Employment regulations and AWR?
I get confused between Employment regulations and AWR (Agency workers directive). What are the key points about the Employment regulations and why do agencies want me to opt out? Should I opt out? Is this the same set of rights I may be entitled to under AWR?
The term ‘Employment Regulations’ is short for ‘Conduct of Employment Agencies and Employment Businesses Regulations’ which came into effect in April 2004. Their purpose is to protect temporary workers and those who hire them from exploitation through a set of minimum standards of conduct for commercial recruitment and employment agencies. The regulations cover a wide range of issues designed to protect all agency workers, including Limited Company contractors, working through a recruitment agency. Additionally, the regulations mean that all intermediaries supplying personnel are obliged to collect increased amounts of detailed information about the people they are placing with companies, such as proof of entitlement to work in the UK, references, or CRB checks on behalf of their clients.
A Limited Company contractor has the choice to accept the protection offered by the Regulations or to ‘Opt Out’. The downsides to opting out include losing protection from not being paid if the agency doesn’t get paid by the client, and the agency being free to introduce more onerous restrictive covenants than they would otherwise be able to. Many agencies will request that you sign an Opt Out agreement for exactly those reasons!
There is a school of thought that not Opting Out points toward you being under the control of the end client, and therefore subject to IR35. As IR35 is decided on the working conditions between you and the end client, this is not a deciding factor at all. If you have a strong working relationship that covers the main factors of Substitution, Control or lack of Mutuality of Obligation then remaining subject to the Employment Regulations will not suddenly turn you into a disguised employee.
AWR is short for the Agency Workers Regulation which is an EU directive which came into effect in October 2011. AWR relates to the rights of Agency Workers and persons employed in a company through intermediaries. It provides that all temporary workers receive the same standard employment conditions as permanent employees, such as basic pay and holiday pay, on completion of twelve weeks continuous employment.
AWR does not apply to Limited Company contractors who work through their own PSC provided they are outside of IR35 and genuinely in business on their own account.
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