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26th February 2014

Employment Law implications of AWO abolition

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Traditionally the wages and other employment benefits of agricultural workers were set by the Agricultural Wages Board (AWB) and incorporated into an annual Agricultural Wages Order (AWO).

In addition to setting minimum hourly rates for different grades of agricultural worker the AWO also set overtime rates, sick pay entitlements and dealt with more esoteric issues such as dog allowances.

The AWB was abolished on 25th June 2013 and the AWO 2012 ceased to have effect from 1st October 2013. However, that does not mean that employers do not have to have regard to the historic terms of the AWO.

This is because workers who were employed before 1st October 2013 will have continuing contractual rights derived from the AWO which will continue to apply until they are varied with the agreement of the worker or the employment relationship comes to an end.

New workers employed on or after 1st October 2013 will not have any accrued rights under the AWO. Employers will be free to set their terms and conditions of employment, subject only to general employment law such as the National Minimum Wage (NMW) and holiday entitlements which are governed by the Working Time Regulations. Agricultural workers will now be subject to the same employment law requirements as employees in all other sectors of the economy. Care must be taken to ensure that all workers are now treated in accordance with these requirements including those who previously fell under the AWO. It is significant to note that one of the grades of worker under the AWO was paid less than the NMW which will now be unlawful.Those employees affected must receive a pay rise to bring them into line with the NMW requirement.

The potential implications for employers of the abolition of the AWB and AWO is that there may develop over time a two tier workforce whereby those employees who were employed under the AWO enjoy different terms and conditions (which may be more generous) than those who were recruited on or after 1st October 2013.

This may result in employers seeking to vary the terms and conditions of their longer serving employees in order to bring all employees into line and remove some of the potentially costly aspects of the AWO. We are aware that the sick pay provisions of the AWO can cause particular difficulties to employers.

It is of course open to employers to seek to negotiate changes to existing terms and conditions although this is not without potential risk of Tribunal claims for breach of contract or constructive unfair dismissal. However if a full and fair consultation process is undertaken with the affected employees such variations can in our experience be achieved.

If you would like to discuss any queries you may have regarding the abolition of the AWO or any other employment related issue please contact Clare Waller, Partner in our Employment team on 01223 461155 or click here to email Clare.