subject: The Agency Workers Directive (awd): Your Questions Answered [print this page] The Agency Workers"?? Directive (AWD) has been on the horizon for a long time. On 21 January this year, following two rounds of public consultation in 2009 and an intensive eight-year lobbying campaign, the final regulations for the AWD were put before Parliament and published the next day. The regulations confirm that the AWD will not become law until October 2011.
PCG (formerly Professional Freelancers Group) has recently been lobbying the Government to recognise the value of freelancers in the labour market and when the AWD does become law, it is bound to revolutionise the freelance workforce.
Here at JSA, we recognise that the AWD will have both advantages and disadvantages for contractors and that the issues surrounding it can be very confusing. Below, we answer queries contractors may have about how it will affect them and what can be done in advance to prepare for it.
Why was the AWD created?
The reasoning behind the Directive (which was originally created by the European Community (EC) in Brussels), was to protect low-paid agency workers from employers taking advantage of their vulnerable status.
Who will be protected by AWD?
PAYE temps, workers supplying their services through umbrella companies and any other type of temporary worker who supplies their services via an employment business to work under the supervision and direction of a user organisation.
Who won"??t be protected?
The regulations are not intended to extend rights to workers who are genuinely in business on their own account i.e. limited company contractors.
How will AWD benefit temporary workers?
Under the new AWD legislation, for the first time, agency workers will be entitled to equal treatment on basic working and employment conditions after 12 weeks in a given job, including pay and holidays, as if they had been recruited directly by the hirer. The rights on pay will apply not just to the basic hourly rate, but to all pay for work done, including bonuses that are directly related to the performance of the agency worker personally.
Other benefits that agency workers will gain from the first day of their assignment include information about internal vacancies to give them the same opportunity as other workers to find permanent employment and equal access to on-site facilities such as child care and transport services.
What happens if employers don"??t comply?
The regulations include provisions that will deal with repeat assignments designed to prevent workers getting equal treatment rights. Agencies will be liable for claims if an agency worker has not received equal treatment. However, liability could move to the end user if it has not supplied the agency information about the relevant working and employment conditions.
What will the disadvantages be?
The equal rights for temporary workers will not extend to some of the wider benefits that permanent staff can enjoy in their longer-term relationships with their employer, such as occupational pensions and sick pay.
There are also fears that the extra bureaucracy involved will only discourage companies from taking on temporary workers when they are unable to create permanent jobs.
APSCo (the Association of Professional Staffing Companies) has said that the rules on implementing the AWD in the UK were "??riddled with inconsistencies"?? as limited company contractors are unlikely to be affected by AWD, yet temporary workers on similar pay operating through umbrella companies will be. There is also a risk that the estimated 1bn annual cost for employers to comply may become the responsibility of contractors who usually earn more than permanent staff but may now receive lower pay rates.
Will limited company contractors benefit more than those using umbrella companies?
It is generally thought that the exclusion of limited company contractors is a victory for the professional recruitment sector, specifically relating to the exclusion for the "??genuinely"?? self-employed. Ann Swain, APSCo Chief Executive, has commented that "??determining whether limited company contractors are genuinely self-employed or not is hugely complicated and is not something recruiters will be able to do reliably without detailed guidance."??
However, there are opportunities to explore for exemption from the AWD for workers who are operating under a contract of employment, subject to meeting certain criteria. This is an avenue that may well prove of interest to umbrella companies and could provide a framework for the benefit of working through an umbrella company in the future.
What is the situation regarding temp to perm fees?
The other major development is that the REC"??s (Recruitment and Employment Confederation) campaign to protect current temp to perm fees has succeeded, with the Government agreeing not to impose potentially damaging restrictions by bringing in a "??reasonableness"?? test on the fees charged by agencies.
Why has the AWD been delayed until 2011?
The trade unions have been pushing hard for AWD to be implemented earlier than 2011 but the Government seems to have been persuaded by business and recruitment sector warnings that if it becomes law this year, it might be damaging to the economy which is still a long way off from recovery.
What happens if a Tory government comes into power in the election?
If a Tory government comes into power, they have already given verbal assurances that they would review and reconsider elements of the AWD, although amending this legislation is not likely to be a major priority for any new government, bearing in mind the current challenges facing the UK.
What can be done to prepare for AWD now?
Although it is a long while until the AWD is implemented, it is worthwhile for employers who use temporary workers regularly to start to assess their staffing needs. It may be best to wait until the general election is over first, though, to see whether any potential new government does decide to make changes to the legislation.
Wise employers who plan ahead should take advantage of this long lead time (post election) to think carefully about and plan their resourcing needs since the government estimates that introducing the AWD legislation will cost the private sector an extra 1.4bn and the public sector an extra 337m.
The delay is a crucial opportunity as it allows a range of counter-measures to be considered. Inevitably, agencies will try to maintain their margins and employers will need to work with their existing agencies and perhaps test the market to work out if better value providers can be negotiated. Employers should consider conducting a workforce planning review now and examine what staffing leads and skills they will need to resource for their business in the medium term.
In summary, employers need to analyse their use of agency temps and assess what effects compliance with the legislation will have in terms of costs and practices. Some employers won"??t change their practices. However, for many employers in both public and private sectors, these changes offer an opportunity to look at how its flexibility needs are met and at what cost and whether there are any better value ways of meeting those needs. Employers can also look at what steps will be needed to comply with the 'day one' rights of access to employment information and facilities such as leisure/refreshment, transport facilities and crches.
What should contractors be doing now?
At JSA we will continue to monitor the development of the AWD as it moves through Parliament and ensure that all of our contractors are fully briefed and updated through each stage right through to October 2011. We will be supporting our contractors every step of the way, explaining how they will be affected by any new developments, answering any questions they may have and available for advice at any time, should they need it.
