Bringing people together in the IR35 fight

The Agency Workers Regulations (AWR) will come into force on 1st October 2011, giving agency workers the entitlement to the same or no less favourable treatment with respect to basic employment and working conditions, if and when they complete a qualifying period of 12 weeks in a particular job. The regulations are not retrospective and for agency workers already on assignment, the 12 week qualifying period will commence from 1st October 2011.

Individuals who work as temporary agency workers are affected by these regulations but certain workers are likely to be outside their scope. One category of such workers are individuals who find work through a temporary work agency (TWA) but are in business on their own account.

An agency worker aka ‘temp’, is someone who has a contract with a TWA (an employment contract or an agreement to supply services personally) but works temporarily for and under the direction and supervision of a hirer. The tripartite relationship between agency worker, agency and hirer/end client is a key feature of the Regulations and who is covered by them.

For someone to be classified as an agency worker the following elements must be present:

There must exist an employment contract or an agreement to provide services personally, between the worker and TWA;
The worker is temporarily supplied to a hirer by the TWA; and
When working on assignment the worker is subject to the supervision and direction of that hirer; AND
The individual in question is not in business on their own account.

The definition of agency worker excludes those who are in business on their own account where the hirer is a client or customer of the individual, i.e a genuine business to business relationship. Simply working through a personal service company will not in itself put individuals beyond the scope of the Regulations. In the event of a dispute as to whether or not a worker is genuinely self-employed it will be necessary to apply the usual employment status tests in forming the ‘hypothetical contract’. If the arrangements do not reflect the reality of the relationship and the actual reality is that the individual is not in business on their own account and work under the supervision and direction of hirer or the arrangements are a smokescreen, then individuals are likely to fall within the scope of the regulations. Ultimately, it will be left for the Courts to decide the reality of the relationships between the parties and they will examine the types of roles that are not commonly associated with high numbers of self-employment such as low skilled work.

Agency workers that have been in the same job after 12 weeks will be entitled to equal treatment in terms of pay and other basic working conditions, these being:

Pay related to work undertaken on assignment.
Duration of working time.
Night work.
Rest periods.
Rest breaks.
Annual leave.
Paid time off for ante natal appointments.

From day one of an assignment, all agency workers are entitled to equal access to collective facilities and amenities as provided by the hirer to direct employees. This does not extend to a right to access everything a hirer might provide to direct employees. Instead it applies to those facilities provided by the hirer and which help staff to meet the demands of working at a particular location, such as:

A canteen or other similar facilities.
Transport services, e.g, local pick up and drop offs, transport between sites. It does not mean company car allowances, season ticket loans.
Toilets/shower facilities.
Staff common room.
Waiting room.
Mother and baby room.
Prayer room.
Food and drinks machines.
Car parking.

An agency worker can make a claim to an Employment Tribunal in relation to their rights under these regulations. To help resolve matters without the need for court intervention, ACAS will be able to get involved in pre and post claim conciliation.

The hirer/end client will be liable for any breach to the extent that it is responsible for a breach of the regulations. Where responsibility for a breach of regulations is unclear however, the worker may claim against both the TWA and the end client from the outset. This does not mean that a tribunal can be asked to find that there is joint and several liability but to ensure that all parties in the relationship can be named from the start or joined to a claim and be liable to the extent that the tribunal finds them guilty of the infringement.

In the event of an agency worker succeeding with a claim, the tribunal will be able to award financial compensation which could be loss of earnings.

Up until now contractors have generally been at the mercy of agencies and end clients in matters of IR35. Freelancers do not get to see copies of the upper level contracts between agency and end client and are therefore left to assume that their contractual terms are mirrored in that upper level contract, e.g right of substitution. Sadly though this is not always the case and will only be discovered during an IR35 enquiry when HMRC drop the bombshell.

During an IR35 enquiry many contractors experience difficulty in getting their end client to support them in verifying their working practices serving to protract the enquiry and thereby increasing the stress and uncertainty on the individual. AWR may however serve to be a useful weapon in a freelancer’s armoury as no longer will agency and end client be able to simply rely on a contractor operating through their own limited company to enable them to bypass legislation and regulations. They will now have to take an active interest in establishing and ensuring that a contractor is genuinely in business on their own account and that contractor has the correct degree of autonomy over their work. All parties should now come together for their own common good and for contractors this should mean that, in the event of an IR35 enquiry, they have the assurance that both their contractual terms and their working practices are genuinely of the self-employed variety.


Leave a Reply

Your email address will not be published.

★ ★ ★ ★ ★

Very pleasant. Excellent price for what I needed. I will be a returning customer.

Rhino Review

Mr Paul D

Great staff. Customer focused and a team who recognise and understand their customers 100%.

Rhino Review

Vijay S

Fantastic accountants who helped me submit my last 2 years personal tax returns! I really rate this company!!!

QAccounting Review


Fantastic service.

Rhino Review

Marco G

Been with QAccounting for several months now, very good service, very personal and the best prices I have seen.

QAccounting Review

Muhammed A

I switched over to QAccounting a few months ago and haven't looked back. I get to speak to my own client manager and accountant, the prices were the best I had seen, and I paid exactly what it said online (no extra costs). Very happy with QA.

QAccounting Review

Jeremy H