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The Court of Appeal has held in London Underground Ltd v Amissah and ors that an employment judge erred in ruling that a hirer, which had joint responsibility along with an agency for breaching workers' entitlement to equal pay under the Agency Workers Regulations 2010 (AWR), should not have to pay any compensation.

A number of agency workers were employed by an agency, TP Ltd, to work at London Underground stations from October 2011 to January 2013 when the contract came to an end. TP Ltd initially asserted that the workers were not entitled to equal pay and terms because they fell within the Swedish derogation (this provides that the entitlement to equal pay under the AWR does not apply where agency workers continue to be paid in periods between assignments). Subsequently London Underground Ltd (LU) revisited the issue and decided that the AWR applied. From October 2012 TP Ltd paid the workers at a significantly increased rate, and between December 2012 and May 2013 LU made payments to TP Ltd to fund the arrears, but TP Ltd did not pass it onto the workers. TP Ltd went into involuntary liquidation in November 2013.

The agency workers brought a claim complaining that they were paid less than employees of LU in breach of the Reg 5 of the AWR against both TP Ltd and LU Ltd. Regulation 5 provides that, after 12 continuous weeks in the same role, an agency worker is entitled to "the same basic working and employment conditions" as they would have been entitled to had they been recruited by the hirer directly to so the same job, rather than through the services of an agency.

The initial tribunal had regard to Reg 14(2) AWR which provides that the hirer may be liable for any breach of Reg 5 "to the extent that it is responsible for that breach". It concluded that LU's liability was 50% as, although TP Ltd had initial responsibility for the underpayment, LU had acted too slowly in making TP Ltd rectify its error. However, it held that it was not just and equitable for LU to have to "pay twice" (it had already made the arrears payments to TP Ltd and TP Ltd had failed to pass them on).

The Employment Appeal Tribunal (EAT) found that although LU had already paid the arrears, the other counter-balancing factors such as it having been LU's choice to use agency workers and the workers' weaker bargaining position meant that the tribunal's decision could not stand. LU then appealed to the Court of Appeal which held that the amount of compensation payable by LU was 50% of the total amount assessed. Although it was regrettable that LU should have to "pay twice", it was not just and equitable for the workers to be deprived of compensation when there was no misconduct on their part and it was LU who chose to deal with an agency.

Take note: Amissah serves as a reminder to hirers of how important it is to establish whether the AWR apply to agency workers at the outset. Even if the agency claims that the AWR do not apply it does not necessarily follow that the hirer will escape liability in the event that they do apply.

This article is taken from HR Law - March 2019.