The Swedish derogation 



Under regulation 10 of the AWRs, there is an exemption from the right to equal pay (but not the right to equal treatment on holidays and working time) for arrangements that meet certain qualifying requirements. The arrangements are known as “Swedish derogation” contracts because regulation 10 was introduced to accommodate working patterns peculiar to Sweden. 



For the Swedish derogation exemption to apply:



• the individual must have a contract of employment with the agency which is not fixed-term and which includes terms governing minimum pay rates, location, hours, maximum hours expected on an assignment, minimum guaranteed hours (which must be at least one hour), and type of work; 



• the individual must be paid between assignments, at least 50% of the pay received on the last assignment or the national minimum wage for the hours worked on the last assignment, whichever is greater; 



• the agency must try to find suitable assignments when between assignments; and



• the contract cannot be terminated until there has been an aggregate of at least four calendar weeks between assignments when the individual was not working but was being paid by the agency.



In 2013, an employment tribunal ruled that agencies and hirers are free to choose between paying equal pay under the AWR 10 or offering contracts based on the Swedish derogation model. Hirers that demand that agencies switch their established agency staff over to “Swedish derogation style” contracts as a condition of being given any future work assignments do not breach the AWRs, ruled the tribunal: 



The above ruling is not binding, but even so, adoption of Swedish derogation-style contracts has since been widespread. In September 2013, the TUC lodged a formal complaint with the European Commission about the UK’s failure to implement the Agency Workers Directive as a result of abuse of the Swedish derogation opt-out.