Updated July 2020
The Swedish Derogation model refers to Regulation 10 of the AWR that allows for temporary workers not to receive comparable pay (with ‘comparable’ permanent employees working at the end-hiring company) if:
- they receive pay between temporary assignments for at least 4 weeks, and
- they are employed by the Recruitment Agency on a permanent contract that must contain a minimum amount of information (including that the agency worker has no entitlement to the rights in Regulation 5 of the AWR in respect of equal pay).
Brief details of the case
This case found Recruitment Agency Monarch Personnel Refuelling defending a claim by some of its temporary workers that Monarch hadn’t complied with all the requirements of the Swedish Derogation model. The temps were supplied by Monarch to BP Oil UK Ltd as tanker drivers.
The agency workers – who had worked for several years for BP on a series of assignments that were described as continuous and regular, and who were employed by Monarch on zero-hours contracts – received 70 pence less per hour than ‘comparable’ permanent workers at BP.
With the introduction of the AWR, BP instructed Monarch to employ its drivers under the Swedish Derogation model. Monarch held meetings with the drivers in October 2011 to explain they would be issuing the temps with new contracts at the end of their current assignment with BP on 30th November 2011. On November 15th, all the workers were issued with new contracts – most drivers signed and returned them by November 29th.
At Tribunal, Monarch argued that the agency workers had agreed to the new contract which incorporated the Swedish Derogation terms, so the agency workers had waived their rights to equal pay.
The Employment Tribunal’s decision
The Tribunal looked at the key issue of how to interpret and apply the words of Regulation 10 (1)(a), which states “the contract of employment was entered into before the beginning of the first assignment under the contract...”
The Tribunal decided that the agency workers had been given the new contract ahead of starting their first assignment, and were aware they wouldn’t be able to continue for working for BP without agreeing to the new terms – even though not all agency workers had signed the new contract before starting the new first assignment. The Tribunal were confirming that it’s not necessary to require a signature as acceptance of the new terms, the conduct of the workers could be enough to imply agreement (for example, they continued working under the new contract).
The tribunal also found that ‘assignment’ referred to particular assignments Monarch had received from BP. It didn’t inevitably refer to the total period during which the agency workers had been hired out to BP, it could refer to the next assignment. This decision confirms it’s possible to create a new contract including the Swedish Derogation terms, with an existing hirer, if the new terms are entered into before the start of the next assignment under the Swedish Derogation terms. Thus it is important to sub-divide one period of engagement with a hirer into multiple assignments.
This decision also confirms that the contract containing Swedish Derogation terms didn’t have to be entirely new – it could be a variation to the existing contract to include those terms, it didn’t need to be an entirely new contract.
The Tribunal ultimately accepted that the contract provided by Monarch complied with the requirements of Regulation 10 of the AWR.
The judge dismissed the claimants argument that an AWR Regulation 10 compliant contract should be in place prior to the first ever assignment with the hirer. This answers the question of whether you can transfer an agency worker from a ‘standard’ agency contract to a Swedish Derogation agency contract, even if the worker will still be working in the same place and in the same way.
In 2019 the Government said it will abolish the Swedish Derogation from 6th April 2020.
Other recent Agency Workers Regulations cases:
- Four temporary workers of Kelly Services working at a Hewlett Packard plant near Blackpool went to Tribunal with the PCS Union to complain about their pay. They had been working at HP for between 15 months and four years prior to October 2011, and were earning £6.10 an hour, which was 24% less than Hewlett Packard’s ‘comparable’ permanent staff. They asked for comparable pay and received a pay rise, but only to £6.65 an hour (the rate that permanent staff at HP who had performance issues earned, not to £7.98 which is the rate earned by most staff at HP). In addition, nine temporary workers from Kelly Services had been taken on permanently by HP at the higher rate. The Employment Tribunal ruled in favour of the temporary workers
- Agency staff from Blue Arrow, working at an Airbus plant in North Wales, were denied an annual bonus of just over £1,000. The Tribunal Judge ruled that his bonus “didn’t meet the definition of pay”, and was exempt from the AWR
- In December 2013, it was confirmed that agency workers who are working on an ‘indefinite’ and not a temporary basis at the end-hirer aren’t covered by the regulations. However another case in 2020 contradicts this – full details of the cases can be found here.
- In September 2014, another case came to tribunal that confirmed the end-hirer was liable for underpayment of an agency worker’s salary – full details are available here
- In August 2015, in Coles v Ministry of Defence, the Employment Appeal tribunal found there’s nothing in agency workers legislation that prevents employers from choosing permanent staff over agency workers for job vacancies
- In 2017, in Mr Jones and others v Birds Eye Limited, the Tribunal was asked to consider if agency workers were working ‘temporarily’ for Birds eye, if they received the same basic employment conditions as a comparative permanent employee, and if the comparative permanent employees were genuine. Birds Eye’s factory at Lowestoft had a permanent workforce which is supplemented with agency workers when demand fluctuated upwards. The Tribunal found they weren’t ‘temporary’ workers as defined by the AWR, since the arrangement with them was open-ended; they also found they were receiving the same terms and conditions as permanent staff and that the comparison was genuine. As this was a tribunal level decision, it’s non-binding on other Tribunals
- In March 2018, the Employment Appeal Tribunal, in Kocur v Angard Staffing Solutions Ltd, considered whether an agency worker who received higher pay than permanent employees, could receive less leave and rest break entitlements. Mr Kocur was supplied by Angard to work for Royal Mail. He received a higher hourly rate of pay than permanent employees, but was only entitled to a 30 minute paid rest break each day, compared to permanent employees who were entitled to 60 minutes, and 28 days holiday compared to the 30.5 days offering to permanent employees. Mr Kocur claimed he should be entitled to the same weekly working hours, annual leave and rest breaks as permanent employees, as he had worked for Royal Mail for more than 12 weeks. The original Employment Tribunal didn’t agree, saying his enhanced hourly rate of pay compensated for his reduced break and holiday entitlements. The EAT, however, didn’t agree that a reduced break and holiday entitlement could be compensated for by a higher rate of pay; each term and condition needs to be assessed separately
- The Kocur case continued to the Court of Appeal in 2019! Mr Kocur had claimed that after he had completed 12 week’s work the AWR entitled him to be offered the same amount of hours of work as Royal Mail’s directly employed staff (he generally was given less than 20 hours per week and directly employed staff worked around 39 hours per week). The Court of Appeal rejected his argument and said the purpose of the AWR was not to regulate the amount of work which agency workers are entitled to be given, but is there to ensure that are entitled to equal treatment while they are at work.
- The Kocur case was back at the EAT in July 2020 – and they found that when Mr Kocur was supplied to the Royal Mail (as the end user/hirer) he had the status of agency worker and was therefore entitled to the basic working and employment conditions that permanent Royal Mail staff were entitled to.Mr Kocur’s contract with Angard Staffing was open-ended and he only worked at Royal Mail, repeatedly over a period of 4 years. The EAT found that each assignment to Royal Mail was defined by a period and shifts. As such, he was an agency worker.
This case focused on the supply of the agency worker to the end user/hirer, not on Kocur’s contract with the agency and contradicts the December 2013 case above.
- In 2019, in London Underground v Amissah, agency workers claimed that their right to equalised conditions had been breached on the basis they had been paid less than London Underground staff. London Underground had in fact paid the agency the sums they needed to, to ensure that the agency staff were not underpaid, but this money had not been passed on by the agency to the workers! By the time the case got to Tribunal the agency had gone into liquidation. At the original Tribunal the ET decided London Underground did not have to pay any compensation to the workers as this would mean they would have paid for the underpayments twice. The agency workers appealed and the EAT said the compensation should be paid by London Underground, because it was 50% responsible for the breach of the agency workers rights. This case highlights that both the hirer (London Underground) and the agency are responsible for ensuring that the correct rights are given to the agency workers.