Understanding Swedish Derogation

An employment tribunal recently found in favour of an employer in a dispute concerning the 'Swedish derogation' in the Agency Workers Regulations (AWR). It was one of the first judgements in this area of employment law.

So what is Swedish derogation and how does it affect the AWR?

The AWR entitle agency workers to get the same basic pay and conditions as comparable employees after a 12-week qualifying period. The Swedish derogation - so called because it was introduced into the regulations at the request of the Swedish government - provides an exemption from this as far as pay is concerned; it does not affect agency workers' entitlements to other provisions under the regulations such as annual leave after 12 weeks, 'day-one' rights and rest breaks.

For it to come into play, the temporary work agency (TWA) offers an agency worker a permanent contract of employment and pays the worker between assignments. It has to be made clear to the worker that entering into the contract means giving up the entitlement to equal pay. A 'zero hours' contract does not count as a derogation contract.

There are rules about how much and for how long the TWA must pay workers. It must be at least half of pay received on assignment based on the highest rate during previous 12 weeks; it can't be below the National Minimum Wage and National Living Wage. The payment between assignments must last for at least four weeks before the contract can be terminated.

The point of the AWR is to improve pay and conditions of agency workers. The Swedish derogation is only allowed because of the pay that is received by a worker between assignments. If employers or agencies take measures to deprive workers of this pay, it could put them at risk of a legal challenge.

ABC Note: Derogation is the partial suppression of a law, as opposed to abrogation—total abolition of a law by explicit repeal—and obrogation—the partial or total modification or repeal of a law by the imposition of a later and contrary one. The term is used in canon law, civil law, and common law.

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