The recent Employment Tribunal decision in Bray & Ors-v-Monarch Personnel Refuelling is one of the first tribunal judgments in respect of the 'Swedish derogation' exception in the Agency Workers Regulations (AWR).
What is the 'Swedish derogation'?
Under the so called Swedish derogation, agency workers do not have to be paid the same as comparable employees of the hirer provided they are employed directly by the agency on contracts that comply with the requirements of Reg 10 AWR. This includes an obligation to pay agency workers when they are not working on assignment for at least 4 weeks.
Background to the Bray matter
The Bray matter concerned a group of tank drivers that were employed by Monarch Personnel Refuelling (UK) Limited (Monarch) and supplied by Monarch to BP Oil (UK) Limited (BP). The Monarch tank drivers represented a relatively settled workforce as all of them had worked continuously for BP on a series of assignments for a number of years. All except 1 driver had only ever been assigned to BP and those assignments had been continuous and regular. Monarch had employed their drivers on a zero-hours contract.
BP was seen as an attractive place to work given that Monarch paid BP drivers £1 more than other drivers. However, this was still 70p less that drivers recruited by BP directly. The non-agency drivers at BP were heavily unionised and placed pressure on Monarch to keep their level of pay above that of the agency drivers. With the implications of the AWR looming BP instructed Monarch to employ drivers under Regulation 10, the Swedish derogation.
To comply with the instruction from BP Monarch held meetings with the drivers in October 2011. At the meeting they explained they would be issuing new contracts on the completion of their current assignment with BP, which was due to end on 30 November, the new contract would be available at a later date.
New employment contracts
On 15 November all claimants were issued with new contracts of employment with most drivers returning their contracts by 29th November.
It was accepted at the Employment Tribunal that the contracts complied with the requirements of Regulation 10, subject to the dispute about conditions set out in the opening of Regulation 10(1)(a):
'10(1) To the extent to which it relates to pay, regulation 5 does not have affect in relation to an agency worker who has a permanent contract of employment with a temporary agency if-
(a) the contract of employment was entered into before the beginning of the first assignment under that contract and includes terms and conditions in writing relating to...'
Meaning of terms in the contract
Judge Forrest held that the meaning of 'assignment' within the AWR does not inevitably relate to the total period that an agency worker has been engaged by an agency. The fact that the drivers had been engaged previously under relatively steady contracts didn't preclude this new assignment starting from 1 December as being the first assignment under the new contract. Thus it is possible to sub-divide one period of engagement with a hirer into multiple assignments.
Also, the meaning of "that contract" in Regulation 10 of the AWR corresponds to the contract in force at the time of the first assignment under its terms. As the drivers had entered into new contracts by 29 November this was still before the first assignment under this contact which took place on 1 December.
The judgment also held that it did not matter if the contract is a new contract, an existing contract or a variation of an existing contract. The interpretation would apply to all of them.
Claimant's argument dismissed
The Employment Judge dismissed the claimant's argument that the AWR should be constructed purposively in requiring the presence of a Regulation 10 compliant contract prior to the first ever assignment with a hirer and also that the scope of the AWR was not unclear and therefore there was no need to make reference to the European Court to determine any of these issues.
Implications of the decision
The decision is only an Employment Tribunal decision and therefore may be appealed. Additionally it will not be binding on any other Employment Tribunal. However, it is significant in that it is the first decision we are aware of dealing with the question of whether you can transfer an agency worker from a 'standard' agency contract to a 'Swedish Derogation' contract, even if the agency worker will be working in the same place and in the same way. The answer appears to be a cautious 'yes' provided an appropriate process is followed.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.