Two recent legal cases involving the interpretation of the Agency Workers Regulations (AWR) have seen one decision in favour of a recruiter and another against, Recruiter learns.

A case settled late last year by the Public and Commercial Services Union (PCS) involved four claimants, who had been placed by recruiter Kelly Services at computing hardware firm Hewlett Packard’s (HP’s) Norcross Lane print works near Blackpool – with the union winning the workers a pay rise and greater holiday pay.

But recruitment company Monarch Personnel Refueling had more success when a number of its temporary workers challenged its use of a Swedish derogation contract – with law firm Brabners Chaffe Street defending it successfully.

The Swedish derogation exemption takes temporary workers outside the scope of the AWR specifically to avoid paying them equally.

Brabners employment partner Paul Chamberlain says the case is “particularly important for businesses operating in the recruitment sector who wish to rely on it [Swedish derogation]”.

He continues: “Although this case involved only a small number of temporary workers, there are many recruitment businesses out there that will use hundreds of workers on such contracts, therefore the importance of getting the content of the contract and the right approach is crucial. The impact of getting it wrong would be very costly to a recruitment business as all temporary workers affected could try to claim equal pay.”

According to a spokesperson for PCS, the four workers had all been employed prior to 1 October 2011 by Kelly Services at HP, with lengths of service ranging from 15 months to four years.

The workers asked for equal pay with regular full time employees, having been given a pay rise that only took them to them same level as permanent employees who were on lower wages because of performance issues. The claimants were given a pay rise to £7.98 an hour and the tribunal ruled holiday pay must be calculated on the basis of equal pay.

• In the November 2012 edition of Recruiter the AWR was called a “pointless piece of red tape” by Stefan Martin, a partner with law firm Allen & Overy.