated for by greater rights in another (such as a higher hourly rate).

Case ref: Kocur v Angard Staffing Solutions Ltd UKEAT/0181/17/BA

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