FarmWeb

Agricultural Wages Board (AWB)

The Agricultural Wages Board (AWB) in England & Wales was discontinued in October 2013.

What is the Agricultural Wages Board?

The Agricultural Wages Board for England and Wales is responsible for setting the minimum rates of pay and other terms and conditions of employment and this order applies to any worker employed in agriculture anywhere in England & Wales.  The Order provided a pay structure for Farmers to pay workers by and there is a concern that without the structure, wages may be reduced. Furthermore, those affected could be vulnerable workers. Many are employed on small farms, with seasonal work and a significant proportion of the workforce are migrant workers. Earlier this year, amongst heavy debate and opposition, the government achieved Royal Assent and the Order will cease to exist on 30th September 2013.  The Board will continue to function in Scotland for the foreseeable future.

What impact does this have on employers and employees?

Whilst the abolition of the Act removes the pay structure for all workers, these changes will not affect those who have existing contracts in place as their current terms and conditions will continue until the employer and worker enter into a new contract.   The abolition will however, remove some of the regulatory burden which is currently imposed by the AWB.  This will allow farmers greater flexibility to negotiate terms and conditions with their new employees going forward.  However, employers will need to ensure that they understand the minimum entitlements that will be afforded to agricultural workers once the AWB is abolished, and that they stay within these statutory requirements when negotiating terms. As a result, agricultural workers could experience a decline in their current entitlements as the AWB provide benefits that employers are not obliged to offer.   

Is there any help available to me to understand the impact of this on my business?

All FarmWeb policyholders have access to a 24/7 Legal Advice Service and details can be found at the front of your policy booklet. This helpline can provide the Insured legal assistance to guide them through employment matters arising from the abolition of the AWB.  There is also the option of insuring for Commercial Legal Protection which will give Policyholders access to the DAS Businesslaw website.  The DAS Businesslaw service provides a wide range of letters, articles and reference information, as well as interactive document builders, designed to help the Policyholder run their Business.  This service also provides useful tools and information on matters such as new legislation, employment issues, property law and taxation, all regularly updated by legal experts.

It's worth remembering that the law generally prevents the changing of a contract without the consent of all parties to the contract. In employment contexts, this means that an employer who is unable to, or fails to obtain consent to a change from their employee, will either have to:

o      abandon the change;

o      impose the change and risk claims of breach of contract/underpayment of wages and possibly even constructive dismissal; or

o      seek to serve notice to terminate the existing contract and to re-issue an amended contract, in relation to which they would need to show a fair reason and process to avoid the risk of Unfair Dismissal being claimed.

In light of this change and the implications it will have, there is now a serious risk that if a Policyholder makes changes to an employees contract of employment which are illegal their actions can result in them being pursued by an employee in an Employment Tribunal for constructive unfair dismissal and/or unlawful deduction of wages.

My insurance policy includes cover under the Employers Liability section for Agricultural Wages Board claims.  What is this cover and what will happen to it, in light of the abolition of the Act?

Under most specialist agricultural insurance policies the farmer can elect to include cover for his employees in respect of all instances of sickness and accidents whilst employees are travelling to and from work and whilst at work.  Cover will provide a benefit for the employee based on their grading and is payable for a period dependant on the employees length of service and provides the benefit for the Insured to offset his obligations of payment under the AWB.  Any absence stemming from incidents outside of work are excluded.  Statutory Sick Pay, where recoverable is deducted from the overall benefit figure. 

As this is clearly an important policy benefit to our Farmers, FarmWeb NIG are pleased to confirm a continuation of cover, providing a benefit to the Policyholder, similar to what would have been received if the AWB had remained in force in England & Wales.  The Act remains in force in Scotland and we have therefore used this as the benchmark to continue cover for our Policyholders who have previously elected to insure for AWB.  The cover is in fact slightly wider by providing a benefit for all instances of sickness and accidents, even if the accident occurs at home or during a recreational activity.  Further, regardless of the length of service, provided it is over 12 months the benefit is the same. A flat hourly rate is applicable under the Scottish Order regardless of job role or experience which simplifies the process for the Farmer.  As of 1st October 2012, the most recent edition of the order, the hourly rate is £6.86.

The current full orders can be viewed at:

England and Wales: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69593/awo12.pdf

Scotland: http://www.scotland.gov.uk/Resource/0040/00402181.pdf

If you currently insure for AWB claims under your policy then you don't need to do anything as we will automatically include the updated benefits of cover within your policy.  If you require more detailed information on policy cover you can view the Notice to Policyholders on our website, concerning this change, effective 1st October 2013.

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