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Agency Workers Regulations

Our Advice

What is AWR?

The Agency Workers Regulations (AWR) were introduced on 1 October 2011 to protect vulnerable temporary agency workers by ensuring that they benefit from the same basic pay and employment conditions as permanent employees.

Despite good intentions, the reality is that the AWR's scope is much broader than originally assumed and potentially affects all agency workers - irrespective of rate, trade or qualification.

Who's protected?

All agency workers who are classed as:

  • employed or otherwise contracted by a temporary work agency; and
  • working temporarily for and under the direction of a hirer.

All agency workers who are classed as:

  • on agency payroll
  • working for an umbrella company.

Contractors who are genuinely in business on their own account - often running their own limited company or personal service company (PSC) - fall outside the scope of AWR. This view is supported by the Department for Business, Innovations and Skills (BIS). At PayStream, we have robust IR35 checks to ensure that this is the case.

What are your contractors entitled to under AWR?

An agency worker is entitled to access collective facilities and amenities from the first day of their assignment, such as the canteen, childcare facilities and transport services.

They're also entitled to equal pay and holidays after a 12 week qualifying period, ie if they've worked in the same role for the same hirer for 12 continuous calendar weeks (although there are many circumstances that pause, restart or continue the 12 week clock that we can advise on).

Basic AWR compliance

The main types of agency worker who fall outside the scope of AWR or are at low risk from AWR:

  • Limited company contractors
  • Agency workers with a contract length less than 12 weeks
  • Agency workers with a higher hourly rate than a comparable permanent employee
  • Agency workers with no comparable permanent employee because their role is unique

You will need to assess any other contractors for AWR risk.

Our Advice

Option 1: Our PSC service - My PSC

PSCs may solve an agency's AWR problems for contractors earning above £15 per hour who are interested in working through a limited company. However the contractor needs to be genuinely “in business” to fall outside the scope of AWR. Our IR35 and 'in business' checks ensure that there is clear evidence that this is the case and provides an audit trail should the contractor decide to make a claim.

For those who don't qualify for PSC, we have our umbrella company.

Option 2: Our umbrella company - My Max

Where an umbrella company is suitable, we recommend the 'equal pay' model - where we make sure that the contractor's rate is at least equal to that of a comparable employee after the first 12 weeks.

This is the best option if the client provides a comparator rate and pay is above this, or where the client is willing to raise their rate to meet equal pay.

We ensure the timely collection of data from the agency using a “business rules engine” to ensure this information is shared on time between ourselves and the recruitment agency. This engine drives AWR compliance and can be tailored to suit an agency's needs based on certain parameters. After 10 weeks, an automated email will remind the agency that the contractor is approaching their first 12 weeks and will confirm the contractor's hourly pay based on what they've earned in the past 10 weeks.

The AWR guidelines state that pay includes wage plus expenses. Calculations of pay rate can vary week by week based on the level of expenses claimed by the agency worker and the number of hours worked.

There are strict compliance requirements that an umbrella company must adhere to; namely there must be an overarching contract of employment in place and supporting expenses policy and the calculations must adhere to minimum wage guidelines.

I have been given an excellent and exemplary service. Nothing ever seems too much trouble and this aligned with the new technology you are using to allow PSC clients to look at their business bank statements and run P&Ls for periods of choice, makes you look very good indeed from a client perspective.

D. Mackinlay, Project Manager