The Department for Business, Energy and Industrial Strategy (BEIS) has published background research on the use of pay between assignment (PBA) contracts and the role of umbrella organisations, two of the topics which are under consideration in current consultations on ‘good work’ proposals
An initial study by Host Policy Research looked at the reasons why individuals choose to sign up to pay between assignment contracts, and to obtain more information on the role of umbrella organisations in the use of these contracts.
Pay between assignment, or the Swedish derogation, involves employment businesses or umbrella companies converting their temporary workers into permanent employees with the promise of paying them between assignments (either at least 50% of the pay they received during the last 12 weeks on their last job or the national minimum wage rate for the hours they worked on the last job, whichever is the greater).
This must be done with the agreement of the agency worker. Agencies are also required to try to find and offer suitable jobs for workers when they are not working.
Crucially, pay between assignment contracts exempt the agency workers from the equal pay element of the Agency Workers Regulations (AWR), which otherwise stipulate that agency workers should receive the same pay (and conditions) they would have received if recruited directly by the hirer. Umbrella companies are therefore free to pay agency workers who sign these contracts less than permanent staff doing the same job. From the agency workers’ perspectives, pay between assignment contracts potentially offer a degree of flexibility and financial security.
The research found that far from being confined to certain sectors, pay between assignment contracts are used in a range of sectors and occupations and are particularly prevalent in low wage occupations. Whilst some agencies and umbrella organisations do not use PBAs, for others they are the contract of choice.
Of the 17 umbrella organisations that agreed to be interviewed, six (35%) do not use pay between assignment models and 11 (65%) do. Of those that use pay between assignment contracts, the extent to which they are used varies considerably. Five umbrellas used them with a very small percentage of employees (3% or fewer), one used them exclusively, and the remainder had between a quarter and a half of their employees on pay between assignment contracts.
The researchers said it was clear that all of the worker interviewees were not aware of the implications of the contract when they started but had discovered the drawbacks since. Two of the interviewees knew they were on pay between assignment contracts but had not registered that this meant they should be paid between assignments. They are all aware that they are getting paid less than comparators.
The research company said it was also clear that ‘pay between assignments’ rarely happens. Individuals either are on very long term contracts or umbrellas/agencies have devised schemes to keep their exposure to a minimum, many contrary to the requirements set out in the regulations. Whether this is intentionally flouting the regulations or is due to ignorance is unclear. Where pay between assignment does happen it is often funded by deductions from the workers’ pay when they are working on assignments.
As a result, the report makes a number of recommendations. These include tightening up pay between assignment regulations; raising awareness amongst agency workers about the implications of signing pay between assignment contracts; providing firmer guidance on what is reasonable in terms of what workers are required to do in order to remain eligible for pay between assignment; and developing more guidance on expenses.
Report by Pat Sweet
