Employment Insight: Agency workers – the cost of getting it wrong

Although the Agency Worker Regulations 2010 (the Regulations) have been in force for almost a decade, there have been surprisingly few cases dealing with the enforceability of the rights they have introduced and how liability and compensation will be apportioned and awarded where these have been breached.


The recent case of London Underground Limited v Adelaide Amissah and others has made clear not only how powerful a tool the Regulations can be for agency workers looking to assert their rights, but also how costly a breach of these can be for businesses.

The right to equal working and employment conditions

After 12 weeks of continuous employment in the same role, an agency worker assigned to a business is entitled to “the same basic working and employment conditions” as they would have been had they been directly recruited by the business. In practice this will often mean a salary increase for the agency worker at the 12-week mark.

One exemption to this right is where the agency worker has a permanent contract of employment with the temporary work agency and is therefore paid between assignments by the agency (called the “Swedish derogation”). This is what Trainpeople.co.uk believed applied to the agency workers it began supplying to London Underground Ltd (LUL) in October 2011. A few months later, LUL took it upon itself to re-visit the question and (correctly) concluded that the exemption didn’t apply.

The parties consequently agreed that the agency workers were entitled to equalised rates, however:

  • LUL only proceeded to provide the agency with information about its comparable workers several months later in August 2012. Without this information, the agency could not determine the conditions (including salary) to which the agency workers were entitled. The agency workers therefore only began receiving their correct, and significantly higher, pay from October 2012.
  • Although LUL agreed with the agency that it would pay it an amount to cover the under-payment of the agency workers during the first year of their assignment, it later transpired that the agency had failed to pass this payment on to the agency workers.

Proceedings were first initiated by the agency workers against both parties in September 2012 but by the time any substantive hearing occurred trainpeople.co.uk had gone into involuntary liquidation, leaving LUL as the only respondent.

Compensation must be just and equitable

The Court of Appeal ruled that LUL and the agency were both equally liable for the breach that had occurred. This is neither controversial nor surprising – while the agency was the one who incorrectly believed the Swedish derogation applied, LUL contributed to the breach by failing to promptly provide the required information to the agency once the error had been discovered.

What is controversial, however, is the Court’s decision that LUL would have to pay the agency workers its share of the compensation to which they were entitled (50%), even though it had already made payments to trainpeople.co.uk in respect of the under-payment they were seeking to recover.

In explaining its decision, the Court highlighted that the Regulations required compensation to be determined having regards to what was “just and equitable”. Although it had sympathy for LUL, which would have to effectively pay twice, it was not in the circumstances just and equitable to leave the agency workers without any compensation, particularly when there had been no misconduct on their part.

Learning points

Although the Swedish derogation principle will no longer apply as of April 2020, the Court’s decision in the London Underground Ltd v Amissah is an important one for several reasons.

It has confirmed not only how courts will proceed to apportion liability, but also how they should approach the question of what is “just and equitable” when deciding compensation. It is clear that at the heart of this question is the agency worker whose rights have been breached, and that ensuring a just and equitable outcome for the agency worker will take priority – even if this results in a potentially unjust outcome for one of the jointly liable parties.

The decision – the first of its kind – has also confirmed that agency workers can rely on the Regulations directly to claim compensation where there has been a breach of the right to equal terms and conditions. The rights conferred are substantive and there is no need to make a separate claim for unlawful deduction of wages in order to secure compensation – something which LUL unsuccessfully attempted to argue.

Finally, in the context of complex agency working arrangements where responsibility is shared between two (and sometimes more) parties, the decision highlights just how important it is for businesses who recruit agency workers:

  • to be aware of their responsibilities under the Regulations;
  • to stay on top of their agency worker arrangements;
  • to promptly provide the necessary information to the relevant temporary work agency to ensure compliance with the Regulations;
  • to proactively manage the relationship with the relevant temporary work agency to ensure it fulfils its responsibilities to the agency workers.

Otherwise, they might find themselves paying for their mistakes – twice.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of April 17, 2019.