Legislation: Need to Know

Employment Agency Regulations (opting in/out)

These regulations affect the relationship that you and we have with the agency, and the relationship that the agency has with the end-client. By default you and we are opted in to the regulations, meaning that the agency must pay our fees for the work you do for the end-client regardless of whether they have been paid by the end-client. We therefore have a degree of protection if we are opted in.

However, if we are opted in, the agency becomes involved in laborious compliance work, and for this reason they would normally be reluctant to offer assignments. Therefore, the tradition has always been for interims and senior independent professionals to opt out of these regulations.

This is done by signing a declaration before being introduced to the end-client, and you may do this on behalf of Competex Umbrella Ltd. The agency will assist with the documentation.

Agency Workers Regulations

In principle, the Agency Workers Regulations give all ‘agency workers’, the right to the same basic working and employment conditions that they would have received if they had been employed directly by the end-client in the same job, regardless of pay or position.

In brief the regulations state that:

  • If you are an ‘agency worker’ you have a right after 12 weeks service with a client to equal pay and equal working hours, rest breaks and holiday provisions, and the right to paid time off for ante-natal appointments, that a ‘comparable’ permanent employee of your client receives.
  • These 12 weeks do not have to be continuous.

Whether you are in-scope or out of scope

The way you operate as a freelance worker will determine whether the regulations apply to you or not.

In-scope and entitled to equal treatment:

  • ‘Agency workers’ supplied through temporary work agencies (TWAs), even if they supply their services through umbrella. These workers normally work under the end-client’s direction or supervision.

In these cases, the end-client and the umbrella company have a duty to ensure that these workers receive comparable pay and employment rights to comparable permanent employees of the end-client.

Out of scope and not entitled to equal treatment:

  • Workers that operate through umbrella companies using the Full (or permanent) Employment Model (known as the Swedish Derogation Model). These workers are out of scope for equal pay treatment, but they remain entitled to equal treatment for rest breaks, holidays etc.

In these cases, neither the end-client nor the umbrella company has a duty to ensure that these workers receive comparable pay, or employment rights comparable to those of permanent employees of the end-client.

The Swedish Derogation Model

When the Agency Workers Directive was negotiated at EU level a Swedish delegation negotiated a clause that said:

Where ‘agency workers’ are employed on a permanent contract by a Temporary Work Agency, and receive pay between assignments, the Agency Working Regulations rights to equal pay for an agency worker no longer exists.

To qualify as being ‘out of scope’, these workers must therefore be employed by an umbrella company and work through a temporary work agency, and their contract must provide for full, permanent employment whereby they receive equal treatment for hours, rest breaks, holiday entitlement, and time off for ante-natal appointments. They do not receive the right to equal pay; however, most contractors are engaged in work where there are no comparable workers and therefore equal treatment cannot apply, or where they are already being paid more than comparable workers.

There are three conditions for the Swedish Derogation Model to apply correctly:

  • A permanent contract of employment between the umbrella company and the temporary work agency must be in place before the start of the agency worker’s first assignment, and the employment must be genuine. However, this has now been clarified by the courts to mean that every time a new contract is signed with the end-client or an amendment to a contract is signed, this counts as a ‘first’ assignment. This means that the Swedish Derogation Model needs only be in place from the start of the latest assignment with the end-client.
  • An umbrella company that employs freelance workers using the Swedish Derogation Model will have a legal obligation to pay these workers between assignments a minimum amount for no less than four calendar weeks. The minimum amount that can be paid is 50% of the worker’s average basic pay for the last 12 weeks, or at least the national minimum wage. If you are employed under a Swedish Derogation Model contract then your employment will normally be terminated by the umbrella company after four weeks if there is no further work.
  • The temporary work agency must take reasonable steps to seek suitable further employment for the worker when their assignment ends.
Amy FowlerLegislation: Need to Know