Contract tips after the end of the Agricultural Wages Board

The terms and conditions for agricultural workers as defined by the Agricultural Wages Board (AWB) come to an end this October, which gives growers much more flexibility when it comes to new contracts.

This follows the abolition of the AWB last month. The AWB had set the minimum wage and other terms and conditions including holidays and sick pay for agricultural workers in England and Wales. The last agricultural wages order made in October 2012 set the framework for wages and other terms and remains in place until 1 October 2013.

So what does it mean for growers and how can they prepare for the changes? And how could new contacts differ from existing ones?

New recruits

Recruits employed after 1 October 2013 no longer have to be offered terms which reflect the 2012 order. They can be offered far more flexible, and in many respects less generous terms and conditions, provided minimum statutory employment terms are complied with.

The main changes are:

• Reduced hourly rates: Employers will have to comply with the National Minimum Wage rates, but these are lower than the minimum wages prescribed by the 2012 order.
  
• No overtime rates: There is no obligation on employers to pay overtime at a higher rate which is a major change. Employers will only need to pay the national minimum wage which is lower than the overtime rates presented by the 2012 order.
  
• Less holiday: Under statute full-time workers are entitled to 28 days annual holiday (including bank holidays). Again, this is lower than the 2012 order which allows full-time workers 31 days annual holiday (including bank holidays).
  
• Lower sick pay: Employers will be able to pay significantly less sick pay to employees. Employees are only entitled to statutory sick pay of £86.70/week (provided they earn at least £109/week) for up to a maximum of 28 weeks. This contrasts with the 2012 order which gives employees with one year’s service up to 13 weeks’ sick pay at their basic rate increasing to 26 weeks if they have service of more than 59 months.

Existing workers

As you would expect, existing agricultural workers who have contractual rights reflecting the terms of the 2012 order will continue to have those rights, including in relation to pay, holiday and sick pay, until such time as their contracts of employment can be varied by agreement or their contracts come to an end.

Essentially this will create a two-tier approach to pay and benefits, if employers adopt the changes for new workers. While it may cause tension between employees it will, potentially, give farming businesses much lower wages bills.

Employers wanting to change existing employees’ terms and conditions will have to tread carefully to avoid breach of contract and constructive unfair dismissal claims, if they seek to impose changes to contractual terms.

The best way forward for an employer considering changing the terms and conditions of his existing workforce, will involve a carefully managed process seeking the workforce’s agreement to the changes and if this cannot be achieved, pursuing a dismissal and re-engagement process to introduce the new terms.

This may also trigger information and consultation obligations where 20 or more employees are dismissed within a 90-day period.

❚ Richard Taylor is a partner at farming consultants and land agents Strutt & Parker (01609 788 457) and Jo Keddie is a partner with lawyers Winckworth Sherwood.

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