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Can we avoid the Agency Workers Regulations?

3 April 2014

This article first appeared in the March 2014 issue of Facilities Management, published by LexisNexis.

A recent case has suggested that there may be a way to avoid having to worry about the Agency Workers Regulations 2010 (the Regulations) when contracting for the provision of facilities management services like cleaning, security, catering and maintenance.

This could significantly reduce the costs and risks of using agency staff.

Moran v Ideal Cleaning Services and Celanese Acetate Limited was decided by the Employment Appeal Tribunal (EAT) in December 2013. Several individuals had been employed by Ideal to provide cleaning services to Celanese.

After a number of years Celanese reduced its need for cleaning services and they were made redundant by Ideal. The individuals argued that they were entitled to protection under the Regulations, including 'equal pay' with comparable employees at Celanese. Both Ideal and Celanese denied that the individuals were agency workers under the Regulations.

The EAT decided that the Regulations only apply to workers who are supplied to work "temporarily" for a client. Although "temporary" is not defined in the Regulations, the EAT applied the dictionary definition of the word and found that it means something that is less than permanent (or, in the employment context, indefinite or terminable on notice).

In this case there was no designated end date for the individuals' performance of services for Celanese. Therefore, their services for Celanese were indefinite rather than temporary and the Regulations did not apply.

Although the individuals had performed the same work as Celanese's own employees for a long time, this meant they were not entitled to 'equal pay'.

In arriving at this decision the EAT also considered the European Directive on which the Regulations are based. The Directive's wording deliberately included the concept of "temporary" performance of services and this reinforced the EAT's view.

The EAT found that there were no public policy grounds to override the clear meaning of the words used in both the Regulations and Directive.

The case therefore suggests that a huge loophole has been discovered in the level of protection provided to workers indefinitely provided to a client who were previously understood by many to be covered by the Regulations.

The case also throws up some challenging questions. For example, a person on an indefinite engagement with a one week notice period would not be covered by the Regulations, but someone engaged for a fixed term of five years would.

Another example is the situation of an agency worker whose assignment is renewed on a weekly basis. The Regulations include 'anti-avoidance' provisions, ensuring that a series of short-term assignments counts as continuous service towards the 12 week qualifying period for 'equal pay' protection.

This suggests that such individuals should be entitled to protection.

However, does such deeming of continuous service now mean that there is no designated 'end date' and therefore that the individual is engaged indefinitely and not entitled to protection?

Another complicating question is whether the commercial agreement between the agency and the client will also need to be indefinite in order for the worker to lose protection.

For example, if the contract for provision of security services between a facilities manager and landlord is fixed for two years, does that mean that a security staff member's indefinite assignment is actually limited to two years?

If so, he or she will still have protection under the Regulations notwithstanding the ostensibly indefinite assignment.

It might appear that this case is ripe for appeal. However, the logic of the EAT's decision and its consideration of the European position means that identifying an error in law on which to base an appeal may be difficult.

Furthermore, changing the Regulations themselves is unlikely to be a high priority for government given the current drives to remove both 'red tape' for businesses and 'gold-plating' of European Directives. It therefore appears that any challenge to this case is likely to be in the form of an appeal to the European Court for a ruling on what "temporary" means under the Directive.

On a practical note, the case is interesting in that it suggests that structuring contracts so that assignments are indefinite may mean that workers are not entitled to protection under the Regulations.

Although commercial contracts between facilities managers, clients and agencies should still deal with the possibility of the Regulations applying, hopefully this case will mean that the likelihood of the Regulations applying will be reduced and therefore make commercial negotiations easier.

That said, the key for a facilities manager will always be to ensure that liabilities are passed through the contractual chain to the appropriate party.

Another option is to ensure that all workers providing similar services to a client are agency workers.

This will mean that, even if they are covered by the Regulations, there are no comparable employees of the client for 'equal pay' purposes. This has become quite a normal business model for a large number of facilities management firms.

This article was written by Kirsti Laird.

For more information, please contact Kirsti on +44 (0)20 7427 6411 or kirsti.laird@crsblaw.com