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AGENCY WORKERS REGULATIONS THREATEN

AGENCY WORKERS REGULATIONS THREATEN CUT TO AGENCY INCOME AND REDUCE WORKFORCE FLEXIBILITY

The proposed Agency Workers Regulations are likely to lead to a loss of income for recruitment companies, as end-users seek to reduce reliance on temps and drive down agency commission to compensate for their additional implementation costs.

This stark warning was given by representatives from some of Britains top companies who recently attended a packed event organised by the Association of Recruitment Consultancies*. They argued that the practical aspects of application and administration were likely to be complex and burdensome for all agencies and hirers. If it resulted in hirers having to increase pay and conditions for agency workers, end users would find it less attractive to use them, with a consequent reduction in the availability of temporary work and loss of income to recruiters.

Over seventy professionals, including delegates from member recruitment agencies, joined more than 30 representatives of some of the UKs largest end-user companies, to hear guest speakers, including Jonathan Djanogly, the Conservative party's Shadow Minister for Corporate Affairs, warn of the likely consequences of the Directive.

Jonathan Djanogly said it was clear that employers did not want the AWR and most employees didnt want it either. "The trade unions may want the legislation because it might provide a bigger pool of workers that could be unionised he maintained. "As things stand, the regulations are counter intuitive. They should encourage the agency market and not detract from it. The future will be about flexibility in the workplace. Agency workers are a key way to getting young people into the workplace and the regulations will have a negative impact in this respect.

The Conservative shadow spokesmen said that his party was very unhappy about the fact that the proposed 12 week period - the number of weeks an agency worker needs to work on an assignment before the directive applies - was not set out in the Directive, nor was there any consultation from businesses, employers, the recruitment industry or Parliament. He said if the Conservatives were elected in 2010, then they would be happy to review the proposed legislation if necessary. He pointed out that as implementation was not required until December 2011, there was no point in rushing it through.

Although the implementation of the Agency Workers Directive (AWD) in the UK has been delayed until October 2011, ARC Chairman Adrian Marlowe warned the audience that the effect of the legislation would be to give agency workers the right to be treated as if recruited directly by the hirer. This could lead to permanent employees demanding pay increases to ensure they did not receive smaller pay packets than temps working with them. It was inevitable that end-users would look for cost cuts to compensate for this and agency fees would inevitably come under pressure.

The Agency Workers Regulations could also seriously harm the UKs very flexible market, which currently greatly benefits both end users and the workers they hire, cautioned Marlowe, and could diminish lifestyle choices for workers and block opportunities for permanent employment, which often resulted from temporary engagements.

Adrian Marlowe stressed that the likely 2.8bn annual cost of implementing this legislation could be better spent, perhaps on job creation. He told delegates that the regulations would affect all agency workers, yet the majority would not fall into the category of 'vulnerable' workers which the Directive was meant to protect.

For this reason, the ARC had suggested to the Government a two tier approach, with the lowest paid achieving the proposed rights at a far earlier stage (i.e. 12 weeks) than the higher paid more skilled workers, who would only become entitled to these rights after a year.

"These suggested limits are an introduction to the principle and not cast in stone," stated Marlowe. "We hope that this solution balances the understandable desire of the various unions to protect vulnerable agency workers, with the need to preserve flexibility in the workplace to the advantage of both end users and workers."

The delegates showed virtually unanimous support for this proposal which the ARC has been pressing the government and the opposition parties to accept since May 2009. Marlowe concluded: It is practical, it reflects the reality, it would be legal if the social partners agreed it, and it would save millions of pounds in wasted administration every year. In the meantime, it is essential that both hirers and agencies should continue to collectively press government on these issues, and that the government should not close the door to further amendments, even though the draft regulations have been laid before Parliament.

Other key points that emerged from the meeting included:
The new regulations, which exceed the provisions of the Directive itself by providing a tougher regime than is required by the European legislation, would lead to a slowing down of social mobility and more flexible working patterns, just when the UK is emerging from one of the severest recession in its history.
The legislation also introduces another level of liability for agencies and hirers, particularly as employment tribunals are likely to grant unwarranted payouts.
On the positive side, the regulations should result in fewer claims for actual employment rights. However where hirers select from their own lists of workers to avoid the impact of the regulations, there would be an enhanced risk of actual employment rights accruing as the hirer would have to contract with the workers direct, potentially negating the benefit of by-passing the Directive.

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