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The Swedish Derogation is flawed, claims Lawspeed

The Swedish Derogation is flawed, claims Lawspeed.
Many agencies are actively considering how best to approach the Agency Workers Regulations 2010, which provide agency workers with the rights to equal pay and other rights from October 2011. One option is to use R.10, the so called Swedish Derogation, but the rules are flawed, says the recruitment law specialist Lawspeed.
The rules provide that agency workers signed up to an employment contract with their agency do not have the rights to equal pay if certain conditions are met. Included within those conditions is the obligation to make payment to the agency workers of 50% of their normal rate (and not less than NMW) in between assignments for at least 4 weeks before their contract is terminated. However these requirements mean that the agency will not know that the worker will not have the entitlement to equal pay until the payments have actually been made.
Speaking at a recent legal training conference run by Lexis Nexis, Adrian Marlowe, Managing Director of the recruitment law specialist Lawspeed, also Chairman of the Association of Recruitment Consultancies (ARC), explained The problem is that, as the rules are currently written, the agency will not know that the conditions have been complied with until at least 4 weeks of the inter assignment rate have been made and the contract has not been terminated. When these conditions have been met the rule will have a retrospective effect disentitling the agency worker from equal pay from the 12 week point.
Accordingly, warns Adrian, the rule is not all it is cracked up to be The Swedish Derogation is being hailed in some quarters as a good solution, with some agencies interested in converting their workers on to employment contracts in order to avoid the complications arising from the equal pay rights set out in the regulations. Whilst the rule can still be used in certain cases, the requirements are set to cause significant confusion, not the least where there are long term assignments or there are multiple assignments with no paid for breaks in between.
Adrian added The ARC is pressing the government to change the wording and make it simply conditional on having the right employment contract. A suitable amendment would help tidy up an unnecessary complex and difficult rule that could otherwise exist to encourage agencies to employ their workers. This is not a guidance issue.
In the meantime Lawspeed is holding a series of seminars, commencing on 14th October 2010 in London, to explain the Agency Workers Regulations and available options. Adrian commented How agencies address the issues with their clients is becoming ever more important and during this seminar series we are set upon digging into the regulations and looking at their impact on all kinds of agency workers and structures. This includes limited company contractors and those operating through umbrella companies. Questions relating to self employment status and some other possible solutions for hirers and agencies are very much on the agenda.

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