Credit Management June 2019

HR MATTERS ROUNDUP
COMPENSATION
CULTURE
A case of an agency worker that is paid a different rate
to a permanent employee and makes a claim.
AUTHOR – Gareth Edwards
DATA from a recent ONS
Labour Force Survey
suggested that the total
number of agency workers
in the UK currently stands
at around 865,000 and this
figure is expected to rise to one million by
2020. With rules being in place for some
years now – in the form of the Agency
Workers Regulations 2010 (AWR) – a recent
case involving London Underground and
the Court of Appeal should be of interest
to hirers. In this case, the Court held
that the hirer (or end-user) should pay
compensation to agency workers supplied
by an independent agency.
THE LONDON UNDERGROUND CASE
An agency, Trainpeople.co.uk (TP),
placed the claimants on a temporary
basis to work for London Underground
(LU). The claimants were being paid less
than comparable employees that were
employed directly by LU, contrary to the
AWR. Although LU flagged this issue and
readjusted the payment to TP as well as
making a payment in respect of back pay
to TP for them to pass on to the claimants,
TP failed to pay the claimants any of the
extra money and subsequently went into
liquidation.
The Employment Appeal Tribunal (EAT)
held that LU was accountable for 50 percent
of the failure but that they did not have to
pay the compensation to the claimants
as it was not ‘just and equitable’ because
they had already paid the back pay once.
The Court of Appeal (CoA) overturned the
second aspect, finding that given LU was
liable for 50 percent of the failure, it should
pay 50 percent of the compensation owed
to the claimants regardless of the payment
already made to TP.
WHAT IS THE LAW?
Under the AWR, once an agency worker
has worked for 12 continuous weeks in the
same role, they are entitled to ‘the same
basic working and employment conditions’
as they would have been entitled to, had
they been recruited by the hirer directly to
do the same job. This includes the right to
be paid the same for the work they do as
direct recruits.
Where there has been an infringement
of the AWR, for instance where agency
workers have been paid less than directly
employed workers, those workers can bring
a claim against whoever is ‘responsible for’
the infringement. If a claim is brought, the
tribunal must identify the responsibility of
the hirer and the temporary work agency.
The temporary work agency and the
hirer will be liable for their share of any
infringement, attributed on a percentage
basis. Once liability is decided, the tribunal
must decide whether to order either the
temporary work agency or the hirer to pay
compensation.
WHY WAS THE HIRER LIABLE?
The initial reason for the agency workers
being paid less, was due to both TP and
LU mistakenly relying on the exception
known as the Swedish Derogation. Under
this exception, agency workers forego
their right to equalised pay arrangements
if they are employed by their agency and
receive pay from the agency in between
assignments.
LU was not at fault for this original error,
but LU was at fault because as a result of
various errors at their end. The information
that TP needed to enable them to pay the
workers the increased amount was not
provided until eight months after the issue
had been flagged – this information should
have been provided to TP within around a
month.
The following factors were taken into
account when deciding if LU were liable
and by how much: it was LU's choice to use
agency workers in the first place because
of the savings that they would make; it was
LU's choice to contract with TP, rather than
another agency; LU was partly responsible
for the original under-payment; and the
claimants were in a weaker ‘bargaining
position’ than either TP or LU.
BEST PRACTICE
This decision has resulted in LU paying
back pay to the agency workers twice – once
to TP and once to the agency workers direct
following TP's demise. This highlights the
importance of carrying out proportionate
checks about the financial stability of
temporary work agencies before entering
into contracts with them and building
appropriate safeguards into the contracts
themselves.
Whether the AWR apply and what
rights they will confer on workers will vary
depending on the status of those workers.
Hirers and agencies should not rely on the
word of the other party as to whether or not
the AWR apply.
Although the Swedish Derogation
exception is due to be abolished in 2020,
establishing whether or not the AWR
apply will remain a crucial and often
complex exercise. Hirers and agencies
should work together and ensure that any
information required is provided as early as
possible.
Gareth Edwards is a partner in the
employment team at Veale Wasbrough
Vizards.gedwards@vwv.co.uk
The Recognised Standard / www.cicm.com / June 2019 / PAGE 50