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Draft Agency Workers Regulations: What employers need to know

Now expected to come into force in October 2011, employers were today given a late reprieve on one of the UK’s most hotly debated pieces of legislation; the Agency Workers Regulations.


Draft Agency Workers Regulations: What employers need to know

Now expected to come into force in October 2011, employers were today given a late reprieve on one of the UK’s most hotly debated pieces of legislation; the Agency Workers Regulations.

Employers have been given until Autumn 2011 to comply with the Regulations which after 12 weeks will give agency workers the right to equal treatment with permanent members of staff as if they had been recruited directly to the same job.

Partner at international law firm Eversheds, Mark Hammerton comments on some of the key areas surrounding the draft Regulations:

“The Regulations should prompt employers to carry out a workforce planning review now. Although the delay in implementation gives employers greater flexibility, budgets and organisational plans need to be in place and actioned well before then in order to be fully prepared for the changes.

“The draft Regulations do not provide for employment status for agency workers nor do they give redundancy pay rights. In recent years the courts and tribunals have shown a tendency to shy away from giving employment status to typical agency temps and this legislation does not change that position.

“Agency workers already benefit from workplace discrimination protection and from rights such as holidays and breaks under the working time legislation and statutory sick pay. The key change will be that after twelve weeks, an agency worker will be entitled to equal pay with the hirer’s direct permanent employees, plus some important benefits. This twelve week rule will dramatically change the economics of using agency workers on a long term basis.”

Mark continues on the added cost to employers: “This legislation will lead to increased cost for employers - according to the Governments own estimate from the earlier consultation exercise, costs will rise in the order of 0.7% of the UK payroll and NI bill. This sounds small but the real cost to employers, already under pressure to control every penny of costs will make a difference.”

On ways that employers may seek to respond to the Regulations, Mark says: “All sectors that use agency workers will need to examine their people needs. Some organisations may conclude it is preferable not to use agency staff after twelve weeks. Other employers may reduce reliance on agency workers by direct recruitment of temps or by requiring current employees to absorb any extra work. Some employers will look at workarounds such as managed service contracts or seeking to establish individuals as self employed.

“While trade unions have lobbied hard for even tighter Regulations, many employers and bodies such as CBI and REC have highlighted the benefits of the flexibility that agency work gives the UK labour market. The Regulations appear to represent a middle route, which goes beyond a bare minimum implementation but does not go as far as some trade unions would have liked. Some very interesting questions remain but, overall, employers can take a degree of comfort from the fact that the legislation could have been significantly more draconian. A period of further consultation now follows but it is unlikely that any of the key policy considerations will change.”

“The trade unions are likely to be disappointed that, in terms of the timing of this legislation, priority has been given to the CBI and REC's lobbying that a swifter implementation would have negative effects on the economy at precisely the wrong point in the economic cycle.”

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