You will find plenty of initialisms in the world of contracting: we’ve already looked at SDC, now let’s turn to AWR. If you are affected by the off-payroll reforms, and are considering alternatives such as Umbrella employment, then it’s helpful to understand AWR.
AWR is the Agency Worker Regulations and they’re the rules which ensure fairness for anyone who works through an employment agency.
An agency worker is defined as someone who has a contract with a temporary work gency but works temporarily for a hirer. In a nutshell, if you receive pay from your end hirer via agency payroll or an intermediary such as an Umbrella company, not from your hirer directly, then you’re an agency worker and therefore protected by the AWR rules.
The AWR aims to combat the discrimination of agency workers to the extent they are no less favourably treated than their full time or directly hired counterparts, i.e. somebody hired by the end client and doing broadly the same job as the agency worker.
The AWR defines two ‘models’ of operating:
1. Pay parity (Regulation 5)
Under this model, after 12 weeks on an assignment, the agency worker is entitled to pay parity when compared with any directly hired counterparts, and the agency worker’s pay for the purpose of this calculation is the value they receive after the party that pays them deducts any of its costs.
Under this model, after 12 weeks on an assignment, the agency worker is entitled to pay parity when compared with any directly hired counterparts, and the agency worker’s pay for the purpose of this calculation is the value they receive after the party that pays them deducts any of its costs.
2. Swedish Derogation (Regulation 10)
Under this model, the worker forfeits their right to equal pay after 12 weeks but instead, must receive a payment between assignments from their employer. So, if the worker is available to work but not offered any, the employer must pay a value that is equal to or more than NMW or 50% of the worker’s highest paying week over the past 12 weeks (whichever is greater).
Under this model, the worker forfeits their right to equal pay after 12 weeks but instead, must receive a payment between assignments from their employer. So, if the worker is available to work but not offered any, the employer must pay a value that is equal to or more than NMW or 50% of the worker’s highest paying week over the past 12 weeks (whichever is greater).
Under both models, the worker is entitled to ‘day 1’ rights, such as access to certain facilities and amenities, and it is likely that the Swedish Derogation model will be repealed next year.
AWR and the off-payroll rules
If you currently work through your own limited company/PSC but anticipate changing as a result of the reforms to off-payroll legislation, then AWR may become applicable to you, particularly if you join an Umbrella company.
We provide Umbrella employment via our FCSA-accredited parent company, JSA Services Limited. JSA is one of the UK’s biggest umbrella and accountancy services providers, serving thousands of contractors and recruitment agencies across the country.
Whilst it’s likely that Umbrella working will require you to pay more tax (as you’re subject to PAYE tax rules when working this way), it does come with certain benefits, and AWR is one of them.
Umbrella working – your rights
From the moment you start work through an Umbrella company, you have worker’s employment rights such as access to collective facilities and amenities such as the canteen, transport services and childcare facilities. After a 12 week qualifying period, you have the right to equal pay (the same pay as a permanent colleague doing the same job), automatic pension enrolment and paid annual leave.
Find out more
If you would like more information about AWR and how it affects a role you are in or are considering taking, please get in touch with a member of our team. We are also able to offer expert advice and guidance to employment agencies on all aspects of AWR.