All change for temporary workers

16th November 2010, 4:09pm

Next year hospitality businesses across the UK will be faced with changing rules for temporary employees. The regulations mean that once temps have worked for a company for 12 weeks, the worker will be entitled to the same pay and benefits as a permanent member of staff. Michael Delaney, a partner in the employment division of law firm Matthew Arnold & Baldwin LLP, explains the new legislation and how you can stay on the right side of it.

This year's Harden's guide found that London restaurants have shown extraordinary resilience during the last 12 months and achieved the highest level of annual growth ever.

Many businesses have succeeded by taking a flexible approach to staffing, using temporary employment agencies. Temporary workers give restaurants, pubs and hotels flexibility when it comes to periods of increased demand or to cover long term absences and let staff go in periods of quietened business activity or for other reasons ensuring that limited employment protection is afforded.

Other advantages for businesses hiring temporary workers have included paying them at a lower rate compared to permanent members of staff, through negotiations with the temporary employment agency who are generally responsible for paying the worker.

The Agency Workers Regulations are to be implemented into UK employment law by 1 October 2011 after being debated for several years in the European Parliament.

Unlike any counterpart legislation there is no guidance, ancillary legislation or case law to assist hirers in dealing with this latest employment minefield.

The Agency Workers Regulations 2010 were laid before Parliament in January 2010 and therefore the time has passed for any legal challenge - although the new government has informed the Institute of Directors that it is again looking at these new regulations.

The regulations ensure that temporary agency workers supplied through an employment temporary work agency will be given the same terms and conditions as employees who had been recruited directly by the hirer, in other words in most cases a permanent member of staff.

The right to equal treatment for temporary staff will arise after the worker has undertaken the 'same role' for 12 continuous calendar weeks. Undoubtedly arguments will arise surrounding the meaning of the 'same role'.

If a temporary worker is tasked to undertake different assignments then arguably he or she will not have been undertaking the 'same role'. However the regulations do introduce anti-avoidance provisions so as to prevent abuse and to stop hirers from rotating temporary workers by giving them different structured assignments which are similar in nature so as to defeat the purpose of the regulations.

Hirers will need to put in place systems accurately recording the days worked by temporary workers since working part of a week will count towards the 12-week period.

Some periods away from the work place will not count towards calculating the 12-week qualifying period. Sickness absence, statutory or contractual time off, annual leave, jury service up to 28 weeks, strike action or a temporary cessation of the business will not count towards continuous service. However some absences relating to pregnancy, child birth, maternity or adoption leave up to 26 weeks will not break continuity of service.

Furthermore it is unlikely that sickness absence or other time off including annual leave will break the continuity of service although no guidance has yet been given and the Regulations are silent on the point.

Employment Tribunals are likely to adopt the same tests for determining continuity of employment and conduct an enquiry into the reason for the absence to determine whether the arrangement has come to an end.

There needs to be a break of at least six calendar weeks either during or between assignments before it is necessary to restart the time that counts towards the qualifying period. In other words if a hirer does not want to provide a temporary worker with equal pay and treatment then any assignment must be ended within 12 weeks and the individual not re-hired for a further period of six weeks.

However in reality where businesses do tend to hire temporary workers through an agency they generally require staff with whom they are familiar and thus will generally not want  to place a specific limit on the duration of the assignment unless it is for a specific purpose namely to cover specific absence.

The main principle derived from the European Temporary Agency Workers directive 2008 (Article 5.1) is that the working employment conditions of temporary agency workers shall be at least equivalent to those that would apply if an individual had been recruited directly to do the job by the hirer, for the duration of the assignment.

The working conditions that give rise to "equal treatment" are pay, the duration of working time, overtime breaks, rest periods, night work, holiday and public holiday entitlement.

In addition overtime pay, shift allowances, unsociable hours premium, bonuses linked to individual performances and vouchers or stamps with a monetary value must also be provided to the temporary worker in the same way as such benefits are provided to a comparable permanent member of staff.

From 2012 work place pension saving with an employer contribution scheme will be caught by the Regulations.

The regulations provide for equal access to the hirers facilities which will include any canteen, child care provision, transport services or training. The latter will increase the overheads to be borne by hirers.

Some benefits are excluded and these include access to occupational pension schemes, long term incentive plans, occupational sick pay, contractual notice pay, redundancy pay, company cars or health insurance benefits.

There are rights for pregnant women who are temporary workers which include the right to attend antenatal appointments as well as to the right to receive payment for any period of absence relating to the pregnancy but liability in this instance is to be met by the agency not the hirer. Other rights include the right to be offered suitable alternative work on terms which are not substantially less favourable than the original assignment by the agency.

There is also the right to be paid for the remainder of an assignment if no suitable work is available. Problems will arise if any assignment is open-ended particularly if the worker is covering for a member of staff on long term sick leave.

If a hirer breaches the regulations then compensation of up to £5,000 may be payable. However it is unclear at this time as to how an Employment Tribunal would calculate such compensation reference is made to the award of compensation which is considered to be "just and equitable". The temporary employment agency could also be liable if it fails to take steps to ensure that the temporary agency worker does not receive equal treatment.

The agency will be liable for any breach that is in relation to the provision of comparable working terms and conditions to a temporary worker unless it can show that it took reasonable steps to ascertain the intention of the hirer about its terms and conditions upon which it engages permanent staff and that it has acted reasonably upon receipt of such information.

The agency's difficulties may of course be obtaining such information about the terms and conditions upon which a hirer engages its permanent staff. The hirer too will also be liable for any breaches of the regulations. Liability is not joint and several as between the agency and the hirer.

Until guidance or reported decisions from the Employment Appeals Tribunal are known hirers will have to ensure that they have robust systems in place for calculating the length of service and the provision of equal pay benefits and treatment or ensure that assignments are short term and last for less than 12 weeks and ensure that there is no re-engagement for a period of at least six weeks.