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The Agency Workers Regulations 2010 (AWR) came into force on 1st October 2011. The AWR affects Great Britain, with Northern Ireland publishing its own regulations. This is intended as a guide to any organisation that may be affected by the AWR.
The AWR apply to:
The AWR do not apply to:
What is a Temporary Work Agency (TWA)?
A TWA is an agency who supplies agency workers to work temporarily for a third party who is the Hirer. The agency worker operates under the supervision of the Hirer but has a contract of employment or service contract with the TWA.
The Regulations cover traditional agencies but also extend as far as intermediaries, which will include umbrella companies and master vendors. Sometimes the hire of agency workers is managed for the Hirer by a neutral vendor who does not employ the agency workers directly or sources other recruitment agencies. Most of these organisations will be categorised a TWA in view of their involvement in the supply of individuals and forwarding payments to such individuals.
What is an Agency Worker?
An agency worker often called a temp is a person who has a contract with the TWA but works temporarily for, and under the direction and supervision of a Hirer. There is a tripartite relationship between the TWA, the agency worker and the Hirer.
What is a Hirer?
The Hirer often called the end user is a private, limited company, partnership or sole trader that books temporary agency workers through a work agency.
If any of your business activities fall into the category of Temporary Work Agency or Hirer you are subject to the AWR
Qualifying for equal treatment
The AWR give agency workers new entitlement from the first day of the assignment referred to as Day 1 rights and additional pay and basic working entitlements following a 12 week qualifying period.
The main factors to be taken into consideration are:
Day 1 Rights Overview
This is not a right to special treatment.
For example if there is a waiting list for facilities i.e. a car parking space the temporary agency worker will be added to the list.
SPECIFIC DAY 1 RIGHTS
Access to facilities
From day one of their assignment the agency worker is entitled to equal access to collective facilities and amenities provided by the Hirer to direct employees who are comparable agency workers. This can include:
This is a non-exhaustive list and acts as an indication of which kind of facilities should be included.
Hirers may face practical and organisational problems in affording agency workers the same access. However consideration should be given to offering certain access of facilities on a pro rata basis as an alternative to excluding them completely.
Access to Information on Job Vacancies
From day one of an assignment, all agency workers will have the right to be provided with information about any job vacancies within the Hirer’s organisation that would be available to a comparable employee or agency worker.
Hirers can choose how to publicise vacancies, whether it’s via the internet/intranet or on a notice board in a communal area.
This obligation does not constrain employers’ freedom regarding;
Rights after 12 weeks in the same job
These new equal treatment entitlements will only come into effect after the agency worker completes a 12 week qualifying period with the same Hirer.
How do I calculate the 12 week qualifying period?
The 12 week period is triggered by working in the same job for the same Hirer for 12 calendar weeks. A calendar week comprises any period of 7 days starting with the first day of the assignment irrespective of how many hours the agency worker does in any one week.
It is not retrospective so an agency worker will only be able accrue 12 weeks after the 1st October 2011 even if the assignment started earlier.
If there is a break between absences of more than 6 weeks this will act as a trigger to restart the qualifying period.
There are very specific rules in relation to the suspension of the qualifying period and restarting of the period for temporary absences including sickness absence and pregnancy related absence. Any TWA or Hirer should take specialist advice form IMS in these circumstances.
TWA’s and Hirers should also be aware of anti-avoidance provisions, which address any situations that are designed to deliberately deprive an agency worker of their entitlements.
For example there is no obligation upon a Hirer to engage the agency worker beyond the 12 week qualifying period. They could reengage the agency worker in a different role or the same role after a break of 6 weeks. This could be justifiable having regard to all the circumstances. However if there was then a third assignment this could be viewed a deliberate and regular pattern to avoid the AWR.
What is included:
What is excluded:
Further guidance is available from IMS in relation to these issues.
After completing a 12 week qualifying period in a given job, pregnant agency workers will be allowed paid time off to attend antenatal medical appointments and antenatal classes when on assignment.
They will also need to be found alternative sources of work, paid at the same rate or higher than the original assignment, if they can no longer complete the duties of the original assignment for health and safety reasons. If alternative work cannot be found, then the pregnant woman will have the right to be paid by the agency for the remaining expected duration of the original assignment.
This provision does not give a pregnant agency worker any entitlement to maternity, paternity and adoption rights beyond those that they are already entitled to. Nor does it give them a right to return to work after maternity leave. The intention of the AWR is to keep pregnant women in the workplace and to ensure that women are not treated unfairly due to their pregnancy. This in addition to the discrimination provisions set out in he Equality Act 2010.
AWR Organisation Compliance
See AWR Organisational Compliance in our agency area.
When expenses are processed for an employee either by reimbursing the employee or paid by the employer in respect of the employee any that are not covered by the relevant exemptions in the legislation, up until 5 April 2016 must have been recorded on a form called a P11D. Receipts must be available in support of all expenses.
With effect from 6 April 2016 any taxable expenses or those that are a mixture of allowable and taxable must be paid with tax and NIC accounted for. The employee will then have to make claim for the element of allowable expenses.
All contractor’s receipts must also be retained. It is not an indication of the expenses that contractors’ are entitled to claim. To claim an expense you must have first incurred the cost and it must be ‘’wholly, exclusively and necessarily’’ incurred in the performance of your job.
All expenses are typically submitted to the umbrella in accordance with a schedule. All expenses incurred must be supported by original receipts. If the contractor does not actually incur an expense then no cost can be claimed. HMRC require that receipts are kept for a period of up to 5 years. The only expense where a receipt is not necessary relates to the overnight incidental expenses. HMRC allows up to £5 per night for stays in the UK and up to £10 for each night, any part of which is spent outside the UK where required to be away from home during the course of an assignment.
These guidance notes summarise the types of expenses that may be claimed by a contractor working with an Umbrella company in order to perform his/her duties of employment. The rules from HMRC are very specific and here is a brief overview of some expenses allowed in performing employment duties:
It is always recommended to keep receipts and only claim the exact amount on the receipt. If you are uncertain as to whether to claim the expense, you should seek professional guidance or not claim the receipt at all.
You are unable to claim the cost of ‘normal’ clothing however certain protective clothing which is required for you to perform your job duties (such as protective uniform) will generally be allowed as an expense.
As a general rule, travel and subsistence (including home to work travel) is no longer an allowable expense. The rules on travel and subsistence expenses changed effective 06 April 2016 which restricted tax relief on these expenses due to employees being under SDC (Supervision, Direction & Control). In certain instances such as site-site travel or certain care workers travel costs may still be allowable. Home to work travel would be disallowed.
If a contractor is required to use VDU equipment he/she may claim the cost of the examination (eye) test. Reasonable costs are typically reimbursed where the examination shows that a contractor requires corrective appliances with specific prescription to use for screen equipment. Where no corrective appliance is required the cost of the examination only can still be claimed.
If a contractor has incurred costs on work-related training courses he/she will need to provide details of the costs incurred. Subject to the expenses being ‘work-related training expenses’ a contractor in some instances may claim reimbursement of such costs. The training would need to be associated as a necessary expense in the performance of the current duties.
Tax relief for pension expenses is normally allowable however pensions requirements are complex and further advice should be sought from a Pensions advisor.
Expenses such as equipment necessary to perform your duties, personal incidental expenses whilst away on a work assignment, overnight accommodation when away from your workplace may be allowable. These would need to be assessed individually.
An Umbrella Company will employ you in a similar way to any other employer. You will be a permanent employee engaged to work on a number of assignments. You will be provided with a Contract of Employment under the Employment Rights Act 1996 granting you full employment rights.
The Umbrella Company contracts with your client or agency and takes care of all the administration matters.
Umbrella services are used by many contractors because they provide a simple, cost effective and flexible operating structure.
The contractor becomes an employee of the umbrella under a contract of employment. The contractor enjoys the benefits of employment but still retains the flexibility of contracting. The umbrella contracts with the recruitment agency, or directly with the end client (if no recruitment agency is involved). All income is paid out through the PAYE tax system. Contractors working through an umbrella will usually submit their timesheets to the umbrella.
The umbrella will then raise an invoice based on the agreed rate and submit this to the agency or end client for payment. Timesheets must usually be submitted within a set time frame to ensure prompt payment to the contractor. Usually any claims for any allowable expenses the contractor has incurred are submitted with the time sheet. The ability to claim expenses is one of the main advantages for the contractor working through an umbrella as opposed to directly through the recruitment agency. However with new rules introduced since 6 April 2016 the ability for certain contractors to claim travel and subsistence expenses is now restricted.
The contractor is also usually offered a higher rate much like a contractor engaged through their own limited company. This is because the rate should reflect that employers Nl, holiday pay and statutory benefits have been passed on to the umbrella business.
The umbrella will take care of all the administration, tax and payroll work for the contractor and provide insurances within the fees of the service to cover the contractor working on an assignment.