After 12 weeks’ employment, agency workers are entitled to the same basic employment terms (including pay) as if they had been hired directly by the hirer, rather than through an agency (regulation 5(1) Agency Workers Regulations 2010). There is an exception to this rule, called the ‘Swedish derogation’, if agency workers receive guaranteed pay between contracts. If there is a breach of this rule, an agency worker can bring a claim against either the hirer, the agency or both, depending on who is responsible.
In London Underground v Amissah, an agency told London Underground (LU) that their agency workers did not have the right to equal pay because of the ‘Swedish derogation’. LU initially accepted this but then realised it was wrong. LU then delayed in providing the information needed by the agency to pay the equalised pay rates. They eventually did so and paid the agency the arrears to pass on to the workers. The agency then went into liquidation before the workers were paid.
The employment tribunal found that both the agency and LU were equally responsible for the breach. However, they said that LU did not have to pay the workers again as it would mean they had ‘paid twice’. The Employment Appeal Tribunal and Court of Appeal disagreed. The Court of Appeal said that workers should not miss out on compensation when they are not at fault. Unless there are exceptional circumstances, compensation should be the value of the breach (i.e. the underpayment) on a pound for pound basis. The case has been sent back to the tribunal to decide the exact compensation LU will have to pay, but they will have to pay 50% of the money owed to the workers, despite having paid it once before.
This case is a reminder to businesses who use agency workers to establish at the outset whether the Agency Worker Regulations 2010 apply. Relying on an agency’s assurance will not necessarily get the employer off the hook. Remember that the ‘Swedish derogation’ will be abolished from April 2020 anyway (see last month’s ELS briefing). Businesses using agency workers may wish to revisit their contractual arrangements with agencies as well as their working models.