UK Business Blog

As of 1 October 2011, agency workers in the UK now have the right to equal treatment in certain areas of their employment, as a result of the Agency Workers Regulations (AWR) which are set to make a significant impact on the UK’s flexible workforce.

Under AWR, all agency workers are entitled to the same basic employment and working conditions as a permanent equivalent in relation to pay, working time and annual leave, after a twelve week qualifying period. Agency workers also have the right to be informed of any relevant internal opportunities for permanent employment. The regulations exclude sick pay, maternity or paternity pay, redundancy, notice pay, payments related to pension entitlement, and bonuses not based on individual performance.

For the most part, it will be business as usual for UK employers. Our sixteen years working in the temporary and contractor marketplace shows that the majority of such contracts do not last longer than twelve weeks. In these circumstances, businesses have little cause for concern.

Businesses stand to benefit from the employment of temporary and contract workers. The recruitment of temps and contractors is growing, with more than 1.4 million people currently employed on a freelance basis in the UK. A lot of hirers use the temporary marketplace to source good quality permanent workers similar to the concept of “try before you recruit”, and in fact we have seen a 17% rise in temporary workers going permanent within the same company.

However, the AWR clock has been set in motion and is ticking, so there are important measures UKbusinesses must take to ensure they comply fully with the regulations now in place.

Businesses that partner with a quality recruitment agency for temporary workers will stand to benefit. Working with an agency will ensure businesses know which temporary workers have worked the twelve calendar week probation period, even if this has not taken place over twelve consecutive weeks – as contractors are entitled to a break of up to six calendar weeks with the same employer.

There are two potential paths recruitment agencies can then follow to ensure they comply with the terms set out by the regulations. The safest, most compliant and ethical solution that also helps control costs, is to use a comparable full-time worker as a benchmark for the temporary worker’s terms – otherwise known as the comparator model. The compliance that the comparator route offers will ensure that businesses feel secure in that they are fulfilling all legal requirements and acting in the spirit of the AWR.

An alternative route to meeting AWR requirements is to use the Swedish Derogation clause. Simply, it means that AWR rights to equal pay of an agency worker no longer exist, where temporary workers are employed directly by a temporary work agency or umbrella company on a permanent basis, and receive pay in-between assignments. The contractor must be paid up to 50% of their highest-earning weekly salary (or national minimum wage if that’s higher) for up to four weeks after the assignment finishes (designed to assist them in looking for a new contract). These post-assignment financial liabilities make it much more difficult to predict the true value of a contract, meaning that forecasting cash flow is more difficult

Those considering using Swedish Derogation should be warned – the trade unions are focusing much of their attention on it, with the intention of bringing tribunals and class actions against those they believe to be breaching the AWR regulations.  Businesses that are seen to be ultimately undermining the protection of temporary workers with Swedish Derogation are highly likely to be first in the line of fire.

The implementation of AWR serves to underline the economic benefits of a flexible workforce for the UK. Businesses should fully acknowledge the importance of the temporary workers market in stimulating economic growth by providing short-term no-obligation labour and as way to “try before you buy”. Businesses that fully understand the terms of AWR, have adjusted their administration accordingly and partnered with a knowledgeable recruitment agency stand to benefit. AWR will see that fairness is firmly entrenched in the system and temporary workers are more closely integrated into the company and its culture, benefitting both employee and employer.

Guest post by Simon Last-Sutton, FPS Group

http://www.fpsgroup.com/

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….started a new ‘Case Study’ section (which you can see from the tabs above!) We will be adding to this every so often so lookout for the stories of companies who successfully made the expansion to the UK and how they did it.

The first case study is about the recruitment software provider Bullhorn, who expanded to the UK from their US base. Happy reading!

What makes this hilarious, you see, it's a suitcase and it's been abroad.....it's an international case study. Ahem...

Katie Jamieson

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A recipe for UK success

Recruitment software provider, Bullhorn, has registered significant growth since its UK launch in June 2009. Over 150 clients and 1000 users have signed up to the system. Peter Linas, Bullhorn UK MD, reflects on how to translate US success to UK profitability.

Expansion and growth

 A thriving business will naturally develop opportunities for expansion. Success breeds success, and market potential will become clear. After excelling in the US, Bullhorn saw the potential in the UK recruitment market, and was keen to start writing the next chapter of its global story.

Incumbent providers were already offering remotely hosted, single company solutions, but there were no major players with established cloud-based recruitment software. Consequently, the market was open and ready to welcome a new name with a proven product – the Bullhorn platform had a decade’s worth of US research and development behind it, essentially de-risking its offering. Dedicated UK expansion was also deemed necessary in order to set up an office that could service all of EMEA. Bullhorn already did business in these regions but wanted a European base of operations to maximise high growth prospects.

Linas believes the UK recruitment market is now ‘cloud’ ready.

Local knowledge and team development

The UK has a highly competitive recruitment business market; even though the potential was clear, Bullhorn realised that a head of operations with the appropriate levels of expertise and experience was required. Twenty years in the recruitment and software industries has provided me with an in-depth understanding and good working knowledge of the areas in which the company specialises. Local acumen cannot be underestimated. Even in English speaking, culturally similar countries like the US and the UK, deals are done differently: the industry language is localised, and second tier stakeholders, like the press, react in their own unique way. If you want your brand and offering to take off and quickly gain traction, the first hire needs to know the sector so they can navigate it well. This is before you even consider the technology lag. It may pain some British ears to hear this, but we’re at least two to three years behind our transatlantic cousins. Our job so far has involved educating clients, and potential clients, on ‘the cloud’, and the difference it can make to their business. This understanding has been key to the brand’s successful development, as few will buy something they don’t understand, even if it boasts extremely impressive return on investment

Considered team expansion is then crucial to a new company’s first 12 months. While it may be tempting to fill an office with bodies from day one, nothing jeopardises all-important cash flow like an out of control wage bill. Carefully building a team requires position planning and pre-set ‘triggers’; points at which it becomes necessary to bring on new staff. We knew there was a specific order of positions that needed to be filled if we wanted to successfully sign and support new business. Early adopters in the recruitment market meant Bullhorn instantly needed local resource – therefore, the first two hires were support staff – effectively an extension of our US office. The following hires in order were: sales engineers, sales staff, project managers (this function was previously run from the US), an implementation team and extended account management. This has meant we’ve grown from a ‘one man on the ground’ team, supported by a US office, to a team of 16 in 18 months. In fact, the pace of the product adoption has meant I haven’t signed a long-term lease yet, and we’ve already moved offices four times! Whilst this expansion may seem rapid, it was never out of control as we maintained our recruitment plan, compensating with US support if we ever needed additional resource.

Recruitment has been easier than expected, which I attribute to two factors. Firstly, the company has an exciting, sellable product – it’s rare the opportunity arises to work for a UK start-up with such rapid growth prospects, but, growth equals opportunity. Our first two hires are now heading up departments and teams. Secondly, the result of our decision to bring on a quality public relations firm from day one meant we signed new business more quickly, but also made the sector very aware of our presence. Industry experts working for us now had already heard of the company, even though Bullhorn had only existed in the UK for a very short period of time.

Market reaction

As previously mentioned, we knew there was a niche in the UK market for a cloud based recruitment software solution. Our first 50 clients could be classed as early adopters and as a consequence took the largest theoretical risk – in reality the US office would have continued to service them, but Bullhorn UK may not have succeeded. Obviously the existing pedigree of the US business helped, but as a consequence the early adopters received exclusive benefits. It would also seem the cloud isn’t for everyone right now, but our burgeoning client base of over 150 companies creates confidence. If our clients are all benefiting from SaaS, then prospects are more inclined to sign on the dotted line. However, not underestimating the competition, while sating the market’s appetite for cloud based services, has allowed us to focus heavily on our unique selling points: managing business not technology; a SaaS solution with all the benefits, and a focused apps store in the Bullhorn Marketplace. The reaction to a true cloud solution was interesting as the recruitment market wasn’t saturated with offerings, but the reaction to the Bullhorn Marketplace has been even more fascinating.

US vs. UK

There is a significant technology time lag between the US and the UK; solutions based on the cloud which are only recently gaining mainstream acceptance in the UK, have been mainstays in the US market for two to three years. In all fairness, there are significant fundamental differences in the two recruitment markets. For example, the majority of recruiters in this country all fall within the boundaries of the M25, and a lot of the terminology and business processes have subtle differences. Simple software development factors like date formats for example, have led to tailored product development resulting in the UK platform now retaining only about 70% of its transatlantic cousin’s original look. Interestingly however, we are now registering a changing of attitudes in the UK. Take the aforementioned Bullhorn Marketplace. This is an online recruitment apps store we opened last year where Bullhorn users can purchase verified, best-in-breed, third party add-ons for their platform which can be instantly activated for maximum benefit. We’re the only solution provider to offer this, but it feels natural for us as an extension of our cloud services. The Marketplace has also opened up new territories for third-party UK partners like Broadbean, Daxtra Technologies and Dialogue Communications. While the service was only intended as an apps store for the Bullhorn platform, a knock-on business effect has been exposure for UK brands to the US recruitment market.

…and finally

The receptive attitude of the UK market towards the cloud has been responsible for the rapid uptake of our product. UK recruiters are becoming more and more familiar with SaaS and what it can offer in terms of service. We are also registering more recruitment agencies surveying their back office software and IT needs in order to assess whether they really are getting value for money. However, as always, consistent expansion relies on the people in the business. We have benefited most from our quality employees driving the UK offering forward, while their US equivalents have invested and developed the product to match demand, ultimately supporting UK recruitment agencies, helping them do better business than ever before.

Heather Baker

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