AWR, the Agency Workers Regulations, came into force on October the 1^st 2011.

The legislation gives temporary agency workers the same basic rights as those on permanent contracts of employment in a comparable role after 12 weeks spent in the same assignment. It also provides for “Day One” rights to ensure that all temporary agency workers are informed of any relevant vacancies within the hirer’s organisation and have access to the same facilities as permanent workers such as a staff canteen and childcare facilities.

The basic rights after the initial qualifying period covers pay, overtime and working conditions such as breaks, rest periods and public holidays. Companies that breach the AWR are liable for a £5000 fine for each incidence of non compliance.

It is unlikely that contractors with their own Limited Companies will be affected by the legislation especially if the Limited Company is well established. Also, if the contractor signs a contract stating that they are wishing to provide a business to business relationship, then they are unlikely to be affected by the regulations.

In order to comply with the AWR, contractors working through an umbrella company can be given the opportunity to work through what is termed the “Swedish Derogation Model”. Using this method, the contractor is not affected by the regulations because the contractor becomes a permanent employee of the umbrella company and as a consequence receives pay between assignments. The contractor is still entitled to “Day One” rights.

The other main option for umbrella company contractors is to work via umbrella companies offering a ‘match permanent pay’ contract. This method of working, which includes full employment rights, is similar to the current way of working when using umbrella companies, where the umbrella confirms that comparative pay elements are equal to or greater than the equivalent permanent employee. Under the AWR, the umbrella company will be provided with comparative pay data from the hirer via the agency, consisting of salary, overtime and holiday entitlements and the contractor would be entitled to “Day One” rights.