Still confused by the AWR legislation? Read this simple guide

Your
  Options

Pay Parity Model

Swedish Derogation Model

Limited Company / Managed
  Service

What it is

It is relatively  straightforward to comply with the legislation.  In order to comply you will need to obtain   and / or provide detailed information on the assignment in order to establish   a comparator rate for a direct hire, detailed information from the contractor   about recent assignments, capture and track the assignment length and have agreed   processes in place to alter pay rates / holiday benefits if required.  

The Swedish Derogation
  model complies with the legislation and provides exemption from the equal pay   requirements.  In return for losing the  right to equal pay, the contractor is entitled to Pay Between Assignments and proactive support in finding alternative assignments. The pay between assignments has a minimum level of 50% of pay (subject to National Minimum
  Wage) for 4 weeks.   

In addition, all other rights as outlined by the AWR exist in terms of conditions and are subject to the 12 week qualifying period.  In order to comply you will need to obtain and / or provide detailed information from the end client in order to establish comparator terms for a direct hire (with the exception of pay rate), detailed information from the contractor about recent assignments, capture and track the assignment length and have   agreed processes in place to alter holiday or other benefits and process pay   between assignments if required.    

It is clearly stated that   those who are genuinely in business on their own account are considered out   of scope of the legislation. 

What risks /  considerations there are

This approach relies on a
  trusting relationship  across the supply chain as it requires the sharing of
  potentially sensitive data in addition to robust data capture, tracking and   flagging systems.  It may be   complicated if there are additional parties involved in the supply chain, for   example master vendors or tiered providers, however it is likely to succeed   as long as you complete your processes as stated and do all you can to   prevent unfair treatment.

This approach also relies
  on the Agency Worker sharing information with you on their recent   assignments.  There is no legal obligation to provide you with a full assignment history however it is   acknowledged that should a contractor withhold information then this will be taken into consideration by any employment tribunal. 

This approach removes the
  requirement for equal pay and as such reduces the risk of tribunal claims under AWR.  It does require the same   degree of information sharing, tracking and process / system development in order to implement successfully and reduce any risk associated with not following the required procedures.  In   addition there is a requirement to fund Pay Between Assignments.  Offering guaranteed hours for the duration   of the assignment may limit the exposure however there will remain a risk   that an assignment may end unexpectedly and there is a cost associated with both guaranteeing hours and Pay Between Assignments.

This approach also relies on the Agency Worker sharing information with you on their recent assignments.  There is no legal obligation to provide you with a full assignment history however it is   acknowledged that should a contractor withhold  information then this will be
  taken into consideration by any employment tribunal. 

There is a small risk
  that an individual may still present a claim under AWR should they perceive   they are being treated unfairly even as a Limited Company or as a Sole Trader.  From a commercial view, it is   unlikely that such a scenario would occur as the benefits of operating this way are likely to be greater than any disparity with a direct hire. 

To mitigate the risks   associated with this option you should ensure there is a legitimate business   to business service being offered and adopt robust processes to demonstrate the validity of the relationship.   

What you would need to do to implement it

Review the on-boarding
  process (both your own and any others in the supply chain, i.e. end client,   master vendor and umbrella provider) and consider introducing a detailed application form, a detailed assignment schedule to capture comparator data and alter processes and systems to ensure accurate data tracking and alerts   should a change be required. 

In addition you should   review the contractual  terms across the supply chain to ensure all parties
  are clear of their duties and responsibilities in relation to information   sharing, data capture and reporting.

For each assignment it is
  important to conduct a review to establish if there is a more significant risk of a claim under AWR on the grounds of equal pay than the likely cost of providing Pay Between Assignments prior to adopting the Swedish  Derogation Model. 

In addition you would   need to review the on-boarding process (both your own and any others in the supply chain, i.e. end client, master vendor and umbrella provider) and consider introducing a detailed application form, a detailed assignment   schedule to capture comparator data and alter processes and systems to ensure accurate data tracking and alerts should a change be required.  Also you should review the contractual terms across the supply chain to ensure all parties are clear of their duties and responsibilities in relation to information sharing, data capture and reporting.  A specific contract of   employment is required to ensure the individual accepts the terms of employment in relation to AWR. 

Review the on-boarding process (both your own and any others in the supply chain, i.e. umbrella   provider) for contractors and consider introducing a detailed application   form and checks to validate the Limited Company or Sole Trader status.  Likely checks would include poven membership of a professional body, certification of specialist skills and qualifications, personal and professional insurances, the right to refuse   work, the right to substitution and non supervision on a client site.

In addition you should   check the commercial contractual relationships in place for clarity of role and responsibilities associated with AWR across the supply chain.