The claimant worked for the first respondent, an employment agency supplying temporary workers to the second respondent. He was paid at an hourly rate of £10.50 for an eight-hour shift with a one hour rest break for which he was paid for 30 minutes. Directly recruited workers were paid at the lesser rate of £9.60 an hour but were paid for the whole of the rest break. His annual leave entitlement was 28 days compared with the direct recruits’ annual leave of 30.5 days. He complained to an employment tribunal of a breach of his rights as an agency worker, under regulation 5(1) of the Agency Workers Regulations 2010, to the same basic employment and working conditions for doing the same job as a direct recruit. An employment tribunal dismissed his claim, deciding that rolling up within the hourly rate of an agency worker’s pay a sum which created a parity of remuneration for rest breaks was a permissible way of discharging the obligations under regulation 5 and that the disparity of 2.5 days in annual leave and 30 minutes in rest break pay was also compensated for by the enhanced hourly rate of pay. It found that the agency required its employees to take holiday during the year to comply with the Working Time Regulations and avoid the risk that the employee would not take leave which was for health and safety benefits. It rejected the claim that including an enhanced hourly rate of pay to compensate for rest breaks was a different way of remunerating agency workers compared with direct recruits and was a breach of the agency worker’s right to the same working and employment conditions under regulations 5 and 6. The tribunal also rejected the claim that, under article 5 of Council Directive 2008/104/EC on temporary agency work, the requirement for equal treatment for agency workers “for the duration of their assignment” meant that the claimant was entitled to exactly the same number of working hours as a person directly employed by the second respondent.
On an appeal by the claimant—
Held, appeal allowed in part. (1) The Agency Workers Regulations 2010 were the domestic implementation of Council Directive 2008/104/EC which was intended to achieve a balance between the flexibility afforded to employers and workers by agency working and the protections needed to provide temporary agency workers security. Entitlement to “the same” working conditions as a person directly recruited, in accordance with regulation 5(1) of the Regulations, having regard to article 5 of the Directive, should be interpreted as meaning that conditions of temporary agency workers should be “at least” those of direct recruits. Such a construction provided for a minimum level, but did not impose a ceiling on, entitlement. A term relating to annual leave was a “relevant” term under regulation 6 and had to be at least equivalent to the amount of leave to which direct recruits were entitled and the employment tribunal was wrong to conclude that a system of voluntary allocation of leave meant that the claimant would have the same leave as an employee recruited directly or that a failure to provide the 2.5 days additional leave was compensated for by an enhanced hourly rate, there being nothing in either the Directive or the Regulations which would enable an agency or direct employer to offset a failure to confer a specific entitlement such as leave with a higher rate of pay. While a term-by-term was required by the Regulations, the mechanism by which parity was achieved need not be identical and methods of payment for holiday entitlement might differ between agency workers and direct recruits, provided that the payment mechanism was transparent and the agency worker could ascertain what aspects of his pay related to annual leave. However, the payment said to compensate for the reduced leave was neither transparent nor readily comprehensible, as it was not clear how the enhanced rate compensated for the shortfall in leave and no calculation had been done to establish whether the enhanced hourly rate in fact amounted to 2.5 days pay. Similarly, in the case of rest breaks, while the duration of the rest break was the same, there was a difference in pay which was one of substance rather than method. Accordingly, the claimant succeeded in his claim of a breach of regulation 5(1) (paras 11, 17, 18, 22, 23, 27, 31, 38).
(2) However, the claimant had failed to identify any specific infringement in respect of hours worked in comparison with a direct recruit and the phrase in regulation 6(1)(b) of the 2010 Regulations “the duration of working time” was not to be construed as meaning entitlement to the same working hours as a direct recruit but rather that the agency worker’s working time for a specific task should not exceed that which applied to direct recruits (para 44).
Per curiam. The Department for Business, Innovation and Skills’ Guidance (which is not in any sense binding) suggests that payment in lieu is permissible in respect of any leave in excess of the statutory minimum. The Regulations are intended to confer an entitlement on agency workers which is based not on Working Time Regulations minima but on that to which employees of the hirer would ordinarily be entitled . It would undermine that entitlement if employers or agencies could simply make a payment in lieu irrespective of whether such a payment could be made to employees (para 24).
Nathaniel Caiden (instructed by the Free Representation Unit) for the claimant.
Simon Gorton QC (instructed by Weightmans llp, Liverpool) for the respondents.