Time to review contracts before end to Swedish derogation

To the untrained ear, “Swedish derogation” might sound like a group of Scandinavian heavies wielding baseball bats to force a solution to Brexit. But it’s a term which recruiters will be more than familiar.

Under the Agency Workers Regulations (AWR) 2010, agency workers who have been on assignment for 12 weeks must receive equal pay and conditions to permanent staff doing the same job. The “Swedish derogation” contract gets around this where pay is concerned.

What is Swedish derogation?

Derogation means an exemption from the rules (ok, we had to google that!)

When the agency workers directive was discussed in the EU, a clause was added at the request of the Swedish government, meaning that workers on a Swedish derogation contract are employed by the recruitment agency directly and have a “pay between assignments” provision which removes the right to equal pay after 12 weeks.

In 2017, the Taylor Review of Modern Working Practices recommended that the Swedish Derogation clause be abolished, following criticism that it exploits temporary workers and denies them the “going rate” of the job they are doing.

In response to the Taylor review, the government published their Good Work Plan in December 2018, in which they described Swedish derogation as a “legal loophole”.

Legislation has since been passed to abolish the practice from 6th April 2020

With an estimated 120,000 workers affected, recruitment agencies are being urged to review their contracts and processes before Swedish derogation becomes unlawful.

Julia Kermode, Chief Executive of the FCSA explains:

“The Swedish derogation stipulated three things for the worker; finding them work, offering them work and ultimately, paying them between assignments if they can’t find them work.

These three elements are going to make it difficult for contractors to be terminated legally by April next year, so the key message is that agencies and their clients should start to look at how they terminate those contracts now, because the details will be more complex than they expect.”

How to comply

Recruiters who are supplying workers to third party clients under Swedish derogation contracts need to review their terms and conditions to ensure they are complying with the AWR 2010 (as amended), in particular ensuring that after 12 weeks on assignment, workers earn the same basic pay as permanent staff.

This means obtaining the comparator role information from the end client and implementing it, ahead of the 12 week qualifying period.

Failure to comply means that the recruitment agency and hirer can be liable for breaching the worker’s rights under AWR.

Workers must be informed in writing of any changes to their terms and conditions.

How we can help

Agencies

Agencies with Swedish derogation workers on their books must find an alternative by April 2020.

Liquid Friday and our business partners are experts in the employment, administration and deployment of flexible workers throughout the UK.

We currently engage over 4500 contractors across 400 agencies and employment businesses.

We are accredited members of the Freelancer and Contractor Services Association (FCSA), meaning we operate at the highest industry standards for the benefit and protection of the agencies and contractors who work with us.

Contractors

If you are a contractor and think you might be on a Swedish derogation contract of employment, we would be happy to review it for you and give you impartial advice.

Just give the Liquid Friday team a call on 0800 316 6030 or click on the link below to get in touch.