Employing foreign workers? Look out – pitfalls ahead!

By Bond Dickinson, BHA Partner

Shadow Minister for Borders and Immigration Chris Bryant has ignited a debate about foreign workers in the UK economy over reported claims that he planned to criticise large retailers (including Tesco and Next) for favouring Eastern European workers over British workers, the favouritism apparently being due to foreign workers being cheaper to employ and a way to avoid Agency Workers Regulations.

Whilst Chris Bryant eventually toned down his original speech, it remains undeniable that some sectors in the UK are vastly reliant on migrant workers.  Hospitality and Leisure is one of those sectors, with 22% of workers being foreign workers.  This compares with 14% for the whole UK economy.  Of these 22%, 16% of migrant workers in the hospitality industry are from outside the European Union.

Businesses need to be aware of the following pitfalls when employing foreign workers.

Immigration rules

The Immigration Rules administered by the UK Border Agency (UKBA) govern who is permitted to enter and work in the UK.  Workers from most European countries can work in the UK without needing to obtain the UKBA's permission.  EU workers have freedom of movement and there is no power to prevent EU nationals from seeking work in the UK.   Some EU workers from the newer member states are subject to restrictions, such as workers from Bulgaria, Romania and Croatia.


Workers from outside the EU must apply for a visa under the points based immigration system.  The points based system allows for high value migrants, temporary workers and some other categories of worker together with specific skilled workers to enter and work in the UK.

If an employer pays a worker less because of the worker's nationality, this constitutes direct race discrimination under the Equality Act 2010.  Race discrimination covers colour, ethnic origin, national origin and nationality.

The Agency Workers Regulations (AWR)

Is recruiting foreign workers a way around AWR?  AWR came into force on 1 October 2011 and state that all agency workers are entitled to the same rights as other employees.  The nationality of the agency worker is immaterial to the AWR.

Whether the worker is British, Polish or any other nationality, the AWR provide for equal treatment after a 12-week qualifying period.  If there is a genuine need for temporary workers for just 10 or 11 weeks, the relevant provisions of the AWR do not apply but any deliberate attempt to circumnavigate them will be caught by the anti-avoidance provisions.  These provisions give a worker the right to be treated as if he was entitled to equal treatment if the structure of his assignment is intended to prevent the worker from acquiring equal rights.

In specific circumstances agency workers can give up the rights they otherwise would have been entitled to, including their rights to pay parity with direct employees.  This is permissible under Regulation 10 of the AWR and is commonly referred to as the "Swedish derogation", but is nothing to do with nationality - Regulation 10 was introduced into the AWR at the request of the Swedish Government and not because it applies to Swedish workers only!

Agency workers from Eastern Europe therefore cost exactly the same as UK agency workers.

In conclusion…

The current state of the EU jobs market means that there may be many foreign workers willing to work flexibly in the UK for a minimum wage and, given the rising living costs in the UK, there are potentially many UK workers who are reluctant to work at the minimum wage, preferring to wait for employment with a better income and job security.  The problem for the Hospitality and Leisure industry as a whole will be to balance its growing needs for talents and specific skills with the immigration policies and the demands placed on them by employment law. With 11% of employers experiencing hard-to-fill vacancies, the industry will for the foreseeable future continue to rely on migrant workers.

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