Manpower in firing line as CWU steps up campaign

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Special report: Manpower in firing line as CWU steps up campaign against Swedish Derogation

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Controversy over the Agency Workers Regulations (AWR) has reignited with the Communications Workers Union (CWU) accusing Manpower of cynically exploiting a “legal loophole” in the regulations to avoid paying more than 1,000 call centre workers the same as their agency colleagues.

The union today [Wednesday 16 January] will stage a series of protests around the country at BT call centres to highlight the use of pay between assignment contracts (PBA) often referred to as the Swedish Derogation Model). While the CWU accepts these are not illegal, it claims they are “immoral” and against “the spirit of AWR”. A Manpower spokesperson tells Recruiter: “We have no comment to make.”

However, recruitment industry experts have hit back against the CWU’s claims, defending the use of PBA contracts as perfectly legitimate, beneficial to agency workers, and something that the unions signed up to.

AWR was introduced in October 2011 with the intention of equalising pay and conditions between temporary agency workers and permanent employees after a 12-week qualifying period. However, the CWU claims that more than 1,000 temporary agency workers working for Manpower at BT call centres are up to £584 a month worse off than other Manpower agency workers, working in the same BT call centres, who qualify for equal pay under AWR.

The union alleges that since the introduction of AWR, new agency workers employed by Manpower are being asked to sign PBA (or Swedish Derogation) contracts, without realising it would result in lower pay. Under these contracts, in return for accepting up to four weeks of 50% of normal pay between assignments, an agency worker gives up the right to equal pay with permanent workers if their contract lasts for more than 12 weeks.

Among the cases highlighted by the CWU are a BT call centre in Dundee, where PBA contract workers are paid £6.25 an hour as against £8.37 an hour for those who qualify for equal pay under AWR, and a BT call centre in Nottingham, where the PBA rate is £6.80 an hour against £9.85 an hour for AWR-qualified workers.

Manpower declined to comment to Recruiter’s questions. However, in a statement BT tells Recruiter: “Whilst it’s inappropriate for BT to comment on the status of employment contracts between agency people and their employer, BT is fully aligned with the Agency Workers Regulations where Pay Between Assignment contracts exist, and acts in accordance with the law.”

A spokesperson for the CWU tells Recruiter: “It is not illegal to use these contracts, but we don’t think it is morally right, and we think that hirers and agencies should be operating within the spirit of AWR.

“We think this is a cynical use of the Swedish Derogation, and that it is being used to prevent normally low-paid agency workers from receiving equal pay.”

Sally Bridge, assistant secretary at CWU, says Manpower and BT are part of “an increasing trend in the UK for agencies and employers to exploit the legislation” with the use of PBA contracts widespread in catering, manufacturing and driving, and wherever agency workers are widely used. High profile employers known to have adopted the Swedish Derogation include Tesco and Morrisons.

The CWU spokesperson adds that the use of the Swedish Derogation has “absolutely exploded”. In April last year, a survey by law firm Eversheds found that 17% of employers had opted for the Swedish Derogation.

And in May a CBI/Harvey Nash survey revealed that 27% of employers changed their model of temporary labour use to including to the Swedish Derogation.

The CWU spokesperson goes on to argue that the use of PBA contracts for low-paid workers is at variance with how its use was envisaged during negotiations over AWR, when she claims the ability to pay workers between assignments was seen as allowing staffing companies to retain highly skilled workers.

However, Tom Hadley, director of policy & professional services at the Recruitment & Employment Confederation (REC), who was involved in negotiations with the trade unions before the introduction of AWR, tells Recruiter that the Swedish Derogation was “not something snuck in during the negotiations” between unions, the industry and government.

“The reality is that the Pay Between Assignment model is not a ‘loophole’ – it is a legitimate part of the legislation that was agreed after significant consultation by the government with recruiters, employers and unions.

“Workers who sign PBA contracts should always be aware of what they are signing for,” he argues, “and understand that there is a trade off between greater security and potentially lower rates of pay.

“Signing the contract makes the worker an employee of the recruitment agency, means the individual gets the security of a full employment contract and all the benefits that incurs like protection from unfair dismissal and entitlement to statutory redundancy pay. The agency has to pay them even when they are not actually working on an assignment, hence the name ‘Pay Between Assignment’ contract.”

The CWU spokesperson says it wants the government to look at the use of PBA contracts again. However, Hadley says there is “no immediate prospect” of the government changing it mind on, though he points out it has always promised to take a fresh look at AWR at the end of the year.

Andy Hogarth, chairman and chief executive of staffing provider Staffline, tells Recruiter: “The Swedish Derogation is not exploitation, it is not a loophole, it the law, and it is something that the Labour government always expected to be used.” Hogarth adds that he sees no prospect of the Swedish Derogation being removed from the legislation. And Hogarth refutes suggestions by the CWU that there has been an explosion in the use of PBA contracts. “That is an exaggeration,” he says.

Kevin Barrow, a partner at law firm Osborne Clarke, who represents staffing companies, tells Recruiter that the use of PBA contracts is perfectly legal, and something that the trade unions signed up to.

As to whether agencies who employ staff on these contracts are breaking the spirit of the law, Barrow says “they [the trade unions] have decided to interpret the spirit of the law in this way”. He adds: “The quid pro quo for workers who qualify for equal pay is that they don’t get paid between assignments.”