Adam Brett's article concerns secondment of employees from one employer to another. On the face of it, secondments are excluded, but all may not be as it seems…

I understand that employees under secondment from one organisation to another are NOT covered by the Agency Worker Regulations. Is that always the case, or are there exceptions when secondees could be covered by the Regulations and be entitled to equal pay, access to facilities, etc.?

The Agency Workers Regulations themselves do not mention secondment directly at all. The Department of Employment and Learning Guidance (and the equivalent BIS guidance in GB) state at paragraph 2.4:

"Those who are likely to be outside the scope of the Regulations include individuals:

* on secondment or loan from one organisation to another (this is usually where the main activity of the organisation seconding the individual is not the supply of individuals to work temporarily under the direction and supervision of another party)."

This guidance seems to rely on the idea that to be a temporary work agency requires the "main activity" to be "the supply of individuals to work temporarily under the direction and supervision of another party".

What the Regulations Say
The Regulations themselves make no reference to "main activity" and indeed the definition of a Temporary Work Agency in Regulation 4.1 simply requires there to be:

"a person engaged in the economic activity, public or private, whether or not operating for profit, and whether or not carrying on such activity in conjunction with others, of:
(a) supplying individuals to work temporarily for and under the supervision and direction of hirers;…"

In Regulation 3.3, in order to be an agency worker, the requirement is simply that:

"the Temporary Work Agency initiates or is involved as an intermediary in the making of arrangements that lead to the individual being supplied to work temporarily for and under the supervision and direction of the hirer…"

The point of concern is that, notwithstanding the DEL guidance, the Regulations do not require that the main activity of the organisation seconding the individual is the supply of individuals to work under the direction and supervision of another party.


Bank Employees
The above point is perhaps backed up by the guidance at 2.31 which states in relation to the use of in-house banks of employees:

"If an in-house bank supplies workers to third parties, including associated companies, the in-house bank would be acting as an agency for the purposes of the Regulations".

In our experience, the bank employee will often be supplied to different companies within a group. The in-house bank is unlikely to be the main activity of the organisation, but rather simply an ancillary function. An example would be where a nursing home group maintains a bank of nurses who are supplied as required to different nursing homes, which may well have a separate Limited Company status. The principal purpose of the group is not the supply of individuals. If this is the case for employees in the in-house bank, then why not for employees who are seconded?

The position on this is currently unclear. If there is only a very occasional secondment then it seems unlikely that a Tribunal would rule that the Regulations apply. However, where there are significant numbers of secondments into related or even separate organisations (as, for example, happens with the Civil Service) then there is a significant risk that a Tribunal, if asked in appropriate circumstances, might conclude that the individual is indeed an agency worker. This would seem to have the additional effect that the seconding employer is deemed to be a temporary work agency.


Implications
There are two particular implications if a Tribunal should make this ruling. The first is that as an agency worker, the secondee would be entitled to Day One rights and, after twelve weeks, to equal pay with an equivalent permanent employee of the organisation to whom the worker is seconded. In this circumstance, it is unlikely that the organisations will have complied with the requirements of Regulation 10 (the Swedish Derogation) so as to have opted out of the equal pay comparison. In circumstances where the seconding organisation pays its relevant permanent staff significantly more, and especially if the secondment lasts for a substantial period of time, the financial cost could be considerable.

The other rather disconcerting consequence is that as a result of a Tribunal ruling in this way, the seconding employer may be deemed to be a Temporary Work Agency. Temporary Work Agencies are, of course, governed by a series of controls, including Part 2 of the Employment (Miscellaneous Provisions) (Northern Ireland) Order 1981 which deals with employment agencies, and subsequent legislation. The activities of Employment/Temporary Worker Agencies are subject to significant regulation and, in the scenario we are considering, it seems unlikely that the seconding employer will have considered itself an agency at all so it will probably not have complied with the Regulations.


What next?
At this stage we cannot know whether or not there will be a problem, and this is likely to depend on Tribunal rulings and then decisions of the Employment Appeals Tribunal/Court of Appeal. It may therefore be some years before we get a clear answer on the point. In the meantime, if your organisation seconds significant numbers of employees then you may wish to consider in more detail what the risks may be and, at least where larger numbers are involved or where the disparity in pay with permanent employees is considerable, consider whether secondments should be set up in accordance with the Regulation 10 Swedish Derogation model in order to minimise risk.

McGrigors has undertaken a major survey with the CBI in Northern Ireland gauging the attitudes of the HR community on employment law issues:
http://bit.ly/v7i0EP


Agency Workers in ROI
The Agency workers Directive has not yet been implemented in the Republic of Ireland. Those with business interests or agency workers based south of the border may be interested in the ramifications of the State's failure to introduce domestic regulations.