HMRC publishes update to guidance on repeal of Swedish derogation
04 October 2019
HMRC has updated the guidance on The Agency Workers Regulation 2010, to reflect the repeal of the Swedish derogation from April 2020.
From April 2020 amendments come into force which mean that all agency workers will be entitled to receive equal pay as their permanent equivalents, once a 12-week employment period has passed, whether or not they are paid between assignments.
As part of the government’s Good Work Plan, regulations were laid in December 2018 which abolish the use of Swedish derogation - the legal loophole which enables some firms to pay agency workers less than permanent staff.
The Agency Workers (Amendment) Regulations 2019 come into force on 6 April 2020 and extend to England, Wales and Scotland.
Initially, pay between assignments was lawful, as opposed to equal pay after the 12-week qualifying period. Agency workers will no longer be able to agree to opt out of equal pay entitlement and will also be eligible for the same employment rights as permanent staff members after 12 weeks. They receive certain rights from day 1.
The advice given on managing individuals presently employed under Swedish derogation contracts which are likely to extend into the next tax year is to adjust their existing contract to accommodate the amendment to the Regulations. However, these contracts can still be in place but employers must observe the new rules surrounding equal pay after a 12 week period has been exhausted.
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