New rules safeguarding the rights of temporary workers come into effect in the autumn. Are employers prepared for the legislation and will they benefit?
Legislation designed to protect temporary workers from being used as cheap labour will come into force on October 1st. The Agency Workers Regulations 2010 follow long debates between employers and unions over whether such workers should be given the same rights as permanent staff.
Following an EU directive, a compromise agreed by the TUC, the CBI and the Department for Business, Innovation and Skills will boost protection within a group thought to be up to 1.5 million-strong. “The objective is to bring the qualifying agency worker up to the same level of the worker directly employed by the company,” says Joe Tully, legal director of de Poel, procurer of temporary labour.
After 12 weeks in the same role with one employer, temporary workers will be entitled to basic pay parity with directly employed colleagues, including the hourly rate and extra entitlements (see panel), as well as corresponding working conditions. They will also have “day one rights” from the start of their assignment, including access to childcare, transport and a staff canteen, as well as the right to be informed of relevant permanent roles in the company.
“It will create extra work and bureaucracy, particularly for agencies, but we believe we can make it work and we are clear that the regulations will not fundamentally impact on the flexibility that temporary agency work provides for UK business,” says Tom Hadley, director of policy and professional services at the Recruitment & Employment Confederation (REC). A recent REC/KPMG jobs survey reported the biggest rise in temporary placements since 2007.
REC’s employment outlook forecast predicts that flexible staffing will remain a linchpin for economic growth, with one in four employers aiming to hire extra agency workers in the next three months and one in three expecting to boost temporary staffing over the next 12 months.
Tully says the plans reflect rising confidence in UK industry. “Agency workers are the most flexible members of the workforce. They are the first to be shed when an industry goes into recession but they are the first to be taken back when it is coming out of it.”
Karen McGill, a partner with law group MacRoberts LLP, believes the new rules offer a timely reminder for organisations to take stock of staffing practices. “I think many will be long overdue in looking at how many agency workers they use and the economics of them,” she says.
McGill believes the rules may have far-reaching effects for larger companies. “One of my clients has had an agency worker with them for the past 11 years and that is not uncommon in big organisations where they have headcount issues,” she says. “Some of them will have hundreds of agency workers on their books and will have had them for years-they need to do an audit to decide on their options.”
Philip Sack, the IoD’s senior adviser on employment policy, describes the regulations as “unwelcome EU-inspired law”. He says: “They will have a significant impact on companies that use agency workers, and they need to be aware of what the requirements are with regard to equal treatment of agency workers.”
But Andy Smith, head of regulation at recruiter Adecco, argues that compliance will be easier than many companies think. “Equal treatment under these regulations is a very different concept to what people are used to under other employment law,” he says.
Sarah Veale, the TUC’s head of equality and employment rights, also believes the effects of the rules are over-hyped. “I can understand why, politically, businesses want to complain about this because it is another cumulative impact, but away from the political heat I suspect they will get on with it and it won’t cause any serious problems,” she says.
Hadley suggests that for many employers the reach of the legislation will be limited, with around 60 per cent of agency worker assignments lasting less than 12 weeks. “A lot of temporary staff are already pretty well paid so in a lot of cases this may not have much impact at all,” he says.
The construction sector, where pay is often lower, is likely to be hit. So, too, will those companies that routinely employ blue-collar temporary workers. “There is likely to be more of a pay differential and if they have high contracts use then it could make a real difference for them,” argues Keith Sammons, operations director of recruitment company Advanced Resource Managers.
His advice to employers is to engage with agencies and look now at their use of agency workers as well as the longevity of contracts. “They may conclude that on average they only keep temps for six weeks, or they may have them for nine months and they can start to gauge what the impact will be,” he says. “There is definitely some work to do up front in terms of gathering this information, but whether there is any impact after that will be on a case-by-case basis.”
Hadley reckons there is nothing to stop employers bypassing the rules by routinely terminating agency assignments just before 12 weeks and bringing in a constant stream of new temporary workers, but he thinks this is unlikely. “Many agency workers are better paid and even if you had to pay them a little more we think it is worthwhile rather than bringing in somebody new and starting from scratch,” he says.
But McGill at law group MacRoberts warns: “There are provisions that say where they [employers] deliberately structured engagement in a way to circumvent [the rules], the tribunal can look at it and decide whether it is a flagrant breach of the regulations.”
Employers who fall foul of the rules could face legal action, but Hadley says: “If you act in the correct way and are clear to workers, that should limit risk. For many employers too many tribunals is already a concern, but we don’t think this is going to lead to a surge.”
The TUC’s Veale adds: “If I ran a small business I would accept that if I was bringing in an agency worker I would have to be careful that I wasn’t doing anything substantially different. As long as you are doing your best it is unlikely there will be serious complaints about anything minor, although there will be damage to the reputation of the business, which you should never underestimate.”
She is pleased with employers’ preparation. “We have been very encouraged by the amount of details that employers have gone into. Employers’ associations have done a lot to put across simpler guidance that is accessible to understand.”
Adecco’s Smith thinks it is important to consider the regulations realistically. “Step back and think about what we are doing here. We are effectively saying that if you find work through an agency you will be treated as if you had been employed directly, in certain respects,” he says.
“If we manage to enhance the attraction of agency working then the benefits of flexibility in the economy are clear. If agency work does come to be seen as more attractive and more skilled, and highly valuable people choose it, then everyone benefits.”
By Tina Nielsen
For more information on the rights of temporary workers