Repeal of the Swedish Derogation

What is it?

Under the Agency Worker Regulations (2010) the Swedish derogation is a “pay between assignments” contract, workers engaged on these contracts with a temporary worker agency (TWA) give up the right to pay parity with comparable permanent staff in return for a guarantee to receive a certain amount of pay when they have gaps between assignments.

Pay parity is the same basic working and employment conditions as direct recruits of the same business, one they have undertaken the same role with the same hirer for 12 continuous calendar weeks.

This arrangement has been most commonly used where large numbers of blue collar workers are needed e.g. retail, manufacturing, etc.

What do the changes mean?

The removal of the Swedish derogation is to encourage more employers to take on permanent employees, so providing greater level of certainty and security to individuals.

By no later than 30 April 2020, temporary work agencies must provide agency workers whose existing contracts contain a Swedish derogation provision with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply.  And after 12 weeks will be entitled to pay parity.

Employers who utilise agencies that provide workers under the Swedish Derogation can therefore expect to see an increase in costs of utilising agency workers, if engaged for more than 12 weeks.

Loates Tips:

  • Establish if any of your existing temporary work agencies are applying the Swedish derogation
  • Ascertain the impact and budget for increased agency fees
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