Employers warned to check contract terms ahead of AWO abolition

The widely publicised abolition of the Agricultural Wages Order (AWO) means that the national minimum wage will apply from 1 October for agricultural workers, but further technical details are still being awaited as to how this will work in practice warns BTF Partnership.

As a result, agricultural/horticultural employers should be checking all of their employment contracts now.

Colin Hall partner at BTF Partnership and Director of the 50 Club Horticultural Employers’ Association comments: “The implications of AWO abolition on individual employees will depend entirely upon the status of the employee at the time and the contractual terms applying to him/her. It is likely existing employees engaged prior to 1 October 2013 with no specific contractual provisions reserving the right to amend following AWO abolition will broadly continue with the same entitlements. For others, however, such as those more recently employed with a specific contractual provision reserving the employer’s right to amend their contractual terms following abolition of the AWO, or those employed on or after 1 October 2013, the implications are greater.”

“From 1 October 2013 the employee may not automatically be entitled to AWO enhancements such as increased pay rates (over and above the National Minimum Wage), overtime, maximum deduction for a house, bereavement entitlements and enhanced holiday (31 days instead of 28 days).

Colin Hall concludes: “Employers need to be careful between now and 30 September 2013 that any employees taken on receive a contract of employment that makes it clear what their entitlements are and review any existing contracts and seek advice if in doubt.”

The legal text that formally abolishes the AWB was inserted into the Enterprise and Regulatory Reform Bill in the Lords, and their amendments have now passed through the House of Commons, meaning the Bill is free to pass to Royal Assent in the reasonably near future.

NFU Deputy President Meurig Raymond said: “The abolition of the Agricultural Wages Board has been a long-standing policy ambition of the NFU and we are pleased that we’re in sight of this goal. Throughout our lobbying effort over the years, the NFU has consistently argued that it is outdated, particularly with the existence of a national minimal wage and working time regulations which apply to all employment.

“AWB abolition is a progressive reform and is a welcome step to freeing up the industry to reward workers appropriately for the valuable work they do on farms. At last, we can move on from the one-sized-fits-all approach that puts agriculture out-of-step with the rest of the UK workforce. Free from the order, this creates the opportunity for workers and employers to look more widely at the total employment package; to go beyond the basic hourly rate and consider skills, training, and salaries as negotiations between individual workers and individual businesses become the norm.

“The timeframe for abolition still has to be confirmed, but it is hoped that abolition will coincide with the expiration of the current Agricultural Wages Order at the end of September. For the timebeing, employers must still comply with the terms of the order, alongside other employment legislation. Employers must be aware that current terms and conditions will remain in place after abolition for existing workers.

“The NFU’s work on employment issues continues. We are committed to providing key indicators and business guidance to help support the agricultural industry as it makes the transition to practices that are standard in every other sector of the economy.”

Plans to abolish the board were drawn up by a statutory panel announced by the government in July 2010, but Shadow farm minister Huw Irranca-Davies said it will be a blow to the agricultural economy.

"The Government admits that the abolition of the Agricultural Wages Board will take £240 million out of the pockets of farm workers over the next ten years.

"David Cameron’s out of touch government has delivered a bitter blow to the rural economy... People in the countryside need a One Nation plan to create jobs and growth, not this Government’s approach that leaves our lowest paid workers out of pocket."

Activists for the trade union Unite said they had delivering their messages of support for the board which it said 'protects the incomes of 150,000 agricultural workers.'

The union has said that 60 per cent of responses to the government’s consultation on the Agricultural Wages Board’s future were in favour of its retention.