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Agency Worker Regulations: Consequences of Non-compliance

The Agency Worker Regulations 2010 (AWR) are designed to protect the rights of agency workers. They ensure that agency workers are entitled to the same basic employment and working conditions as comparable permanent employees of the hirer.

The AWR cover a wide range of terms and conditions, including pay, holiday pay, sick pay, pension rights, and access to collective facilities and amenities.

Catch up on our AWR series here

Legal Consequences for non-compliance with the AWR. 

These can include:

  • Financial penalties: Both the agency and the hirer can be fined up to £5,000 for each breach of the AWR. The amount of the fine will depend on the severity of the breach and the circumstances. For example, a repeated failure to pay agency workers the same rate of pay as comparable permanent employees could result in a higher fine. Fines are calculated on a per-violation, per-worker basis, and stack up fast.
  • Employment tribunal claims: Agency workers who have been denied their rights under the AWR can bring an employment tribunal claim. If they are successful, they may be awarded compensation, including back pay and interest. The amount of compensation will depend on the individual’s circumstances, but it could be substantial. For example, an agency worker who is denied holiday pay for a year could be awarded several thousand pounds in compensation.

Business Consequences. 

  • Increased staff turnover: Agency workers who are not treated fairly are more likely to leave their assignments early. This can lead to disruption to the hirer’s business and the need to recruit and train new staff. For example, if an agency worker is not paid the same rate of pay as comparable permanent employees, they may be more likely to leave their assignment and find a new job with a better-paying employer.
  • Damage to reputation: Non-compliance with the AWR can damage the reputation of an agency or hirer. This could lead to a loss of business and a decrease in customer confidence. For example, if an agency is found to be in breach of the AWR, it could be named and shamed in the media; HMRC currently uses this method (notably for tax avoidance schemes) as a major deterrent and publishes lists online. This could have a significant impact on the agency’s business.
  • Reduced productivity: Agency workers who are not treated fairly may be less motivated and productive. This can impact the hirer’s bottom line. For example, if an agency worker is not given the same access to training and development opportunities as comparable permanent employees, they may be less productive.

Our Conclusion

Agencies, Umbrellas, and Hirers need to understand their obligations under the AWR. There are a number of resources available to help, including our series on AWR, the government’s guidance on the AWR. The FCSA is also committed to helping its members comply with the AWR; our stringent accreditation process ensures best practice for Umbrellas.

If you are an agency or hirer, we urge you to ensure that you are compliant with the AWR. By doing so, you can protect your business and avoid the potential consequences of non-compliance. One of the best ways to do this is to use an FCSA Accredited member as your Umbrella.