Agency pay

Where an agency and hirer are held equally liable for infringing the right to equal pay under the Agency Worker Regulations 2010, the Court of Appeal has held in London Underground Ltd v Amissah and ors that it would only be just and equitable in “exceptional” circumstances for a tribunal to order a hirer to pay less than the amount apportioned to them for the breach.

Basic facts

Trainpeople.co.uk Ltd (TP) was an agency supplying temporary workers to London Underground Ltd (LUL). When the Agency Workers Regulations came into force in 2011, TP asserted and LUL accepted that the agency workers were not entitled to the same pay as directly employed workers because they fell within the so-called “Swedish derogation”. This provides that where agency workers have a permanent contract with the agency the right to claim equal pay with those directly employed with the hirer does not apply.

Subsequently LUL revisited the issue and decided the regulations did apply. As a result, it agreed with TP that it would pay equalised rates for the agency workers going forward.  LUL also paid TP an amount to cover the previous under-payment. TP paid the claimants the correct rates from mid-October 2012 until the termination of the agreement in January 2013, but not for the earlier underpayments. It went into involuntary liquidation in November 2013. The agency workers claimed a breach of regulation 5 and compensation.

Relevant law

Regulation 5 of the Agency Workers Regulations 2010 gives agency workers the right to the same basic working and employment conditions as directly employed staff.

Regulation 18(2) states that agency workers can complain to a tribunal that a right conferred on them by regulation 5 (among others) has been breached.

Regulation 18(9) states that when a tribunal orders compensation and there is more than one respondent (employer), the amount of compensation payable by each of them “shall be such as may be found by the tribunal to be just and equitable having regard to the extent of each respondent’s responsibility for the infringement to which the complaint relates”.

Tribunal and EAT decisions

The tribunal held that, although LUL was equally liable with TP for the breach of regulation 5, it would not be “just and equitable” to order LUL to compensate the claimants.  This was because the underpayments were not attributable to breach of regulation 5 but due to other factors.  Alternatively, if it was wrong about that, there were exceptional circumstances, namely that LUL had paid sums to TP more than they owed to the claimants and it would not be just and equitable to make LUL pay twice.

The claimants appealed to the EAT which allowed the appeal and remitted the case back to the tribunal to assess compensation based on what would have happened if the infringement had not occurred. LUL appealed the decision of the EAT.

Decision of Court of Appeal

The Court of Appeal held that the infringement was the failure to pay equal pay and having determined that LUL was equally liable for the infringement the losses should be assessed pound for pound the amount of the underpayment.  While it was possible to take into account events subsequent to the initial infringement the circumstances would have to be “exceptional”, for instance as a result of serious misconduct by the claimant.

The fact that TP had failed to pay the claimants when LUL had given them the funds to do so, did not break any connection with the original infringement. As it was LUL which had chosen to deal with TP, it should therefore be LUL, not the claimants, who bear the burden of TP's dishonesty.

It therefore ordered under regulation 18 (9) that LUL should pay 50 per cent of the compensation to which the claimants were entitled and remitted the issue of the assessment of compensation to the tribunal.