Higher pay did not compensate agency worker for lower entitlements
In the following case, the Employment Appeal Tribunal ruled that agency workers, who had completed 12 weeks of work and were therefore entitled to the same basic employment terms as comparable permanent employees, could not be compensated for less favourable holiday entitlement and rest breaks by being paid a higher hourly rate of pay.
Under the Agency Workers Regulations 2010 (AWR) temporary agency workers become entitled, after they have been in the same role with the same hirer for 12 weeks, to the same pay and working conditions as a comparable direct employee of the hirer.
In this case, the Claimant was an agency worker who had worked at Royal Mail’s postal centre in Leeds long enough to trigger rights under the AWR. He raised a grievance with Royal Mail that he was paid for just 30 minutes of his 1 hour rest break when comparable employees were paid for the whole hour and also that his holiday entitlement was 28 days’ compared to the employees’ 30.5 days. However, Royal Mail pointed out that, unlike its employees who were paid £9.60 an hour, the Claimant was paid £10.50 an hour which Royal Mail argued compensated him for the difference in his rest breaks and holiday.
The Claimant brought claims under the AWR in the employment tribunal.
The tribunal dismissed his claims for payment for rest breaks and entitlement to annual leave because his higher pay compensated for the fact that he received less favourable terms in respect of rest breaks and holiday.
The Claimant appealed to the Employment Appeal Tribunal (EAT), arguing that the tribunal was wrong to decide that his lower annual leave entitlement and rest breaks could be compensated for by a higher rate of pay.
The EAT agreed with him and allowed his appeal. It ruled that Royal Mail could not use the extra pay to off-set the lower holiday entitlement and rest breaks. It added that where the AWR conferred a specific entitlement (e.g., to the same annual leave), an agency or hirer could not offset a failure to award the entitlement with a higher rate of pay. The entitlement under AWR is to the same basic terms and conditions as comparable employees on a ‘term-by-term’ basis, not by comparing the overall package.
However, the EAT said that parity in holiday pay could be achieved by paying a lump sum at the end of the assignment or in ‘rolled-up’ holiday pay.
The case is a reminder to employers that they must provide agency workers, who have 12 weeks service, with the same basic terms as their own employees and cannot rely on the fact that an agency worker’s overall package is of at least equal value.
However, as the EAT suggested, employers have other options such as ‘rolled-up’ holiday pay or payment of a lump sum on termination of the holiday assignment to offset the benefit.