Articles
Reading headlines in this magazine last month, you might imagine that the concerns over the introduction of the Agency Workers Regulations (AWR) in the UK last October were overblown.
Vacancies in engineering for temporary jobs have increased since the start of the year, according to a study by the Association of Professional Staffing Companies. And the latest survey by Markit and the Chartered Institute of Purchasing and Supply showed manufacturing jobs increasing in line with production, with February seeing the biggest rise since June last year. February’s Recruitment & Employment Confederation/KPMG AWR Monitor report on jobs also reported contined strong demand for temporary workers, with agency billings up since last December and overall demand for agency workers in the economy at “historic levels”.
Given the obvious reasons for using temporary workers, none of this is surprising. Nor is the fact that the REC report found 68% of employers said they’d made no changes in their approach to agency workers and that “flexible staffing arrangements are firmly embedded with employer resourcing strategies”.
So does that mean that we’re out of the woods and can relax about AWR and carry on as before? Well, no – not just yet.
The bad news for contractors is that this new layer of EU-derived regulation, designed to improve the rights of agency workers by giving them equal employment rights after 12 weeks, is being seen by many employers as an opportunity to do the opposite and protect their margins at the same time.
Some major companies in the automotive industry and the food and drink sector have tried to use the solution known as the Swedish Derogation to limit their obligations to temps, and to bring down the effective rates paid over the period of a contract.
It involves the agency technically employing workers on permanent contracts, and paying them a minimum amount between assignments. Although entirely legal, it flies in the face of both the intention of AWR and the spirit of the law, hence the negative media coverage of those being seen trying to use it.
Others have sought to get around upgrading the rights and pay of temps by letting them go, or giving them a new role, before the 12-week qualifying period is reached, or simply hiring them for 11 weeks at a time. A recent Daily Mirror report even accused HR staff in the Cabinet Office of advising government departments to do this.
The potential risk to contractors is less pay – not just than the higher rates designed to tide them over till their next job, but also compared with their full-time equivalents.
For employers, the dangers lie in the uncertainties that remain over how to correctly implement AWR. They need to protect their reputation by being seen to do the right thing, and also attract the best people in what’s become a competitive market because of big infrastructure projects such as Crossrail.
Despite the recruitment industry having spent years understanding the legislation and its implications, Meridian’s AWR LinkedIn group is still a hotbed of discussion on how the legislation should be interpreted, which is bad news for employers. We sought to resolve these debates offline at a February summit in London for leading representatives of key AWR stakeholder groups and the government’s lead official on AWR. But five months into implementation of the regulations, there were still more questions than answers.
So how do employers avoid sleep-walking into either having their agency costs shooting up after 12 weeks or being hit with negative media coverage if they try to cap them by using the Swedish Derogation? In the absence of clear guidance from the government or fuller support from industry, the simple answer is to consult a professional recruitment agency.
Agencies are still best placed to protect employers from the AWR risks, and should be left to deal with the forthcoming legal challenges to some interpretations of it. Those cases will eventually clarify all the key issues that will allow firms to use temps with confidence.
For contractors, the advice is the same. Agencies have an incentive to ensure temps are given the protection and reward that AWR was designed to guarantee them – so that they keep coming back for work.