The Swedish derogation
It may sound like a chapter from a dry history book but the “Swedish” derogation caused some interest at Congress today. Reference was made to it in an Emergency Motion from Unite, who are concerned about its impact on agency workers, and indeed other workers, in the UK. So what is it?
Essentially it as an option written into the EU Temporary Agency Work Directive that allows member States to insert a provision into their transposing legislation that says that where an agency worker is directly employed by an agency they are not protected by the equal treatment provisions in the Directive. The UK Regulations, which come into force in October, make use of the “Swedish” derogation.
To illustrate the effect by example, Jo has been signed up to the Slog Agency and they place her with various local companies where she works as a temporary receptionist. From October, when the Agency Work Regulations come into force, the companies where she goes to work would be obliged to give her the same rates of pay as their permanent receptionists after she has been there for 12 weeks. However, using the “Swedish” derogation, Slog takes her onto their books as an employee. In other words she has become an employee of Slog with a contract of employment – she is no longer an agency worker strictly speaking, even though she works for an agency. Slog is now solely responsible for paying her, setting her working hours and so on.
Although this gives Jo the basic employment protection to which employees (as opposed to agency workers) are entitled – for example better maternity rights, the right to claim unfair dismissal (after a year – soon going up to two years if the Government gets its way) and so on, it means that when Slog sends her to an assignment with another company she can legally be paid less than someone directly employed by the that company, thus potentially undercutting agreed rates of pay in that workplace.
The other problem with the “Swedish” derogation is that the UK regulations have stretched the provisions of the Directive to the extent that an agency can employ an agency worker and only give them a minimal amount of paid work for a week, but because they are an employee of the agency they have to be available to take work when it comes in. This means that they could end up earning very little in a bad week.
Unite’s motion asks the TUC to explore the potential for a legal challenge to the UK Regulations, which the TUC will now do. Unite has observed a significant recent increase in the use of the “Swedish” derogation and is concerned that it is being used to avoid the equal treatment provisions that underpin the Directive.
I started with history and I will end with more of it. It took several years to persuade the former Government to stop blocking the Agency Worker Directive in Brussels. What eventually emerged was a unique legal formulation based on a UK Social Partner (TUC, CBI and Government) agreement. The “Swedish” derogation was not wanted by the TUC but was one of the concessions that had to be made in order to get a Directive at all. Although the TUC did get a caveat inserted into the “Swedish” derogation, it was rendered feeble by the transposition. It is on that point that the Congress has now asked the TUC to take action. Of course this would have to be done with a close eye on any risks and unintended consequences but external advice will be sought and the General Council will take a decision based on that advice.