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Further AWD Comment

Further AWD Comment

APSCo disappointed by final Agency Workers Regulations laid before Parliament

Scope of Regulations will create red tape nightmare

The Government laid the Agency Workers Regulations 2010 before Parliament (21/01/10), which will implement the Agency Workers Directive into UK law.

Ann Swain, Chief Executive of the Association of Professional Staffing Companies (APSCo), comments:

Giving temporary workers the same pay and employment rights as permanent staff could cost UK plc over a billion pounds annually. Ironically, some of this cost will be borne by contractors who usually earn more than permanent staff but may now get lower pay rates.

This legislation is riddled with inconsistencies. While contractors who work through their own limited companies are unlikely to be burdened by this legislation, professionals on the same levels of pay who operate through other corporate structures (e.g. umbrella companies) will be.

The exclusion of limited company contractors from the Regulations is a huge victory for the professional recruitment sector. APSCo will continue to push for clarification on this issue and will be assisting the Government in drafting guidance. 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.

APSCo had campaigned vigorously to block any attempt to limit temp to perm fees. The Government has listened to our concerns and decided not to intervene. This is a crucial win for the industry.

End users will be able to push the cost of complying onto recruiters by getting recruiters to indemnify them in respect of any claims made in connection with the Regulations. This will leave vulnerable workers no better off and heap further costs on recruiters.

The Regulations will give temporary workers who are pregnant or new mothers more rights than equivalent permanent employees. This will impose significant costs on staffing companies.

Paul Venables, Group Finance Director at Hays, comments on todays announcement about the implementation of the AWD:
We have worked closely with the REC and CBI over the last year to support their efforts to delay the implementation of the AWD and we welcome todays confirmation that these changes will not be brought into effect until October 2011. In the current economic climate earlier implementation would have reduced the flexibility of the temporary job market and the attractiveness of the UK for investment, with the potential effect of slowing any recovery in the labour market and increasing unemployment. However, there remain concerns about the increased administrative costs that these new regulations will place on UK businesses and it is important that clear and practical guidance is provided well ahead of the implementation date. We will continue to support our clients through the next stages prior to implementation in October 2011.

Government statement on Agency Worker Regulations initial response from ARC.

The Association of Recruitment Consultancies (ARC) has given a mixed response to the government statement of policy published yesterday that final regulations are to be laid before Parliament immediately.

The regulations are intended to give agency workers equal entitlements to pay and leave arrangements as if they had been recruited directly by their hirer, following an EU Directive finalised in December 2008.

Adrian Marlowe, chairman of ARC, said there is little to be jubilant about as yet and I reserve my judgment until I have seen the final regulations, which I understand are to be published later today. The regulations necessarily are complex, have the capacity to affect other areas of law, and the potential to affect the viability of agency work as we know it. For those reasons, and because of the many anomalies in the original draft which we had addressed on our response last December, we had urged the Government to publish the final regulations for comment before laying them before Parliament. Regrettably this has not happened, and I hope therefore that the Regulations do actually lead to a fair result.

What can we take from it so far? There appear to be some positive wins. The draft regulations contained proposals for all transfer fees, not just temp to perm, to be limited by a reasonableness test. The transfer fees that recruiters can charge include temp to temp, and the test was also proposed to cover the extended periods of hire that a recruiter must offer to hirers in place of a fee. Uniquely we saw this recruiter specific proposal as highly dangerous for the temp contracting industry, leading to a potential blood bath as hirers switch workers from one agency to another, and we mounted a detailed and well publicised campaign to stop it. I am therefore very pleased to see that the Government statement indicates plans to drop the test in any form and to scrap the proposal leaving the transfer fees regulations unaffected.

Also the policy statement in certain areas also indicates an acceptance of key points of principle, relating to the distinction between agency work and employment, which we had highlighted in our response to the 2nd consultation. For example, on the issue of pay we are told that included bonuses are to be defined in a more sensible way. This is very welcome and again would more reflect the reality of the agency relationship.

However in all these areas the jury must be out until the detail can be seen, and we are not jumping to any conclusions.

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