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Monday, 24 December 2012

Abolition of the Agricultural Wages Board - Update

We have already blogged twice about the abolition of the AWB. That’s because it matters to our clients, most of whom are in the camp that would welcome the removal of the Board and the opportunity for greater flexibility in employment packages. Some, though, are concerned that not having an annual Agricultural Wages Order (AWO) setting minimum rates might mean a difficult conversation with employees about wage levels and other terms.

Last week Defra announced that – following consultation – it planned to proceed with the abolition of the Board by including provisions to that effect in the Enterprise and Regulatory Reform bill that is currently making its way through parliament. If everything goes to plan, the 2012 AWO will be the last and the Board will be abolished before October 2013.

From a practical – and legal – point of view, employers will need to consider the effect of abolition. At its most basic it will mean that the statutory terms and conditions of agricultural workers will be governed by National Minimum Wage and other employment legislation. That leaves the question of employees’ contractual rights and, in particular, what the position is with regards to areas that are not covered in the same way by general employment legislation (e.g. overtime, sickness, bereavement leave).

It is helpful to consider four distinct groups of employees:-

• existing (perhaps long-standing) employees whose contracts cross-refer to the AWO;
(c) Agripicture Images

• existing (perhaps more recent) employees whose contracts do not cross-refer to the AWO;

• employees taken on between now and the abolition of the AWB (and expiry of the AWO); and

• employees taken on after the abolition of the AWB and expiry of the final AWO.

The position in relation to the first and last of these should – subject to the small print of the legislation that abolishes the Board – be relatively clear-cut, the two groups in the middle less so.

What employers will be keen to know is whether, and if so how, they can move out of AWO terms once there is no longer an AWO in force. We are, for the moment, keeping a watching brief on this – there may be some provisions in the legislation which affect what can and cannot be done following abolition. Future terms and conditions may well turn on the wording used in current employment contracts.

Having said that, and for immediate action, employers who are taking on workers between now and the abolition of the Board should contact us for advice about whether, and how, they should be amending their standard contracts in view of the upcoming move into an AWO-free landscape.

Contact Phil Cookson for further information.