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Employment Law: Morrisons use legal loophole to cut temp workers' pay

Following the recent implementation of the new Agency Workers Regulations (AWR), employers in the food retail industry have been trying to use a legal loophole to save money by paying their temporary workers less.

Morrisons, following the lead of Tesco, confirmed it has "held discussions" with its recruiters about using the 'Swedish derogation' model to cope with the AWR, stating this is a "legitimate option for temporary employees".

The AWR, which came into effect in October, afforded agency workers the same rights to pay and working conditions as permanent staff. It was designed to offer temporary workers more protection.

However, the Swedish derogation model, named after a concession gained by Sweden in similar AWR discussions, means that employers do not have to comply with AWR if they employ people directly and not through an agency.

As well as using the Swedish derogation model, Morrisons said they are adopting a number of other strategies to deal with the new regulations including cutting all use of temporary workers in manufacturing and logistics and employing more workers directly.

Another technique is to introduce a 'starter pay' for newly recruited permanent staff which is lower than permanent workers who have been with the company some time. Then when temporary workers are hired who must receive the same rights as a permanent worker of the same level, they can legitimately be paid the lower 'starter pay'.

The Bakers, Food and Allied Workers Union have criticised Morrisons, saying "We are totally against it. The AWR was put into place to stop agency workers being exploited by unscrupulous employers."

But with nearly two thirds of employers now deciding to cut back their reliance on agency workers, the future for temporary workers does not look good.

Adrian Marlowe, chairman of the Association of Recruitment Consultancies (ARC), believes the new regulations are doing "more harm than good".

He said: "Modification of the Regulations could save both private and public sector millions of pounds at a time when every penny counts. The ARC urges the Government to take a pragmatic approach, to distance itself from the previous administration's commitments, and to grasp this particular nettle with determination."

Related links:
Read more on the story (The Telegraph)
New regulations for agency workers (FindLaw)
Find local employment solicitors throughout the UK (FindLaw)