Agency Workers: Hirer's liability for failure to provide equal pay to agency workers

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Agency Workers: Hirer's liability for failure to provide equal pay to agency workers

Published 14 March 2019

The hirer of agency workers was liable for the agency’s failure to pay equal pay to the workers in spite of the hirer having made payments to the agency to fund payments to the workers

THE FACTS

The claimants were agency workers who worked for London Underground Ltd through an agency, trainpeople.co.uk, from October 2011. The agency initially asserted that the agency workers were not entitled to equal pay and terms because they fell within the “Swedish derogation”, and London Underground agreed with this. (The Swedish derogation is an exemption to the principle that agency workers are entitled to the same basic working and employment conditions after twelve weeks in the same role as if they had been recruited by the hirer directly to do the same job.) The workers were not therefore given the same pay as if they had been directly recruited. However, London Underground later revisited this, and decided that the Swedish derogation did not apply, and that the workers should be entitled to equal pay and terms. The agency was unable to pay the workers equally until London Underground provided it with information on the comparators. There was a delay in doing so, but from October 2012 the agency paid the workers (correctly) at a significantly increased rate. For about five months, London Underground made payments to the agency to fund the payment of arrears, but the agency did not pass this onto the workers. The agency went into involuntary liquidation in November 2013. The employment tribunal, the EAT and then the Court of Appeal had to consider the calculation of compensation under the legislation protecting agency workers, and how to apportion compensation between the agency and London Underground.

The Court of Appeal held that:

  •  The legislation confers a substantive right on workers to be paid equalised pay rates and to benefit from other equalised terms compared with direct recruits; it is not simply a right to be issued with a document containing compliant terms and conditions of employment.
  •  It was just and equitable for London Underground, as the hirer, to pay compensation to the extent it was found responsible for failure to pay agency workers equalised pay. This was despite London Underground having already paid over the arrears of pay to the temporary work agency.
  • Compensation should be assessed, pound for pound, as the amount of the underpayments.
  • London Underground had to pay 50% of the arrears, reflecting its responsibility for the breach. It could not benefit from a discount on this liability. This meant that it effectively had to pay twice, because it had already made payments to the agency to fund the arrears (which had not been passed on to the workers). The employment tribunal had however had found that it was not “just and equitable” for London Underground to pay the full 50% of the compensation. The Court of Appeal disagreed with this, finding that the tribunal had made a mistake. The legislation does not provide for “just and equitable” considerations: only in “exceptional circumstances” would a respondent be required to pay less compensation to the worker than the amount for which it was “responsible”. The circumstances in this case were not found to be exceptional.

WHAT DOES THIS MEAN FOR EMPLOYERS?

This case is a reminder that employers who hire temporary workers via agencies must be aware of their responsibility to make sure that the agency workers benefit from the same basic terms and conditions (including equal pay) as the workers would have received had they been hired directly. The hirer cannot leave it up to the agency to make sure that this happens: it will be liable if it is found to be at fault in any way for any breach of the agency workers’ rights.

London Underground Ltd v Amissah & Ors

Authors

Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

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