Retail Bulletin - January 2010

Temporary workers

Retailers enjoy the flexibility of being able to take on and then shed temporary workers as demand fluctuates, particularly over the Christmas/New Year period. However, the latest developments on agency workers' rights have placed the spotlight on working conditions for temporary workers and the role of temporary workers in the UK labour market, under increased scrutiny.

We set out below the potential hazards of temporary workers and what legislative changes are planned which will significantly affect how you hire temporary workers.

Employment status

One of the key benefits of temporary workers for retail organisations is that they have the flexibility to terminate the temporary worker without being liable for unfair dismissal or redundancy pay as they are not considered an employee of the company. However, in certain circumstances, agency workers have successfully claimed they were employees of an end user company (rather than the agency) and you therefore need to minimise the risk that your temporary workers seek to make employment status claims.

Whilst it is desirable for organisations to make a temporary worker feel part of the team, it is important not to blur the boundary surrounding the question of who employs the temporary worker. To minimise the risk of a contract of employment being implied:

• Minimise integration into the workforce: for example, do not give temporary workers management or supervisory roles, exercise caution with any training and do not involve them in employee events such as team-building exercises and company social events.
• Ensure that all paperwork relating to agency workers reflects that they are an employee of the agency. Use an organised employment business and on a day-to-day basis, reduce control of agency workers (temps) and, do not appraise or discipline them; pass dealings with the agency worker through the employment business.
• Seek an indemnity from the employment business in respect of claims based on employment status.
• Seek a warranty from the employment business about the temporary worker's employment status.

Temporary workers' rights

Temporary workers who are ‘employees' enjoy the same statutory employment rights as their permanent counterparts in the same employment.

However, every temporary worker (whether an employee or otherwise):

• Has the right not to be discriminated against on grounds of sex, race, colour, pregnancy, sexual orientation, religion or belief, age or disability.
• Is entitled to annual leave and the same rest breaks and restrictions on their working hours as apply to other workers under the Working Time Regulations 1998.
• Has the right to be paid the appropriate National Minimum Wage.
• Has the right not to be subjected to any detriment (including dismissal) for making a protected disclosure.
• Will be a “data subject” under the Data Protection Act 1998, and so will be entitled to the same protection as employees and workers.
• Has the right to be accompanied at disciplinary and grievance hearings. A temporary worker is not necessarily entitled to a disciplinary or grievance hearing, but if a hearing is held in respect of a temporary worker, the right is applicable.

Businesses using temporary workers must also ensure they have the same level of health and safety protection as permanent employees. Temporary workers should receive appropriate information, instruction and training on any health and safety risks associated with the work they have been hired to do.

Future law developments

Temporary Workers Agency Directive

The UK government has until 5 December 2011 to implement this Directive. The main provisions of the Directive is that after 12 weeks of working with an organisation, the temporary worker will be entitled to equal treatment, including with regards to pay, as a comparable permanent worker.

The Directive has attracted controversy from UK business groups who are concerned the law will damage the temping industry, as the very essence of agency work relies on hiring staff according to peak and trough demands. Employers have also argued that the Directive would be hard to implement because it is hard to define a temporary worker's role or compare them with permanent employees. The Directive is meant to protect and be beneficial to temporary workers, however, the increased costs and administrative burden that is likely to result in a reduction in demand for their services.

Paid leave

Harriet Harman has confirmed that she will consider proposals to extend the right of employees to claim paid leave when they care for sick relatives to temporary workers in a Green Paper expected in January 2010. This proposal would arguably be counter-productive to the employment of temporary workers, for example, it could lead to the situation where an employer needs to hire a temporary worker to cover an existing temporary worker who is on paid leave to care for children or the elderly.

It is clear that the law surrounding temporary workers is subject to change in the very near future and we recommend that you keep abreast of these developments. We would be happy to advise accordingly.