Why employers must take care on agency workers’ rights

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Can higher pay compensate for inferior terms? Purvis Ghani and Nic Mangan report in light of a recent EAT decision

In the case of Kocur v Angard Staffing and Royal Mail, the Employment Appeal Tribunal (EAT) overturned a ruling made by the employment tribunal that an agency worker’s higher rate of pay could compensate for inferior annual leave and paid rest break entitlements than those enjoyed by his hirer’s employees.

In upholding Mr Kocur’s appeal, the EAT held that when assessing whether an agency worker’s terms are the ‘same basic working and employment conditions’ as comparable employees’ terms under the Agency Workers Regulations (AWR), the terms must be looked at individually on a term-by-term basis rather than as an overall package.

Kocur, an agency worker, made a claim against his agency and hirer claiming breaches of the AWR on the basis that he was not receiving the ‘same basic working and employment conditions’ as the hirer’s employees. This related to annual leave, paid rest breaks and working hours. He was entitled to 28 days’ leave and one hour’s rest break per shift (of which 30 minutes was paid). In contrast, direct recruits had 30.5 days’ leave and one hour paid rest break. Kocur, however, received a higher rate of pay.

Under the AWR, once an agency worker has been working at the hirer for more than 12 weeks, they are entitled to the ‘same basic working and employment conditions’ as the hirer’s employees.

At first instance, the employment tribunal rejected Kocur’s claims. It found that in relation to annual leave, Kocur received a higher rate of pay and could take an additional 2.5 days’ leave at his own volition. In relation to paid rest breaks, his higher rate of pay could offset the loss of not being paid for a full hour break. Finally, in relation to working hours, no appropriate comparator could be identified and the tribunal noted that, as agency work “waxes and wanes”, hirers needed flexibility to supplement their workforce when required. Kocur’s claim on this ground would therefore defeat the intention of the AWR.

EAT ruling

Kocur appealed the decision. The EAT upheld the appeal in relation to annual leave and paid rest breaks, but not working hours. It found:

Having regard to the EU Temporary Agency Work Directive, the term ‘the same’ under the AWR means ‘at least’ the same and provides the minimum level of entitlement. However, it does not set the limit on what an agency worker is entitled to.

Receiving less annual leave is not in line with the AWR and loss could not be compensated by a more generous hourly rate. Voluntary taking of leave – ie an extra 2.5 days – does not amount to an entitlement to annual leave.

Receiving less pay for rest breaks is a breach of the AWR, despite the length of the break being identical.

A literal interpretation of ‘duration of working time’ could result in an “absurd or unworkable outcome” and the EAT accepted the tribunal’s reasoning on working hours.

What does this mean for agencies and hirers?

Careful attention needs to be paid when assessing whether an agency worker’s basic working conditions are ‘the same’ as a hirer’s employee. Importantly, terms must be assessed individually and higher pay cannot compensate for less favourable entitlements under the AWR. The EAT did note, however, that the AWR does not include a mechanism by which parity is to be achieved. In terms of holiday pay, this means it could be rolled up, but only where it is ‘transparent’ or ‘comprehensible’ and it can be specified how the higher rate of pay can compensate for the agency worker receiving a lesser entitlement.

Purvis Ghani is a partner and Nic Mangan an associate at Stephenson Harwood

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