Likely impact of the Agency Workers Regulations on interim managers - update 22/9/2011

The Agency Workers Regulations 2010 (AWR) come into force on 1 October 2011. The AWR will give agency workers the right to the same "basic working and employment conditions", such as pay and working time, as comparable direct hires after 12 weeks in the same role with the same end user client.

A temporary work agency (TWA) supplies individuals to work temporarily for and under the supervision and direction of hirers, or pays for, or receives or forwards payment for, the services of such individuals. Note that a TWA is not necessarily only a recruitment company; other intermediaries such as an umbrella company may also be a TWA. A TWA will be responsible for providing the same basic working and employment conditions and will have the bulk of the compliance burden under the AWR. However, the AWR will also have implications for the business of the end user client, including obligations to provide access to facilities and information on permanent job vacancies from day one of an agency worker's assignment.

Guidance on the AWR published on 27 May 2011 by the Department for Business Innovation and Skills (see this link: http://www.bis.gov.uk/assets/biscore/employment-matters/docs/a/11-949-agency-workers-regulations-guidance.pdf) has helped clarify who does and who does not fall within the scope of the AWR. Under the AWR, an "agency worker" is someone who is supplied by a TWA to work temporarily for and under the supervision and direction of the end user client.

Are interim managers within the scope of the AWR?

Limited companies
Principle:
The definition of an agency worker excludes those who are in business on their own account where the end user client is a client or customer of a profession or business undertaking carried on by the individual via a limited company. The AWR state that an individual is not prevented from being an agency worker because the TWA supplies the individual through one or more intermediaries. Therefore, an interim manager working via a limited company is not automatically excluded, but may fall outside of scope where he or she can satisfy the test of being in business on their own account. In order to fall outside the scope of the AWR, there must be a genuine business to business relationship between the interim manager providing services via a limited company and the end user client.

Impact:
Due to the nature of the business relationships and level of skills of interim managers providing services through their own limited companies via TWAs, it is likely that the AWR will not apply. Of particular significance will be whether, as an interim manager, you work under the supervision and direction of the end user client or whether the assignment involves a substantial amount of autonomy. These factors will help to clarify whether the test for being in business on your own account has been satisfied. Although the AWR do not affect tax law and tax status, the tests used to assess whether an individual is genuinely self-employed (to which there is a link in the draft guidance) are similar. It is likely, therefore, that interim managers working within IR35 will be agency workers and that those working under arrangements which fall outside IR35 will not.

Umbrella workers
Principle:
Umbrella companies fall within the definition of a TWA. Individuals engaged or employed by umbrella companies may be agency workers for the purposes of the AWR. If they do not work under the supervision and direction of the end user client, they will not be agency workers. As mentioned above, both the umbrella company and the recruitment company will be classified as a TWA, and will therefore both have obligations to ensure the individual's equal treatment whilst on assignment if the individual is an agency worker.

Impact:
Interim managers working through umbrella companies should assess whether or not they are agency workers. An interim manager working through an umbrella company will not be an agency worker within the scope of the AWR if he or she does not work under the supervision and direction of the end user client. Those that do, and who consequently will be agency workers, will usually be receiving a good rate of remuneration which is likely to be the same as, if not better than, a comparable direct hire of the end user client. Often there will be no comparator, due to the senior positions that interim managers tend to be engaged to fill, and so it may be difficult to ascertain what would constitute equal treatment without looking at what applies generally in the relevant end user client's workplace and in the market place at large. The end user client must provide interim managers who are agency workers with access to onsite facilities, such as parking, childcare facilities and staff canteen, from day one and make them aware of any permanent job vacancies that arise during the assignment.

Bridget Wood, Blake Lapthorn, September 2011
 

For other recruitment legal advice follows this link or contact Bridget direct below:

http://www.bllaw.co.uk/sectors/recruitment.aspx

Bridget  Wood: Bridget.Wood@bllaw.co.uk 

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