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