Many thanks to the delegates at Wisbech Trades Council who recently invited me to address them on the law regarding migrant agency workers. In particular, delegates were concerned about the use of “Swedish derogation” contracts. It was the first I had heard of these contracts but it appears that there are already thousands and perhaps tens of thousands of agency workers employed on them in food processing factories, etc.

When the 2010 Agency Worker regulations were introduced, they brought in the principle of equal treatment: i.e. when an agency worker has been with a “hirer” (ie not the agency but the company at which the worker is based) for 12 weeks, the agency worker is entitled to the same terms and conditions, including but not only pay, as a directly employed worker. Regulation 5(1) provides that: “an agency worker (A) shall be entitled to the same basic working and employment conditions as A would be entitled to for doing the same job had A been recruited by the hirer … other than by using the services of a temporary work agency…”

But employers don’t want to pay agency workers the same as direct employees.

So regulation 10 (the “Swedish derogation” clause) provides a very partial and limited opt-out, as follows:

An employer can pay an agency worker less (but not treat them differently with regards to any term other than pay – so the same rights have to exist in terms of holidays, sick pay, etc), if, and only if, ALL the following circumstances are met:

1. There is a written contract between the agency and the agency worker
2. The written contract designates the agency worker an employee of the agency
3. The written contract is a permanent contract

The contract sets out
4. the minimum scale or rate of remuneration or the method of calculating remuneration,
5. the location or locations where the agency worker may be expected to work,
6. the expected hours of work during any assignment,
7. the maximum number of hours of work that the agency worker may be required to work each week during any assignment,
8. the minimum hours of work per week that may be offered to the agency worker during any assignment provided that it is a minimum of at least one hour,
9. the nature of the work that the agency worker may expect to be offered including any relevant requirements relating to qualifications or experience
10. The contract expressly states that under its terms the agency worker is entitled to all the conditions of directly employed workers save for pay

And, when the agency worker’s placement ends, the agency must
11. take reasonable steps to seek suitable work for the agency worker,
12. offer the agency worker any suitable worker that becomes available,
13. pay the agency worker for at least another four weeks

To repeat, if any of these conditions is not met, the Swedish derogation clause is not effective, and the agency worker can bring a claim against the hirer, not the agency.

So, I have three main thoughts about the scheme:

One, where the Swedish derogation clause is effective, the agency worker is subject to a surprisingly robust employment code, which in practice would give them almost the same rights as a directly-employed person (certainly in terms of unfair dismissal, they would be able to bring a claim if they had the qualifying service – unlike an ordinary agency worker).

Two, it would be only in the most unusual case that an agency managed to comply with all the necessary requirements to ensure that the scheme was satisfied. They aren’t just a matter of drafting an employment contract correctly (although this is beyond the skill of very many employment agencies). More tellingly, the agency would have to do all sorts of things, including after the employment ended – such as finding work for the agency worker – that most agencies will not do, and no employer, save for the most unusual, will check that the agency has done. (You have to remember that agency worker contracts generally cost employers about the same as direct employment – because, even where a different hourly rate is paid, the agency’s cut also has to be paid from the same budget. Moreover, if the employer did check that every single agency worker had the right contract, was still given work after they left, etc, the extra personnel time this would require would immediately eat up any remaining cost saving from the marginal advantages in terms of pay).

Three, this exception only applies to pay, and not anything else.

So – imagine you were a “Swedish derogation” agency worker, and you are quite rightly outraged by your employer’s refusal to pay you the same as other workers. What do you do?

You read your employment contract, and if any of the clause 1-10 above are missing, the Swedish derogation is ineffective, and you can sue the company for equal pay

Or, if the agency fails to do any of 11-13, once again, you can sue for equal pay.

(Hat tip to Darren Newman)