Archive for March, 2010

What will the effect of the Agency Workers Directive be on the UK?

25/03/2010

A reader asks RecruitAdvisory ….

What will the effect of the Agency Workers Directive be on the UK?

This question has come from alot of readers! The Agency Workers Regulations 2010 will be implemented on 1 October 2011, so there is a little time to prepare. But not alot.  The AWR covers temps. Temps are typified as low-pay labour who don’t have sufficient skills to command a permanent job, hence the EU bringing in legislation to protect these more vulnerable workers.

I have surveyed a number of large employers around the EU and asked them what they believe the implications are, and what they have done and are doing to address the risks. I asked them how they will manage temps, managed service contractors, and the self-employed? And once the temp status of 12 weeks is up, what parts of the permanent employee’s pay package are these ex-temps eligible and not eligible to?

A number of large employers have said their options are to employ agency workers for less than 12 weeks, use managed service firms rather than employment agencies, contract the self-employed, or hire them direct. Using agency workers for less than 12 weeks is not going to be practical for most businesses, and rotating subsidiary employers, assignments, job titles and the like has been emphatically outlawed. Alot of people claiming to be self-employed have already been disabused by the Tax Office for years now, and employers risk fines for complicity. Most employment agencies will have to change in order to define their managed service clearly enough to differentiate themselves from being mere temp agencies; they could then legitimately tender for an exclusive relationship, so alot of employment agencies are going to be squeezed out of business.

Most employers surveyed have told me that they will hire either through a Managed Service Provider or their inhouse team, and accentuate the components of permanent employees’ Compensation & Benefits that are not covered by the AWR. A few have admitted that their Procurement or Finance departments have grown their own empires by taking over these units of production, at the expense of HR & Resourcing departments either not thought to have sufficient expertise, or not willing to put the work in.

The big questions, therefore, will be how employers efficiently administer the end-to-end process from requisition, attraction, selection, pooling, timesheeting, and pay & bill, and how they create reliable and flexible management reports on this end-to-end process. How much will the extra time taken in administration cost by not automating? What risks are there from not having a clear audit trail, and from not having reporting that can prove compliance?