Agency Workers Regulations (AWR) explained for contractors

The Agency Workers Regulations (AWR) provide temporary agency workers with the same basic employment and working conditions as if they had been recruited directly by the client, after completing a 12-week qualifying period in a particular role.

The rules are particularly relevant where contractors work under supervision and direction through an agency.

The AWR came into force on 1 October 2011. You can read the official government guidance here.

In this guide, we explain what the AWR means, and how it applies to contractors.

What does ‘equal treatment’ mean in practice?

From the first day of an assignment, agency workers are entitled to access collective facilities and amenities provided by the hirer, such as:

• Canteens and similar facilities.
• Childcare facilities.
• Transport services (e.g. parking or shuttle services).
• Information on job vacancies.

After 12 weeks in the same role with the same hirer, agency workers are entitled to the same basic working and employment conditions as comparable permanent employees, including:

• Pay: Basic pay, overtime, shift allowances, and bonuses linked to the work performed.
• Working time: Hours, rest breaks, and night work.
• Annual leave: Paid holiday entitlement.

Some employment rights apply from day one

It’s important to separate AWR rights from general employment rights, which apply regardless of the regulations.

All workers are entitled to:

• Protection from discrimination.
• At least the National Minimum Wage.
• A minimum of 5.6 weeks’ statutory holiday.
• Statutory benefits such as sick pay and maternity or paternity pay.

These rights are not created by the AWR, but apply alongside it.

Which contractors are included?

The AWR applies to individuals who have a contract with a temporary work agency and are supplied to work temporarily under the supervision and direction of a hirer.

Umbrella company contractors

Workers employed by umbrella companies and supplied to hirers are generally within the scope of the AWR.

See also umbrella company guidance and umbrella company comparisons.

Limited company contractors

Individuals working through their own limited companies (PSCs) may fall outside the AWR if they are genuinely operating a business on their own account.

However, where the contractor works under supervision, direction and control, there is a risk they could be treated as an agency worker for AWR purposes.

This overlaps with key status tests used in IR35 assessments, particularly around control and integration.

In practice, each case depends on the specific working arrangement.

Factors include the level of supervision, contractual terms, and how integrated the contractor is within the client’s organisation.

Disputes may ultimately be decided by an employment tribunal.

Some professionals are also excluded from the AWR

Certain professionals, such as accountants and lawyers, are typically outside the scope of the AWR where they are not subject to supervision, direction or control.

This reflects the genuinely independent nature of their work.

In sectors where AWR considerations are more prominent, you’ll also find a range of contract opportunities — for example, health and safety freelance roles — where working arrangements and compliance requirements can vary significantly.

Recent development: Swedish derogation abolished

As of April 2020, the so-called Swedish derogation — which allowed agencies to employ workers on permanent contracts and avoid equal pay provisions — was abolished.

This means agency workers are now entitled to equal pay after 12 weeks, regardless of contractual arrangements.

You can read the impact assessment here.