Understanding Swedish derogation
An employment tribunal recently found in favour of an employer in a dispute concerning the 'Swedish derogation' in the Agency Workers Regulations (AWR). It was one of the first judgements in this area of employment law. As it could still go to appeal, it may be premature to draw firm conclusions, but it may be timely to ask, what is Swedish derogation and how does it affect the AWR?
The AWR entitle agency workers to get the same basic pay and conditions as comparable employees after a 12-week qualifying period. The Swedish derogation - so called because it was introduced into the regulations at the request of the Swedish government - provides an exemption from this as far as pay is concerned; it does not affect agency workers' entitlements to other provisions under the regulations such as annual leave after 12 weeks, 'day-one' rights and rest breaks.
For it to come into play, the temporary work agency (TWA) offers an agency worker a permanent contract of employment and pays the worker between assignments. It has to be made clear to the worker that entering into the contract means giving up the entitlement to equal pay. A 'zero hours' contract does not count as a derogation contract.
There are rules about how much and for how long the TWA must pay workers. It must be at least half of pay received on assignment based on the highest rate during previous 12 weeks; it can't be below the National Minimum Wage and National Living Wage. The payment between assignments must last for at least four weeks before the contract can be terminated.
The point of the AWR is to improve pay and conditions of agency workers. The Swedish derogation is only allowed because of the pay that is received by a worker between assignments. If employers or agencies take measures to deprive workers of this pay, it could put them at risk of a legal challenge.