One of the ongoing debates that the staffing industry has been having since 1st October has centred on the Match Perm Pay (MPP) solutions that umbrella companies are offering. Unfortunately, when the government published its guidance notes earlier this year it just served to confuse things further.
In the guidance, when referring to pay and expenses, the document reads:
Equal treatment on pay for agency workers who work through umbrella companies
Where an agency worker works through an umbrella, the pay they receive should be the same as if they had been recruited directly – or paid to a comparator if appropriate. Where an umbrella worker receives part of their pay as reimbursement for travel expenses and, for example, where a directly recruited worker or employee would receive £100 per day, the umbrella worker must still receive £100 a day but this can be made up of £80 plus £20 reimbursement of travel expenses.
A number of leading commentators in our industry have pointed to this paragraph and you have to admit, it is fairly clear on this point.
The problem comes when you read the actual Agency Workers Regulations themselves, specifically Part 2, Clause 6 which seeks to define relevant “terms and conditions” and this includes a definition of pay in paragraph 2 which reads:
For the purpose of paragraph (1)(a), “pay” means any sums payable to a worker of the hirer in connection with the worker’s employment, including any fee, bonus, commission, holiday pay or other emolument referable to the employment, whether payable under contract or otherwise, but excluding any payments or rewards within paragraph (3).
Paragraph (3) then goes on to list these exclusions and includes in point (J):
Any payment in respect to expenses incurred by the worker in carrying out the employment.
As you can see, the legislation itself is fairly clear on this point as well, expenses should not be included as part of pay and so you see the problem.
As we developed our AWR solutions at Parasol over the last two years, every single piece of legal advice we received, from both leading QCs in employment law, as well as employment tribunal judges themselves, made it very clear to us that a tribunal judge will always base their decision on what it states in the regulations themselves, not on the subsequent guidance. It is for this reason that under Parasol’s MPP model, some expenses are restricted for the worker. We believe that this is the only way to ensure the highest levels of compliance when it comes to AWR.
Until there is case law to set a precedent on this matter we will not be deviating from what the Agency Workers Regulations themselves clearly state. We don’t think it’s worth taking that risk for our staffing industry partners or our employees.
You can read the full Agency Workers Regulations on this site by clicking here.