Monday February 17, 2020
For the road ahead

Government Propose Abolition of Swedish Derogation


Following many years of union campaigning, the Government have now put before Parliament for the the abolition of the Swedish derogation from 6 April 2020. Once passed into law, this will mean that all agency workers have a right to pay parity after 12 weeks with no exceptions.

Swedish derogation currently allows agency workers to exchange their right to be paid equally to permanent counterparts in return for a contract guaranteeing pay between assignments.

However, agency workers who work under a Swedish derogation contract have a permanent contract with their agency, not the end client, which allows them to be paid between assignments but not receive the same wage and employment benefits as other members of full-time staff. The government has described the contract as a ‘legal loophole' which excludes agency workers from the principle of equal treatment in relation to pay under the Agency Workers Regulations (AWR) 2010. 

Under the AWR, which is commonly used in warehousing and logistics, temporary workers employed for more than 12 weeks by the same employer should receive the same pay and employment conditions as permanent staff. 

Although the original intentions of Swedish derogation were to offer reassurance that individuals would still earn during quieter periods, some employers have been using this opt-out to reduce the size of their pay bill.

Nowadays it is very unusual for agency workers to have gaps between their assignments, and in some cases, employers have devised schemes to keep their exposure to a minimum contrary to the requirements originally outlined.

The government aims to repeal Swedish derogation with new legislation, banning the use of this type of contract to withhold equal pay rights. Instead, long-term agency workers will receive equal wages to those of permanent employees.

More information: The Agency Workers (Amendment) Regulations 2019 - revocation of the Swedish derogation: Final Stage Impact Assessment

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