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AWR changes and Swedish derogation explained

What are Agency Workers Regulations and what is the Swedish derogation?

As a contractor, there’s a lot of legislation that you have to be aware of. One such piece is the Agency Workers Regulations (AWR), which has garnered attention since it came into force in October 2011. Since there are changes ahead with the end of the Swedish derogation model, we’ve covered the basics of AWR and Swedish derogation to keep you in the loop.

What are the Agency Workers Regulations?

The Agency Workers Regulations 2010 (AWR) were established to give agency workers the right to the same treatment as permanent employees carrying out the same work at that company. This means that businesses cannot treat agency workers any differently or any less favourably than any of their permanent staff. You can find out more about AWR here.

What is Swedish derogation, and how does it link to Agency Workers Regulations?

Swedish derogation describes the type of agency worker contract which complies with regulation 10 and 11 of the Agency Workers Regulations 2010 (AWR). This states that workers who have signed a contract giving them access to full employment rights and pay between assignments are entitled to equal treatment to that of their employed colleagues but crucially, not in terms of pay. This was a widely used practice in Sweden, leading to the name ‘Swedish derogation’.

Its official name is a ‘pay between assignments’ contract because workers engaged on these contracts with an agency give up the right to equal pay in return for a guarantee to receive pay in between assignments.

Why is Swedish derogation being abolished?

The 2017 Taylor Review of Modern Working Practices recommended that the Swedish derogation be repealed as there was evidence that the model was being utilised unethically and is a detriment to agency workers. This recommendation was accepted by the Government as part of the Good Work Plan and regulation 10 and 11 will be repealed on 6th April 2020.

What does the removal of the Swedish derogation mean for contractors?

Starting from April 2020, the changes ahead mean that all agency workers will have a right to a pay parity after 12 weeks, regardless of whether they have been paid between assignments. In effect, this will mean all agency workers will be entitled to fair pay at 12 weeks and the agency must work with the end-hirer to gather information regarding comparator pay.

Where can I find more information about legislative changes?

Parasol’s knowledge hub is here to help you with everything you need to know about business, legislation and finance, to make your working life as simple as possible.

By Parasol

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