Employment e-Brief – Agency Workers: liability of end user for pay differential

There have been very few reported cases on the Agency Workers Regulations 2010 (“the regulations”). A very recent one will give pause to many an employer who would like to think their agency supplier will have to absorb any risk. Not so says the employment tribunal.

The tribunal in question decided that the hirer, not the agency that employed the agency worker, was liable for the compensation ordered to be paid to the agency worker as a result of the worker not having been paid at the rate required by the Regulations.

The Regulations say that after a 12 week qualifying period, an agency worker doing the same job as a direct employee must be paid the same as if they had been employed directly by the end user. If that doesn’t happen then both agency and hirer can be liable to pay compensation to the agency worker where they are at fault.

The case, Stevens v. Northolt High School, involved a situation where the agency had taken reasonable steps to obtain information from the end user about the salary of the end user’s comparable employees after the 12 week period. For whatever reason, despite being asked repeatedly to supply the relevant information, the end user failed to provide it to the agency and was therefore found to be solely liable for the salary underpayment.

As with so many employment law situations, the case emphasises the need for robust systems and procedures. Both hirers (end users) and agencies have obligations so both need to have compliance systems in place. Parties to agency contracts should also be mindful of the need for indemnities as between them in terms of latent or contingent liabilities of this nature under the regulations.

To discuss this matter in more detail please contact Philip Paget on 0113 2270212 or email him at philip.paget@gordonsllp.com