The Swedish derogation

Under regulation 10 of the AWRs, there is an exemption from the right to equal pay (but not from the right to equal treatment on holidays and working time) for arrangements that meet certain qualifying requirements, known as the “Swedish derogation”. For this 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 the 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 decide between paying equal pay under the AWR 10 or offering contracts based on the Swedish derogation model:

In September 2013, the TUC lodged a formal complaint with the European Commission about the UK’s failure to implement the Agency Workers Directive due to widespread adoption by employers of Swedish derogation-style contracts.