The ‘Swedish Derogation’ which has been used by employers to exploit agency workers ends today. Employers will no longer be able to pay long-term agency workers less than their colleagues. It is estimated that around 120,000 workers are currently affected by the misuse of the rules.
In another win for workers below is a statement issued today by the TUC explaining why unions campaigned against the misuse of the ‘derogation’ and what agency workers are now entitled to.
Ten years ago, legislation was introduced to ensure that agency workers received the same pay as those they worked alongside.
But a loophole in that law known as the ‘Swedish Derogation’ meant that a significant number of agency workers were paid much less than directly employed staff for doing the exact same work.
Unions campaigned to abolish this loophole ever since it became clear.
Their dogged opposition to ‘Swedish Derogation’ contracts means that many agency workers will now get paid the going rate for the job.
Why is this important?
Previous TUC research has shown that there are many agency workers trapped in long term agency assignments, many of them working under ‘Swedish Derogation’ contracts.
More than 420,000 agency workers have been in their jobs for more than a year, and shockingly, over 120,000 have worked for an agency for over five years.
Agency workers employed under the Swedish Derogation suffer a significant pay penalty. The TUC has evidence of workers earning up to £4 less per hour than directly employed staff even though they do the same work.
But now thanks to union campaigning, many agency workers should receive a pay rise.
Quickfire questions
What is a PBA/Swedish Derogation contract?
PBA or ‘Swedish Derogation’ contracts are contracts of employment. Provisions previously meant that you could be paid between assignments, instead of receiving equal pay after 12 weeks of working for the same client in the same role.
Why is the new legislation good for agency workers?
The new legislation will abolish the Swedish Derogation, which gave employers the ability to pay agency workers less than their own workers in certain circumstances. It will be unlawful if you don’t receive equal pay after the 12 weeks qualifying period if you are on a PBA contract.
What happens for agency workers already on PBA/Swedish Derogation contracts?
If you are on a PBA contract, you must receive written confirmation from your recruitment agency confirming your right to equal pay by 30 April 2020.
What is the effect on an agency worker’s pay?
If you don’t receive equal pay after a 12-week qualifying period you may be able to bring a claim to an employment tribunal and claim compensation. In addition, you should not be unfairly dismissed or subject to a detriment when you exercise your right to receive equal pay.
Where can I go for further information?
If you’re in a union please speak to your union rep. The TUC has published this fact sheet to give you an overview of your new and existing rights as an agency worker.
CTUF comment: The UK ‘loophole’ was based on the clear exploitation of a Swedish collective agreement.
In Sweden agency workers are covered by a national collective agreement between the government, employers and the unions.
The derogation in Sweden allowed recruitment agencies to employ workers on a permanent basis, whilst guaranteeing they will be paid between assignments.
In Sweden agency employees on permanent contracts are guaranteed up to 90% of their salary when not working between assignments. This was never the case in the UK.
Unions in the UK fought against the introduction of the derogation with agency and permanent workers threatening to take industrial action when employers tried to drive through changes to contracts.
