Agency workers

01 April 2015

Updated April 2015

Gives introductory guidance on the Protection of Employees (Temporary Agency Work) Act 2012 which was signed into law on 16 May 2012. Covers qualifying periods, retrospection, who the Act applies to,; the effect of the legislation, exceptions, the hirer's obligations under the Act, the anti-avoidance clause, redress for contravention of the Act, and recent case law.

The Protection of Employees (Temporary Agency Work) Act 2012 was signed into law on 16 May 2012.

The Act differs significantly from the Bill as initiated. In the first instance, it is only retrospective to 5 December 2011 in respect of pay and not any other basic working conditions. The concept of a comparable employee is gone and an agency worker’s entitlement is to the same basic working and employment conditions as an employee of the hirer.

There is also a new anti-avoidance provision inserted in Section 7 of the Act which prevents the use of successive assignments to circumvent any potential entitlements that an agency worker might qualify for, based on their service.

The Department of Jobs, Enterprise and Innovation has published a guidance document on the agency workers legislation.

No qualifying period

In England and Northern Ireland, the relevant legislation allows for a qualifying period of 12 weeks before the equal treatment entitlements relating to pay and other basic working conditions, such as annual leave and rest breaks, come into effect. That is not the case here. The equal treatment entitlements and the right to access employer facilities such as canteen, childcare and transport facilities take effect from day one following the enactment of the legislation. The equal pay provision is retrospective to 5 December 2011.

Retrospective for pay only

The Act is retrospective to 5 December 2011 in respect of pay and not any other basic working conditions. This affects Sections 2, 3, 4, 5, 6 (other than Sub-Section 1), 8, 9 and 13 (other than Sub-Sections 2 and 3). For practical purposes, Section 6 is the most pertinent.

The Sections cover the following areas:

  • Section 2 is the interpretation/definition.

  • Section 3 sets out who is covered by the Act.

  • Section 4 sets out the schemes which are not covered by the Act such as FÁS schemes, the national internship scheme or any variation, extension or replacement of those programmes or any vocational training, integration or retraining scheme financed out of public monies that the Minister may specify.

  • Section 5 deals with expenses relating to the administration of this Act.

  • Section 6 is made retrospective only in so far as it relates to pay.

  • Section 8 allows for parties to derogate from the principle of equal treatment where there is a collective agreement in place.

  • Section 9 excludes the application of Sections 7 and 8 of the Employment Equality Act and Section 7(4) of the Part Time Work Act in so far as they are inconsistent with this legislation.

  • Section 13(1) prohibits an agency from charging an agency worker a fee should they be employed with the hirer subsequent to the conclusion of their assignment.

Section 3 states that the Act applies to agency workers temporarily assigned by an employment agency to work for, and under the direction and supervision of, a hirer. Agency workers are individuals, not companies, employed by an employment agency under a contract of employment by virtue of which the individual may be assigned to work for, and under the direction and supervision of, a person other than the employment agency.

Section 4 states that the Act does not apply to work carried out pursuant to a placement under FÁS or the national internship scheme or any variation, extension or replacement of the above or any vocational training, integration or retraining scheme or programme financed out of public funds that the Minister may specify.

The legislation means that, as of 5 December, 2011, all agency workers are entitled to the same basic pay as non agency workers employed by the hirer. From the date of enactment, all agency workers are entitled to the same basic working and employment conditions as an employee of the hirer who is engaged in the same or similar work.

Pay

Pay means:

  • basic pay and any pay in excess of basic pay in respect of:

    • shift work

    • piece work

    • overtime

    • unsocial hours worked 

    • hours worked on a Sunday

It does not include:

  • sick pay

  • payments under any pension scheme or arrangement

  • payments under financial participation schemes

Basic working and employment conditions

Basic working and employment conditions are terms and conditions required to be included in a contract of employment by virtue of any legislation or collective agreement or any arrangement relating to:

  • pay 

  • working time

  • rest periods

  • rest breaks during the day

  • night work

  • overtime 

  • annual leave 

  • public holidays

Collective facilities and amenities


In addition to equal treatment in relation to basic working and employment conditions, the hirer of the agency worker is obliged under Section 14 to treat an agency worker no less favourably than an employee of the hirer, unless the difference in treatment can be objectively justified, in relation to access to collective facilities and amenities at a place of work including:

  • canteen or other similar facilities

  • childcare facilities 

  • transport services

This definition of collective facilities and amenities is not exhaustive. The Minister has announced that he intends to publish implementation guidelines which are expected to be an aid in interpreting the legislation. It is to be hoped that these guidelines will elaborate further on what exactly is covered.

An agency worker should be treated the same as an employee of the hirer doing the same or similar work. There are, however, some exceptions to this.

For example, Section 6(2), known as the Swedish derogation, provides that, where an agency worker is employed by an employment agency under a permanent contract of employment, the equal pay provisions will not apply. This is as long as the agency worker is notified of this by the employment agency in writing before entering into the contract of employment and is not paid less than half of the pay to which they were entitled to during their most recent assignment.

In addition, the parties can put in place a collective agreement in accordance with Section 8 that provides for different basic terms and conditions. This requires any such collective agreement to be approved by the Labour Court in accordance with criteria set out in Section 8.

Section 14 states that a hirer is obliged, in respect of access to collective facilities and amenities, to treat an agency worker no less favourably than one of its own employees unless there are objective grounds justifying less favourable treatment.

Section 15 states that a hirer is obliged to provide the employment agency with all the information in its possession as the agency reasonably requires to enable it to comply with its obligations under the legislation. Where proceedings are brought against an employment agency and the contravention is attributable to the failure by a hirer to provide the relevant information, a hirer is statutorily bound to indemnify the employment agency in respect of any loss incurred.

Section 11 states that a hirer is obliged, when informing his or her employees of any vacant position of employment, to also inform any agency worker assigned to work for the hirer of the position to allow them the opportunity to apply.


Section 24 states that a hirer is obliged not to penalise or threaten to penalise an agency worker. Penalisation includes:

  • suspension or dismissal or the threat of suspension or dismissal

  • loss of opportunity to apply for a position of employment with the hirer

  • transfer of duties, change of location of place of work or change in working hours

  • imposition of any discipline, reprimand or other penalty including a financial penalty

  • coercion or intimidation

Section 7 of the Act contains an anti-avoidance clause to prevent a hirer or an employment agency from breaking down assignments into a series of assignments for the purpose of determining basic working and employment conditions.

The redress provisions are contained in Schedule 2.

A complaint in relation to contravention of Sections 6 (basic working and employment conditions), 13(1) (charging fees for effecting an introduction) or 23 (penalisation by an employment agency) is against the employment agency.

A complaint under Sections 11 (informing agency worker of vacancies), 14 (access to collective facilities) or 24 (penalisation by the hirer of the agency worker) is against the hirer

A complaint is to a Rights Commissioner, on appeal to the Labour Court and to the High Court on a point of law. Complaints should be made within 6 months from the beginning of the contravention. This can be extended to a maximum of 12 months after the expiration of the 6 month period, that is 18 months after the start of the contravention, where the employee can show reasonable cause. The maximum compensation is the equivalent of two years’ remuneration. 

As the Act is relatively new, case law concerning the 2012 Act is only now starting to filter through.

Qualification allowance is basic pay

One of the first cases, Nurse on Call v Geraldine Mahon (AWD131), concerned the interpretation of basic pay. The complaint was made on behalf of a midwife who claimed she was entitled to have a specialist qualification allowance treated as part of her basic pay. Her claim was upheld by the Labour Court. The case is interesting in its analysis of what constitutes pay under the Act.

The Labour Court had to decide if a midwifery allowance, which Ms Mahon says she was entitled to, comes within the definition of pay under the Act. 

Pay

The agency argued that the definition of pay as set out in the Act is exhaustive. Pay under the Act means basic pay and any pay in excess of basic pay in respect of:
  • Shift Work
  • Piece Work
  • Overtime
  • Unsocial hours worked
  • Hours worked on a Sunday

The payment of the allowance did not fall within the definition of any pay in excess of basic pay.

Basic pay

The question then was whether the allowance forms part of basic pay.

The Labour Court noted that basic pay is not defined under the Act. The Court went on to state that in determining whether a payment forms part of basic pay it would normally have regard to the manner in which the parties themselves regarded it. In this regard, evidence was furnished as to how the payment was treated/viewed, with the Court noting that an allowance in the nature of pay is normally understood to be one on which pension contributions are payable. The Court also noted that the specialist allowance is paid in respect of a qualification without which she cannot practice as a midwife.

On foot of this, the Court upheld the worker's claim and found that the allowance was 'an integral part of basic pay to which the claimant had an entitlement under the Act'.

Analysis

The case is interesting as it is one of the first determinations under the Act, particularly as it applies to the interpretation of basic pay. As this phrase is not defined in the legislation, it undoubtedly may cause difficulty in interpretation in years to come and this decision represents some guidance on what may be deemed to be a constituent part of basic pay.

Arrangements that apply generally

In a subsequent case, O'Reilly Recruitment Limited v Nine Agency Workers (AWD 141), the issue of how basic pay and conditions is to be interpreted by the courts in the absence of a direct comparator test came up for consideration.

In the case, nine agency workers won their appeal at the Labour Court in relation to their claim that they were paid less than directly hired workers. The decision represents the fifth determination made under the Act. The Act requires that workers employed as agency workers receive the same terms and conditions of employment as they would expect to receive had they been employed directly by the end users.

15% pay gap

The workers stated that their hourly rate of pay represented a difference of 15% from the rate that directly employed workers of the end user company received. The workers said that they perform the same work as the end user employees. They did acknowledge that they are afforded the same terms and conditions of employment that the direct employees enjoy such as working time and rest periods.

The agency claimed that the rate of pay given to the direct employees was a legacy rate of pay, that those directly employed workers had long service and trading conditions as a result of the recession meant that the end user company would not employ people on those historical rates either currently or as of 5 December 2011 (the date to which pay is to be backdated to under the legislation).

Objective test

The Court looked at the relevant section of the legislation which requires that basic working and employment conditions means 'terms and conditions of employment required to be included in a contract of employment by virtue of any enactment or collective agreement, or any arrangement which applies generally in respect of employees, or any class of employees of a hirer' which includes pay.

The Court said that the test that it must apply in determining this section is an objective one. It said it must determine 'if there is a legislative provision, collective agreement or general arrangement in place that sets the general working and employment conditions, including the basic rate of pay of directly employed workers'. The Court said that in order for it to meet its obligations under the Act and the fundamental principle of equal treatment, it must apply the 'arrangement that applies generally' to directly employed workers.

It said it could not accept the recruitment agency's argument and substitute a hypothetical rate posited by the hirer for the actual rate of pay that in fact generally applies to the directly employed workers who are doing the same work as assigned agency workers. To do so it said would defeat the purposes of the Directive and the Act.

On foot of this, the workers' complaint succeeded and in doing so it overturned an earlier Rights Commissioner decision. It directed that the recruitment agency adjust the workers' rate of pay by 15% with effect from 5 December 2011.

Analysis

As case law under the Act is only now starting to filter through, this case is useful in looking at the court's interpretation of 'arrangements that apply generally' to directly employed workers in order to determinate the rate of pay to be afforded to agency workers. One of the criticisms levied at the Act when it was enacted was the lack of direct reference to a comparator for determining pay and conditions. This case provides some guidance as to how the court will approach the issue.

This factsheet was written by A&L Goodbody, Solicitors, IFSC, North Wall Quay, Dublin 1.

© A&L Goodbody Solicitors. The material is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.