Government fails to broker new deal on AWR

The Government will no longer seek to amend the Agency Workers Regulations and will press ahead with producing guidance for employers after failing to broker a new deal with the CBI and TUC.

Following a long period of deliberation and consultation, the Government took the view that the legal hurdles to amending the regulation were too great for the amendments to be made within an acceptable time-frame.

The EU-inspired Directive which will give temporary workers similar rights as employees must be incorporated into UK law by October 2011. The Government has been in discussion with interested parties who were seeking amendments to the proposed restrictions.

The previous administration supported the Directive after coming to an agreement with businesses through the CBI and the unions through the TUC. Despite attempts by the current Government to renegotiate this agreement, the interested parties could not reach a new settlement and there were fears that any changes to the agreement could result in a legal action and risk the 12-week qualifying period.

A ministerial statement (see below) was issued to Parliament by Edward Davey, Minister at the Department for Business, Innovation and Skills rejecting any further revisions to the AWR on the grounds that any changes might have been subject to legal challenge because of the agreement brokered by the previous administration between the CBI and TUC.

In taking the decision not to reform the regulations, the Government cited the need to protect the 12-week qualifying period from potential legal challenges, arguing that it 'significantly mitigates the burdens the legislation will place on employers'.

Guidance notes

The devil will now be in the detail of the guidance notes which will be issued shortly and, which the Government aims, will give 'best possible guidance to help employers comply with their new obligations'.

Ann Swain, Chief Executive of the agency body, APSCo said: "It was always very unlikely that amendments to the Regulations could have been made at this stage. This is why APSCo has been concentrating on the guidance notes.

"We have been asked by BIS to help draft the guidance notes. The guidance will help recruiters interpret how they should be implementing the Regulations. The wording of the guidance will have a massive bearing on how easy it is for recruiters to ensure they comply fully with the AWR.

"Whilst it is disappointing that the Government has not looked at areas like the definition of pay, at least a lot of the uncertainty surrounding the Regulations has now been removed. We can now push on to make sure the Regulations are fully understood. The drafting of the guidance was completely stalled as we awaited this announcement.

"It's heartening that BIS is at least sympathetic to many of the concerns raised by APSCo and other stakeholders. The statement does at least give us some indication of where the Coalition stands on employment-related regulation.

"There is still no need to panic just yet. Recruiters and end users won't be able to get their internal processes in order until the guidance notes have been published. Spending time at this stage worrying about compliance with the Regulations is premature."

Written statement

The full text of the written statement from Mr Davey was:

The Agency Workers Regulations 2010, implementing the European Agency Workers Directive, were made by the previous Administration in January 2010 and are due to come into force in October 2011. The Government are aware of the different points of view that have been expressed by various stakeholders about certain aspects of these regulations and have been considering the way forward.

The directive sets out the principle of equal treatment – that

"the basic working and employment conditions of temporary agency workers shall be, for the duration of their assignment at a user undertaking, at least those that would apply if they had been recruited directly by that undertaking to occupy the same job".

The default position in the directive is that this principle should apply from day one of an agency worker's assignment. However, the directive also allows member states some flexibility as to how this principle is applied, including the possibility of a qualifying period before the right to equal treatment arises, as long as this is based on an agreement reached by "national level" social partners. Such an agreement was reached by the CBI and TUC, with the support of the previous Administration, in May 2008 and provides the legal basis for the legislation subsequently put in place, including its provision for a qualifying period of 12 weeks.

Since the formation of the coalition, the Secretary of State for Business, Innovation and Skills and I have discussed the way forward on this issue with a wide range of stakeholders. Employers and their representatives have expressed a range of concerns regarding the regulations, arguing for amendments before their entry into force that might reduce the burden they place on business. The Secretary of State and I have both had considerable sympathy for some of the arguments we have heard, particularly proposals to simplify the definition of "pay" under the regulations (especially as far as the administration of performance-related bonuses are concerned) and the administrative requirements around the application of the qualifying period to patterns of infrequent, short-term assignments.

However, the Government's ability to make changes to address such matters is constrained by the fact that the regulations are based to a significant degree on the agreement brokered by the previous Administration between the CBI and TUC. Due to this unique legal situation, any amendments proposed to the regulations touching upon the subject matter of the CBI and TUC agreement, which did not have the agreement of those parties, would face the risk of being set aside in the courts in the event of a legal challenge.

Were that to happen, the effect could be to call into question the very foundation for the fundamentals of the implementing legislation, crucially including the 12-week qualifying period itself.

The Secretary of State and I have therefore discussed this matter on a number of occasions with both the CBI and the TUC, seeking agreement on changes that we consider would have improved the implementation regime, to the potential benefit of both employers and agency workers. Unfortunately it has not been possible to find a way forward that would be acceptable to both parties.

This outcome is clearly disappointing. However, the Government have taken the view that the absolute priority must be not to take any steps that could put at risk the 12-week qualifying period, which significantly mitigates the burdens the legislation will place on employers. The Government will not therefore be proceeding with any amendment of the regulations themselves. We will instead now use the time that is still available before the regulations' entry into force to develop the best possible guidance to help employers comply with their new obligations.