Recruiters should use the consultation on draft guidance for Agency Workers Regulations (AWR) to gain further clarity on the ‘Swedish Derogation’ model.

This is the advice from Hayley Dear and Bridget Wood, solicitors in law firm Blake Lapthorn’s specialist recruitment sector group.

Earlier this month, the Department for Business Innovation & Skills (BIS) published draft guidance on the AWR 2010. The guidance is available for comment until Friday. BIS will consider comments received before finalising the guidance, which is due to be published at the end of this month.

Dear and Wood told Recruiter: “An agency worker with a permanent contract of employment which meets various conditions set out in the AWR, including payment between assignments, is outside scope of the AWR in relation to the right to equal pay known as the ’Swedish Derogation’ model. 

“Although the guidance provides clarification that payment for just one hour per week between assignments is unlikely to be sufficient to be compliant, there are still areas of uncertainty, notably how to terminate such a contract. Recruiters will want further clarification if they are to make use of the Swedish Derogation as a feasible workaround.

“A particular concern voiced by recruiters is that clients are asking them to accept liability for agency workers’ AWR claims by inserting indemnity clauses in revised terms of business, even if it is the client who has caused the liability, for example, through failure to provide sufficient information to the recruiter regarding comparators’ pay and other conditions (or indeed fails to provide information at all). 

“The recruiter would therefore ultimately be liable for breach of the AWR and any subsequent Tribunal claims. The inequality of bargaining power means that some recruiters will simply accept the indemnity rather than lose the client’s business. BIS has stated that it will consider the possibility of including a provision within the guidance to prevent such practices. However, it remains to be seen if this has any impact in practice.

“Recruiters should take this limited window of opportunity to lobby BIS for amendments to the guidance by asking for indemnities in terms and conditions between temporary work agencies and clients passing liability under the AWR to the temporary work agency to be rendered unenforceable, and to seek clarification on the matters which remain unclear in the draft guidance.”