Agency workers and appraisal schemes

Where a directly recruited employee of a hirer organisation has the opportunity to receive a bonus based on their successful personal performance, an agency worker performing the same role must also have this opportunity once they have been in the role for 12 weeks.

Does this mean then that the hirer has to conduct the same appraisal scheme with the agency workers that they use for their directly recruited employees, in order to determine whether the agency worker is in line for the bonus? It is clear that something has to be done to make this determination.

The answer is that the hirer should not use the same appraisal scheme as they use for their directly recruited employees. Whilst the Agency Worker Regulations themselves do nothing to alter the employment status of agency workers i.e. an agency worker will not become an employee of the hirer merely because the Regulations give them certain rights, certain actions by the hirer in performing their duties under the Regulations may well muddy the waters if the employment status of the agency worker was ever subsequently questioned. It is when an individual who was taken on as an agency worker manages to assert that they were in fact an employee of the hirer that employers find themselves in a sticky situation because employment rights will then apply to the agency worker.

One factor that a Tribunal will look at when determining employment status is the integration of the individual into the hirer’s organisation. Now, if the exact same appraisal scheme that is used for directly recruited employees is then used for agency workers, even if only by way of ensuring compliance with the Agency Workers Regulations, a certain level of integration may be inferred and the lines between ‘agency worker’ and ‘employee’ may be blurred. Although the Government guidance to the Regulations indicate that in some circumstances it may be easier to fully integrate the agency worker in to the full appraisal scheme, for the sake of a higher level of clarity over employment status, it would not be appropriate. For this reason, a modified appraisal scheme should be used for agency workers. Alternative approaches include:

• Creating a simpler system to appraise agency workers – they will normally have clear objectives to help them undertake the assignment which could form the basis of their appraisal and this could be aligned to that of the user;
• Utilising an agency’s existing appraisal/feedback system to keep track of their performance through regular discussion between hirer and agency.

If the modified appraisal scheme results in the determination that the agency worker is not entitled to a bonus because the amount or quality of their work is not of a high enough level, this does not breach the Regulations. As long as the opportunity is available for them should they be productive enough, the Regulations will be complied with.

Bonuses that are not attributable to the personal performance of the individual do not have to be made available to the agency worker because they do not fall into the classification of ‘pay’ under the Regulations. Such bonuses may include profit share schemes, or those paid to reward loyalty to an organisation and not dependent upon performance.

If you have any queries regarding this issue please call our 24 Hour Advice Service on 0844 892 2772.