The Agency Workers Regulations 2010 – important judgment on the applicability to workers on "indefinite" assignments

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A recent case in the Employment Appeal Tribunal ("EAT") has found that workers on "indefinite" or "permanent" assignments at a hirer do not benefit from the protection of the Agency Workers Regulations 2010 ("AWR").

This ruling is highly significant and its impact is already being felt in the recruitment industry.

In the case of Moran and others (the "Claimants") v Ideal Cleaning Services Ltd ("Ideal") and Celanese Acetate Ltd ("Celanese") (Case Reference UKEAT0274/13), the ten Claimants were employed by a cleaning agency (Ideal) but from the outset were placed on assignment at Celanese (or its predecessor), working under its supervision as cleaners. The Claimants had worked at Celanese for between 6 and 25 years until their employment was terminated by reason of redundancy in late 2012. During their assignments at Celanese they were paid on a weekly basis by Ideal, which invoiced Celanese for supplying their services.

The Claimants argued that the AWR applied to them and that as a result they were entitled to the same basic working and employment conditions as if they had been recruited by Celanese directly after their completion of the 12 week qualifying period following the introduction of the AWR on 1 October 2011. They would have been entitled to more attractive conditions, including higher rates of pay, had they been recruited directly by Celanese.

An agency worker under the AWR is defined as "an individual who is supplied by a temporary work agency to work temporarily for and under the supervision and direction of a hirer." Both Ideal and Celanese argued that the Claimants could not be agency workers pursuant to the AWR because they were not working "temporarily" for Celanese. This was due to the fact that they had been appointed to work for an indefinite period at Celanese – their contracts with Ideal specified that the place of work was the Celanese factory and that their employment was terminable on notice. The AWR do not define "temporary" and so it fell to the Employment Tribunal to decide the point.

The Employment Tribunal Decision

At a pre-hearing review in the Employment Tribunal one of the Claimants admitted that in reality the assignment was a "permanent" placement under which he did not expect to be moved elsewhere. This, together with consideration of the dictionary definition of "temporary" led the Judge to find that the Claimants were not supplied to work temporarily for Celanese, and they could not therefore be classified as agency workers under the AWR. It therefore followed that Ideal could not be a temporary work agency in this instance. The Claimants appealed to the EAT.

The Employment Appeal Tribunal Ruling

The EAT found that the concept of "temporary" in the AWR means "not permanent". Given that the Claimants were placed by Ideal on a permanent basis with Celanese, by definition they could not be working "temporarily" and therefore they fell outside the scope of the AWR. The decision of the Employment Tribunal was upheld.

Why is this case important?

Many thousands of workers are engaged on indefinite assignments as the Claimants were in this case. The EAT ruling appears to take such workers outside the scope of the AWR when they had until now been assumed by the industry to be in scope. This has created uncertainty and seems to undermine the principal purpose of the AWR. It now appears that only assignments of a pre-determined length or which are terminable upon a condition being satisfied (for example, the completion of a specific project) will be considered as "temporary" in nature for AWR purposes and as such only agency workers who work on those such assignments will be afforded protection.

Anecdotal evidence already suggests that some end users will seek to insert provisions in their contracts with agencies in order to ensure that assignments are represented as "indefinite" in duration and therefore outside the scope of the AWR to avoid having to match basic working and employment conditions. It should be noted however, that the Conduct of Employment Agencies and Employment Businesses Regulations 2003 ("the Conduct Regulations") require employment businesses to confirm the expected duration of an assignment to the temporary worker. If an assignment is represented as being "open-ended" in order to attempt to avoid the operation of the AWR then this would likely fall foul of the Conduct Regulations.

Given the importance of the decision in this case, it is anticipated that the judgment may be appealed again. The Recruitment and Employment Confederation has asked the Department for Business, Innovation and Skills ("BIS") to comment on the judgment and awaits a response. We would recommend that clients do not amend their existing practices in relation to the AWR and agency workers as a result of this decision until further guidance is issued, either by BIS or from case law.

N.B. It is important to draw a distinction between the Claimants in this case and those individuals who are supplied via an employment agency to be engaged directly by a hirer on a permanent basis (i.e. where the agency operates as an introducer and then has no further involvement in the relationship). Such a relationship was not previously within scope of the AWR and remains so.