Agency Workers Regulations - Swedish Derogation

An international law firm has found that the implementation of the AWR has increased the cost of hiring staff for most organisations, and most firms are using at least one exclusion to mimimise the impact of the new rules.

The survey by Eversheds polled over 140 companies to see how the Agency Workers Regulations had impacted them in the six months since implementation on 1st October 2011.

According to Richard Sheldon, Associate at the law firm, most firms have seen an overall rise in labour costs of under 10%, although a small number have reported hikes in costs of 25% and even 50%.

The majority have found ways to absorb or avoid significant increases in labour costs altogether by relying on exclusions from the AWR.

Short term assignments, of less than 12 weeks, are clearly excluded from the scope of the new rules, and Eversheds says that the use of 'Swedish Derogation' contracts is far greater than had been anticipated - being used by 17% of firms surveyed.

The Swedish Derogation model is an arrangement which hires temporary staff on permanent contracts, but guarantees them minimum levels of pay between assignments. This prevents workers from making claims for equal pay.

Mr. Sheldon commented: "The Regulations are not drafted as clearly as they might have been in this regard but, ironically, once established and adhered to, this mechanism may in fact offer a degree of certainty lacking elsewhere in the Regulations. It remains to be seen how practice will evolve in this area in the coming years and months."