TUC lodges complaint against abuse of ‘Swedish derogation’ contracts

Victoria Phillips is head of employment rights at Thompsons Solicitors

The ‘zero hours’ contract has a twin with a strange name. ‘Swedish derogation’ contracts are now increasingly being used by employers to avoid employing agency workers on the same pay as permanent staff.


The two types of contract are part of a common strategy of creating an army of second class workers – or to use the employers’ euphemism: a ‘flexible’ labour market.


The TUC says the tens of thousands of agency workers on these contracts are paid less than permanent staff – even though they are working in the same place and doing the same job.


It is calling for the contracts to be banned and has lodged a formal complaint with the European Commission against the UK government for failing to implement the EU Temporary and Agency Workers Directive properly.


Under the regulations implementing the directive, agency workers are entitled to the same pay and conditions as permanent staff doing the same job after 12 weeks.


However, the TUC says agencies are avoiding this by employing workers on Swedish derogation contracts that allow them not to pay the worker the same rate as long as they directly employ the individual and guarantee to pay them for at least four weeks when they are between assignments.


In Sweden, where these contracts originate, workers still receive equal pay once in post and 90 per cent of normal pay between assignments.


However, in the UK, workers have no equal pay rights and are paid either half as much as they received in their last assignment or minimum wage rates between assignments.


Although the directive said that countries must prevent the misuse of Swedish derogation contracts, the TUC says it has evidence that the UK government has failed to provide adequate protection.


Agency working in the UK has increased by 15 per cent since the recession, and around one in six agency workers is now on these contracts. They are used regularly in call centres, food production, logistics firms and parts of manufacturing.


It’s yet another sorry tale of employers being adept at by-passing European directives – and the Government conniving with them.


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