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Agency Workers: Higher Pay does not Offset Inferior Holiday Entitlement

The recent case of Kocur v Angard Staffing Solution Ltd concerned the equal treatment of an agency worker in relation to holiday pay and rest periods. It was confirmed that an agency worker’s inferior holiday entitlement and pay for rest breaks compared to a directly recruited employee of the hirer could not be offset because the agency worker received a higher hourly rate of pay.

Background

Under Regulation 5 of the Agency Worker Regulations 2010 (AWR), an agency worker who has undertaken the same role (whether on one or more assignments) with the same hirer for 12 continuous weeks is entitled to the same basic working and employment conditions as if they had been directly hired. The relevant terms and conditions to which an agency worker is entitled after completing the 12-week qualifying period includes terms relating to pay, duration of working time, annual leave and rest breaks.

In this case, Kocur was employed by Angard Staffing Solutions Limited (ASS Ltd) and was supplied to Royal Mail Group Limited (Royal Mail) under an agency arrangement. Kocur completed the 12-week qualifying period, meaning that he was entitled to the same basic working and employment conditions as directly recruited employees at Royal Mail under Regulation 5 of the AWR.

Kocur was unhappy with some of his terms and conditions which differed from those of permanent employees at Royal Mail. Kocur was entitled to 28 days’ annual leave, whereas permanent employees were entitled to 30.5 days and he was given a one-hour break on night shifts but was only paid for 30 minutes, whereas permanent employees were paid for the full hour.

Kocur brought an Employment Tribunal claim for breach of Regulation 5 in relation to his annual leave and rest break entitlements, amongst other things. The Employment Tribunal rejected his claims in relation to annual leave and rest breaks, confirming that although it was accepted that there was a disparity of treatment in relation to both, this was compensated for by Kocur’s higher hourly rate as he was paid £10.50 per hour, compared to £9.60 for directly recruited employees.

Decision

Kocur appealed to the Employment Appeal Tribunal (EAT) who allowed the appeal, confirming that Regulation 5 had been breached in relation to both the annual leave and the rest breaks.

In relation to the annual leave, the EAT confirmed that they were not in agreement with the earlier Tribunal’s assertion that because Kocur was paid more, he was compensated for the reduced annual leave entitlement. The earlier Tribunal had held that if Kocur had wanted to, he could have chosen to not work on 2.5 days of the year (representing the difference in annual leave entitlement) which would have resulted in overall equivalent treatment. The EAT, however, rejected this argument confirming that a voluntary allocation of leave by the worker is not the same as an “entitlement” under Regulation 5. They held that the Regulations require a term-by-term approach and there is nothing in the legislation which enables a hirer to offset a failure to meet one specific entitlement by enhancing the benefit of a separate entitlement.  

In relation to the rest breaks, the EAT confirmed that the failure to pay Kocur for the full hour meant that he was paid just over half of what comparable permanent employees were paid. They confirmed that the fact that Kocur was paid a higher rate throughout the whole day was not enough to satisfy Regulation 5. In order to meet the requirement for overall equivalent treatment, the EAT held that if any payment for rest periods was to be rolled into hourly pay, this arrangement would have to be transparent and clearly carried out in a way which ensured the agency worker received the same pay for their rest break as permanent employees.

Comment

This case provides important clarification on the implementation of Regulation 5 of the AWR. In particular, it is clear that just because an agency worker may benefit from a higher hourly rate of pay, this does not mean that this can be offset against the failure to confer another specific entitlement in order to “balance out” any disparity in treatment. The EAT made it clear that the Regulations require a term-by-term approach and that each term and condition under Regulation 5 for an agency worker who has completed the 12-week qualifying period should match those of a direct employee or worker.

Interestingly, the EAT did not rule out a situation where an agency worker in similar circumstances received the 30.5 days annual leave but was only paid for 28 days of annual leave because of their higher rate of pay. As the Regulations don’t guide employers on how an agency worker should receive equal treatment, this would be permitted in principle, as long as the arrangements were transparent, the agency worker could ascertain what aspect of his pay related to annual leave and the result was that the agency worker is paid at least the same as direct employees in respect of annual leave.