The Agency Workers Regulations 2010 (AWR), which implement the EU Agency Workers Directive, came into force on 1 October 2011. Under Regulation 5 of the AWR, agency workers have the right to the same basic terms and conditions of employment as if they had been recruited directly by the hirer, once they have completed a qualifying period of 12 calendar weeks in a particular job. This includes equality with regard to pay, duration of working time, night work, rest periods, rest breaks and annual leave.



However, Regulation 10 of the AWR provides that Regulation 5 does not apply to an agency worker who has a permanent contract of employment with a temporary work agency, provided certain requirements are met. These include that:

• the contract of employment was entered into before the beginning of the first assignment under that contract;
• the contract of employment contains a statement that the effect of entering into it is that the employee gives up any entitlement to the rights conferred by Regulation 5 in relation to pay;
• the agency takes reasonable steps to seek suitable work for the worker and puts forward the worker for suitable work placements;
• the agency does not terminate the contract of employment until it has complied with its obligations with regard to finding suitable work for at least four calendar weeks between assignments.

This exception is referred to as the ‘Swedish derogation’, so named because the Swedish Government insisted that it be included in the Agency Workers Directive. Such contracts, often referred to as ‘pay between assignment’ (PBA) contracts, have often been criticised as allowing employers to circumvent the equal treatment provision of the AWR with regard to pay. They do, however, provide that agency workers are the employees of the recruitment agency, and are thus able to acquire the employment protection rights that entails.



In Bray and Others v Monarch Personnel Refuelling, the Employment Tribunal (ET) held that new PBA contracts issued after the introduction of the AWR to a group of tanker drivers supplied by Monarch Personnel Refuelling to carry out deliveries for BP Oil (UK) Limited were legitimate, even though the drivers had all worked for BP on a number of assignments for several years. BP had instructed the agency to employ the drivers under Regulation 10 in order to maintain a pay differential that existed between their remuneration and that of drivers employed directly by the company.



The ET found that the meaning of ‘first assignment’ in Regulation 10 does not necessarily refer to the very beginning of the working relationship. It could mean the first assignment under the new contract of employment.



This is one of the first cases to look at how the ‘Swedish derogation’ should work in practice. As it was at ET level, it is not binding and the situation could change.