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The Agency Workers Regulations (AWR) were introduced on 1 October 2011 to protect vulnerable temporary agency workers by ensuring that they benefit from the same basic pay and employment conditions as a direct recruit or comparable employee.
Despite good intentions, the reality is that the AWR's scope is much broader than originally assumed and potentially affects all agency workers - irrespective of rate, trade or qualification.
All agency workers who are classed as:
employed or otherwise contracted by a temporary work agency; and
working temporarily for and under the direction of a hirer.
on agency payroll
working for an umbrella company.
Contractors who are genuinely in business on their own account - often running their own limited company or personal service company (PSC) - fall outside the scope of AWR. This view is supported by the Department for Business, Innovations and Skills (BIS). At PayStream, we have robust IR35 checks to ensure that this is the case.
The key to successful working under AWR is cooperation and coordination between agency and service provider. This video sets out our understanding of the Agency Workers Regulations (AWR), and how we intend to work with you to ensure that you receive the best support and advice.
An agency worker is entitled to access collective facilities and amenities from the first day of their assignment, such as the canteen, childcare facilities and transport services.
They're also entitled to equal pay and holidays after a 12 week qualifying period, ie if they've worked in the same role for the same hirer for 12 continuous calendar weeks (although there are many circumstances that pause, restart or continue the 12 week clock that we can advise on).
The main types of agency worker who fall outside the scope of AWR or are at low risk from AWR:
Limited company contractors who are genuinely in business on their own account
Agency workers with a contract length less than 12 weeks
Agency workers with a higher hourly rate than a direct recruit or comparable employee
Agency workers with no comparable direct recruit or employee because their role is unique
You will need to assess any other contractors for AWR risk.
Option 1: Outside IR35
Engaging with a limited company that provides the necessary services to your clients may help with AWR. The limited company contractor needs to fall outside IR35 and genuinely be “in business” on its own account. Our IR35 reviews will assess whether this is the case and provide a necessary audit trail.
Option 2: Our umbrella company - My Max
To remain compliant with AWR, we ensure the timely collection of data from the agency using a “business rules engine” to ensure this information is shared on time between ourselves and the recruitment agency. This engine drives AWR compliance and can be tailored to suit an agency's needs based on certain parameters. After 8 weeks, an automated email will remind the agency that the contractor is approaching their first 12 weeks and will confirm the contractor's hourly pay based on what they've earned in the past 8 weeks.
The AWR guidelines state that pay includes wage plus expenses. Calculations of pay rate can vary week by week based on the level of expenses claimed by the agency worker and the number of hours worked.
There are strict compliance requirements that an umbrella company must adhere to; namely there must be an overarching contract of employment in place and supporting expenses policy and the calculations must adhere to minimum wage guidelines.
