Why Logistics Businesses Rely on Agency Workers
Agency workers are a lifeline for many transport and logistics businesses. When you win a new contract, need cover for peak periods, or simply cannot recruit permanent drivers fast enough, agency staff fill the gap. Warehouses, distribution centres, and freight operations across the UK rely on a flexible mix of permanent employees and agency workers to keep goods moving.
But using agency workers creates HR obligations that many logistics businesses overlook, or only discover when something goes wrong. The Agency Workers Regulations 2010 (AWR) give agency workers specific rights that kick in after a qualifying period, and failing to comply can result in tribunal claims and back-dated pay awards.
The Agency Workers Regulations 2010
The AWR apply to all agency workers supplied by a temporary work agency to work temporarily under the supervision and direction of a hirer. In logistics, this typically covers agency drivers, warehouse operatives, forklift operators, pickers, packers, and distribution staff. Agency drivers are also subject to drivers' hours and working time rules, which adds a further layer of compliance.
Day-One Rights
From the first day of an assignment, agency workers are entitled to:
- Access to collective facilities and amenities at your site, such as canteens, car parking, childcare facilities, and transport services, on the same terms as comparable permanent employees
- Information about job vacancies at your organisation, giving them the opportunity to apply for permanent roles on the same basis as your own staff
These are often overlooked in busy logistics operations, but they are legally enforceable from day one.
The 12-Week Qualifying Period
After 12 continuous calendar weeks working in the same role at your site, agency workers gain the right to the same basic working and employment conditions as if they had been recruited directly. This is the "equal treatment" requirement.
The qualifying conditions include:
- Pay: Basic pay, overtime rates, shift allowances, and unsocial hours payments must match what a comparable permanent employee would receive
- Annual leave: Entitlement above the statutory 5.6 weeks, if your permanent staff receive more
- Rest breaks and rest periods: On the same terms as comparable employees
- Night work limits: The same restrictions as comparable employees
- Duration of working time: Including overtime
What Does Not Count
Equal treatment does not extend to:
- Occupational sick pay
- Maternity, paternity, or adoption pay (beyond statutory entitlements)
- Redundancy pay
- Pension contributions
- Notice periods
- Bonus payments not directly linked to the individual's work output
How the 12 Weeks Are Calculated
The qualifying clock starts ticking from the first day the agency worker begins working at your site in a particular role. The 12 weeks must be continuous, but certain breaks do not reset the clock:
- Breaks of up to 6 weeks for any reason (provided the worker returns to the same role)
- Breaks due to sickness or injury of up to 28 weeks
- Breaks for annual leave
- Breaks caused by a workplace closure (e.g., factory shutdown over Christmas)
- Breaks related to jury service of up to 28 weeks
A break of more than 6 weeks for other reasons, or a change of role at the same hirer, resets the clock back to zero.
The Anti-Avoidance Rules
Regulation 9 of the AWR is designed to prevent hirers from structuring assignments to avoid triggering the 12-week qualifying period. This is sometimes called the "Swedish derogation" workaround, but the specific pay-between-assignments exemption was abolished in April 2020.
If an employment tribunal finds that an arrangement was structured to prevent an agency worker from completing the qualifying period, the worker can bring a claim. The tribunal can award compensation and declare the worker's rights under equal treatment.
In practical terms, this means you should not:
- Rotate agency workers between slightly different roles every 11 weeks
- End assignments just before the 12-week mark and re-engage the same worker shortly after
- Create artificial role changes that do not reflect a genuine change in duties
If the work is substantially the same, tribunals will look through the arrangement and treat it as continuous.
Managing a Mixed Workforce in Logistics
Running a logistics operation with both permanent and agency staff creates practical challenges beyond legal compliance.
Pay Transparency
Once agency workers qualify for equal treatment, pay disparities can cause friction. Permanent drivers who have been with you for years may find that agency drivers are being paid the same rate, without the same loyalty or commitment. Agency workers who discover they are being paid less than permanent colleagues doing the same work may bring claims.
The key is transparency and fairness. Ensure your pay structures can withstand scrutiny and that both groups understand how pay is determined.
Training and Induction
Agency workers should receive the same health and safety induction and site-specific training as permanent employees. In warehouse and distribution operations, this is a legal requirement under the Health and Safety at Work Act 1974 and the Management of Health and Safety at Work Regulations 1999. Skipping induction for agency staff because they are "only temporary" is a common and costly mistake.
Performance Management
You can manage the performance of agency workers during their assignment. If an agency worker is not meeting standards, you are entitled to raise concerns with the agency and request a replacement. However, ending an assignment for reasons connected to the worker asserting their AWR rights would be automatically unfair.
Record Keeping
Keep clear records of:
- Start dates for each agency worker assignment
- The role and location
- Comparable permanent employee terms (for equal treatment assessments)
- Any breaks in assignment and the reasons for them
- Health and safety inductions completed
TUPE and Agency Workers
TUPE transfers are common in logistics. When a distribution or supply chain contract moves from one provider to another, the permanent employees assigned to that work typically transfer automatically under TUPE. But what about agency workers?
Agency workers are generally not covered by TUPE, because they are employed by the agency, not by the outgoing or incoming hirer. However, if an agency worker has been working on the contract for an extended period, questions can arise about their true employment status. If a tribunal finds that the worker is in reality an employee of the hirer rather than an agency worker, TUPE may apply.
This is another reason to ensure your workforce structure is properly documented and that the contractual arrangements accurately reflect the working relationships in practice.
For more detail on managing TUPE in logistics, see our TUPE support page or read about the wider HR challenges in transport and logistics.
Worker Status and IR35
A related risk in logistics is the misclassification of workers. Some businesses engage drivers or warehouse operatives through agencies or as self-employed subcontractors when the reality of the working arrangement points to employment or worker status. Our dedicated guide to IR35 in transport and logistics covers off-payroll working rules in detail, including your responsibilities since the April 2021 changes.
HMRC's view is straightforward: if someone works set hours, uses your vehicle, wears your uniform, and follows your instructions, they are likely a worker or employee regardless of what the contract says. Our guide to employee vs contractor status covers this in more detail. The consequences of misclassification include:
- Back-dated tax and National Insurance contributions
- Penalties from HMRC
- Holiday pay claims (including historical claims under the Working Time Regulations)
- Tribunal claims for unfair dismissal, if the individual has employee status
Getting your workforce structure right from the start is always cheaper than dealing with the fallout later.
How Rebox HR Can Help
We work with logistics businesses across the UK to manage the HR complexities of a mixed workforce. Whether you need to audit your agency worker arrangements, review your contracts and pay structures, or put proper record-keeping systems in place, we can help.
If you are unsure whether your current setup is compliant with the Agency Workers Regulations, or if you need support managing a TUPE transfer that involves agency staff, book a free consultation and let us review your arrangements.
