Agency Workers Regulations – which contractors are affected?

The Agency Workers Regulations ("AWR") become legislation on 1 October 2011.
The legislation will give temporary agency workers the same basic rights, after 12 weeks in the same assignment, as those on a comparable permanent contract at the same place of employment.

After the initial qualifying period of 12 weeks, equal treatment will cover pay and working conditions, including overtime, breaks, rest periods and public holidays. Agency workers who have completed this qualifying period will be able to request information on the terms and conditions that are in place for similar employees at the workplace from their agency.

The definition of "agency worker" is anyone who finds temporary work through an agency - it's therefore very broad in terms who might be within the scope of the legislation.

Guidance issued on the AWR says both umbrella and personal service companies are covered by the Regulations; although guidance says that limited company contractors are not automatically exempt, it does however clarify that those who are "genuinely self-employed" will not be covered.

As Umbrella company workers will be within the scope, some service providers are adopting what's called the 'Swedish Derogation Model' to meet the requirements of the Agency Workers Regulations, which essentially means that all contractors working for such Umbrella companies work under a contract of employment and be receiving a salary, even between assignments.