AWR - Is the Swedish derogation model workable?

The more feedback I'm getting from lawyers, HR professionals and clients the more I'm thinking it's not. I don't mean not as in it's not physically possible, I just mean not really viable, especially in the high-street sector. Here's why.

The temp must be employed by the agency and the agency by law has to explain the nature of the AWR, the derogation model itself, and exactly why they are asking the temp to sign the contract. They are encouraged to actually tell the temp that the SDM is specifically designed to 'get around' paying them parity pay.

Then the agency has to agree with the temp the nature of work the temp will agree to do, now this is a thorny one. The overarching priority of any agency will be to avoid paying the temp the four-week 'not on assignment' guaranteed pay. Therefore it will be in the agencies' interests to get the temp to sign a contract basically saying they will accept any work from the agency. This in practice will mean administrators being asked to agree to accept toilet cleaning if it's the only work available.

Next, as a zero-hours contract is illegal under the derogation, but a 'one-hour' one isn't, agencies are likely to sign a temp up on the following basis:

• You are an employee of XYZ agency
• XYZ agency will only EVER pay you minimum wage
• You HAVE to accept any assignment XYZ agency offers you
• XYZ agency is liable to pay you £5.93 a week if we can't find you work

Temps will be queueing round the corner to sign up to that. Not. 

If the temp does go straight on assignment, the agency will be forced to load the client charge rate to cover the potential four week 'out of work' period. Even if they offer to refund you the money in the hazy future event that the temp is never not on assignment, do you really want thousands of pounds of your money in an employment agencies' bank account? I think not.

Use of the derogation model will mean for hirers:

• A two-tier temp workforce will develop
• Non-derogation agencies will have the better skilled and qualified temps
• Switching to an agency using derogation will alienate your temp workforce
• Multiple agencies will ALL have to be on the same system
• Ad-hoc bookings will be hard to fill based on the fact that as agencies will be forced to keep temps in work, your favourite regular (but not full-time) temps will be shoved into any assignment and you won't be able to book them
• Someone has to pay for the four week 'out of work' period
• Being seen to deliberately get round the AWR (which the SDM is) will lead to bad feeling, bad publicity, and is likely to give rise to tribunal claims

So imagine two agencies next to each other on a high street, one using the SDM, one not. Who will have the temps with the better skills, experience and work references? Who is more likely to be able to supply quality staff at short notice? 

Many ad-hoc assignments will never result in parity pay because they won't last 12 weeks. In any case there is nothing stopping you ending an assignment after 12 weeks, provided you don't deliberately wait six weeks, then re-engage the same temp. Anti-avoidance fines under the AWR are considerable, at £5,000 a pop, not to mention tribunal awards, so deliberate avoidance is unlawful and commercially unsound. 

So my advice would be to think very carefully about using the SDM, the EU is likely to close the loophole anyway in the next year or two. It may look like it saves money at first glance, however I feel it will actually result in the opposite. A partner at a major employment law firm I was talking to called the Swedish Derogation Model "a mandate for the unscrupulous, don't touch it with a barge-pole."