Even though many IT contractors are ‘agency workers’, in the loosest definition of the term, the vast majority stood to gain little from the introduction of the Agency Workers Regulations (AWR). The truth is, whilst everyone would applaud the aim of protecting low paid and vulnerable workers, it was clear from the start that the regulations would disproportionately hit well-paid contractors and the recruitment industry. And so they did.It was not surprising, therefore, that the industry found a loophole, the so-called Swedish Derogation, that in essence allows contractors and recruiters to side-step AWR. So, why is the Trades Union Congress (TUC), which signed up to implementing AWR with the Swedish Derogation, now complaining that many umbrella company contractors, umbrella service providers and agencies have found ways to mitigate AWR’s negative impact? There are two ways for you to get around AWR. Either your agency/umbrella matches your rights to those of permanent workers in similar roles after 12 weeks. Or, your agency or umbrella implements a Swedish Derogation contract, which means that you get paid between assignments. These are also known as ‘pay between assignments’ (PBA) contracts.Considering the TUC agreed to the Swedish Derogation during negotiations in 2008 with the then Labour government and fellow ‘social partner’ the Confederation of British Industry (CBI), its decision to complain to the European Commission smacks of sour grapes.
Not surprisingly, others feel the same. In her response, the CBI’s chief policy director Katja Hall says: “The TUC appears to have conveniently forgotten that it signed up to the Swedish derogation as part of the deal that brought in the Agency Workers Directive”.Recruitment and Employment Confederation (REC) head of policy Kate Shoesmith agrees: “It is wholly misleading of the TUC to describe … Swedish Derogation contracts as a loophole as they are part of the Agency Workers Regulations (AWR) that were assembled following consultation with the unions. ”The Association of Professional Staffing Companies’ (APSCo) head of external affairs Sam Hurley notes: “The TUC actually agreed to [this] and so I am surprised that they are now complaining about it.”And finally, just in case you were in any doubt about the sentiment of the recruitment sector over the TUC’s u-turn, the chairman of the Association of Recruitment Consultancies (ARC) Adrian Marlowe is decidedly unimpressed. “It is not now appropriate for the TUC as a consenting ‘social partner’ to complain to the EU to try to undo what is a legally binding arrangement,” he says.Despite the TUC’s attempt to manipulate the media and public opinion in advance of the party conference season, this bears watching.
The Swedish Derogation has without doubt kept many IT contractors, and possibly you, in contract, because the alternative was for clients simply to stop using contractors.If the TUC were to be successful in its attempt to remove the Swedish Derogation from the legislation, then matched permanent pay might be your umbrella company’s, your recruiter’s and your client’s only option. And that might mean never working on a contract for more than 11 weeks and four days again.Limited company contractors, of course, remain unaffected. If you are thinking of becoming one, then if your gross fee income is in excess of around £30,000 a year it might well be worth you switching. I would be delighted to advise you on what’s best for your contracting career.