Agency rate of pay

The law states that agency workers are entitled to the same basic working conditions as employees after 12 weeks’ employment in the same job. In Kocur v Angard Staffing Solutions Ltd and Royal Mail Group Ltd, the Employment Appeal Tribunal (EAT) held that agency workers cannot be compensated for less holiday and/or a lower rate of pay for rest breaks with an enhanced hourly rate.

Basic facts

In June 2015, after having worked for 12 weeks as an agency worker for Royal Mail, Mr Kocur became entitled under section 5(1) of the Agency Worker Regulations (AWR) 2010 to the “same basic working and employment conditions” as if he had been recruited directly to the job by Royal Mail.

However, by October he noted a number of outstanding anomalies between his working conditions and those of the direct recruits. For instance, he was only paid for 30 minutes of a one-hour break while the direct recruits were paid for the whole hour; he only received 28 days’ holiday compared to 30.5 for the direct recruits; and he was not always given the same standard hours as the direct recruits.

The agency argued that he was compensated for any differences by an enhanced hourly rate of pay - £10.50 compared to £9.60 for direct recruits. 

Tribunal decision

The tribunal held that, although the regulations stipulated “the same” terms and conditions, this had to be read against the principle of equal treatment enshrined in the directive which stated that the basic conditions should be “at least” those of a direct recruit. 

As this principle allowed employers to make more generous provision in the terms and conditions of agency workers, the tribunal held that the agency and Royal Mail had discharged their obligations by providing Mr Kocur with an enhanced rate of hourly pay.

EAT decision

With regard to holiday entitlement, the EAT held that the AWR require a term-by-term approach (whereby each term applicable to the agency worker is “at least” that which applies to the employee) and not a package-based approach.

However, the regulations did not stipulate the mechanisms by which parity had to be achieved so an agency worker could be paid for their identical holiday entitlement by means of a lump sum at the end of the assignment, or by means of a higher hourly rate into which an amount for holiday pay was rolled-up. In other words, as long as the agency worker was paid at least the same as an employee in respect of the same holiday entitlement and provided the payment mechanism was transparent so that the agency worker could ascertain what aspect of pay related to holiday pay then, as per the case of CD Robinson-Steele v RD Retail Services Ltd, there would not be a breach.

Applying the same principle to rest breaks, the EAT held that, as Mr Koncur was only paid £5.25 for the break whereas his employed colleagues were paid £9.60, the fact that he was paid more for the whole shift could not offset the fact that he was paid significantly less for the one-hour rest break. Focusing on the overall pay for a shift diminished the scope of the statutory protection and would enable hirers to give with one hand (in the form of a slightly higher hourly rate) only to take away with the other (by e.g. not paying for all or part of a rest break).

The EAT rejected his claim, however, that he was also entitled to the same standard hours as a direct recruit. The EAT considered that equal treatment between an agency worker and a direct employee in respect of “duration of working time” did not relate to hours of work as this was not what was intended by the legislation and would produce an unworkable outcome for employers for whom flexibility was key.