More than 190 workers brought claims against two employer agencies and two hirers for failing to comply with the requirements for the Swedish Derogation.
In Twenty-Four Seven Recruitment Services Ltd and others v Afonso and 190 others [2018] UKEAT/0311/17 the claimants argued that the lack of compliance meant they were entitled to be paid at the same rate as the hirers’ permanent workers under Regulation 5 of the Agency Workers Regulations 2010 (AWR).
When working through a temporary work agency, workers acquire rights under the AWR. After 12 weeks of working for a hirer, agency workers become entitled to the same “basic working and employment conditions”, including pay, as they would have been had they been directly recruited by the hirer.
The exception is where agency workers have a permanent contract of employment with the temporary work agency before their first assignment and are paid a minimum amount between assignments for at least four weeks. This exception is known as the Swedish derogation and is a controversial tool with regard to employees’ rights.
In this case, the Employment Appeal Tribunal (EAT) had to decide whether the agency workers’ contracts fully complied with the Swedish derogation requirements – in particular, that their contracts set out the minimum scale or rate of remuneration or the method of calculating remuneration and the expected hours of work.
The EAT held that their contracts did not meet these requirements. The wording of their contracts did not specify ‘scale or rate of remuneration’ and it found that the workers should have been provided with actual figures. The detail of the number of hours of expected work was also lacking, and workers had no accurate information about their working hours.
As a result of these failings, the EAT found that the Swedish derogation did not apply and the agency workers were entitled to the same pay rates as permanent workers.
In a write up of this case for Lexology, Taylor Wessing warned that: “Where employers are using the Swedish derogation then it must comply with all the requirements stipulated in the AWR. If, as in this case there is only partial compliance, then the ‘default’ AWR provisions kick in.”
News of this judgment follows on from reports that the government is considering scrapping the Swedish Derogation rule to help strengthen employment rights.
An exclusive report in The Guardian revealed that the Prime Minister is keen to end the legal loophole of the Swedish derogation, which allows companies to pay agency workers less than full-time staff for doing the same job.
It was also reported that Business secretary Greg Clark hopes to implement several key recommendations from the Taylor Review to improve workers’ rights, especially for those operating in the gig economy.
