AWR guidance should not drive in-house options, says REC

AWR guidance should not drive in-house options, says REC

The Government's draft AWR guidance document makes it clear that in-house banks are not covered by the regulations.  This is nothing new as the original EU Directive focuses exclusively on ‘tripartite’ relationships where a third party is involved in the supply of staff. However, there are legitimate concerns that explicit reference to in-house banks in the guidance could act as a prompt for more employers to explore this option.

Tom Hadley, the REC’s Director of Policy and Professional Services says:

 "The regulations were never intended to cover typical in-house supply models. Will this be a driver for more employers to explore non-agency options? Some will look into it, but there are a number of powerful counter-arguments that the AWR will not disarm.

“First off, other legal issues would need to be considered – for example, in-house models could come under existing fixed-term workers regulations which already enshrine equal treatment principles.  In addition, employers looking to transfer agency workers onto their own bank will often have to contend with complex TUPE requirements.

“A second major counter argument is the practical implications of sourcing, vetting and placing workers, administering a payroll and essentially replicating the work of an agency. The reality is that many businesses have periodically explored in-house options but have subsequently back-tracked due to the practical as well as legal requirements. 

“A third important message to get across is that in most cases the impact of the AWR on direct costs will be limited as temporary staff pay is already in-line or above that of direct recruits. This lessens the need for new models of supply. The key is to ensure that clients understand enough about the regulations to able to evaluate the cost  implications.”

Hadley added: “Looking ahead, an immediate priority is to ensure that the final AWR Guidance document refers to the legal and practical implications associated with in-house banks so that we challenge the assumption that this is an obvious and cost-effective way forward. Driving client awareness and actively promoting the value of using agencies will continue to form a core element of the REC’s AWR campaign.”

The REC is meeting with senior BIS officials tomorrow to go through the draft guidance line by line and ensure that the concerns of recruiters are reflected in the final document.  This follows an initial meeting with BIS officials last week as well as discussions with the Employment Relations Minister, Ed Davey and the Business Secretary, Vince Cable.