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Insurance solution for AWR costs

Insurance solution for AWR costs

The Institute of Recruiters (IOR) and insurance broker Lockton Companies LLP (Lockton) have launched & lsquo;AWR-React’ - bespoke insurance that helps recruitment agencies cover the cost of defending a claim brought under the new Agency Workers Regulations (AWR) which become law on 1st October.

The new regulations give temporary agency workers legal entitlement to the same basic employment conditions as permanent employees, after 12 weeks employment.  Under the AWR, the recruitment agency is responsible for ensuring that its temporary workers’ rights are met. If a case is brought by a temporary worker, the agency will have to defend itself against a possible fine of &pound5000 for non-compliance, and unlimited fines fro AWR claims brought through Employment Tribunals. The agencies will need to prove it took & lsquo;reasonable steps’ to obtain the relevant information regarding employment conditions from the & lsquo;hiring’ company. Lindsey Bell, Partner at national law firm Clarke Willmott LLP and the IOR's legal partner comments that: “The costs of mounting a legal defence against an AWR case could be considerable”.  James Kerr, Recruitment Practice Leader, Lockton said that this is where AWR-React assists: “It will provide financial support to the agency to pay for the required legal and professional costs to defend itself against an AWR breach claim. This is the first AWR insurance product on the market, and it is affordable by all agencies – the cost of comprehensive cover starts at &pound153 per annum.”

Azmat Mohammed, Group President and CEO of the IOR comments: “The recruitment market in the UK is worth over &pound19bn, and 80% of this business is the placement of temporary workers.  However, around 70% of recruitment agencies are smaller businesses, including sole traders or offices employing three to five people, and the cost of defending an AWR claim could seriously damage their business. So it is vital that agencies have appropriate risk management procedures in place to mitigate against the new risks created by the AWR, and these plans should include AWR-React insurance protection.”

“Judging by the responses to a questionnaire sent to our membership there is a general awareness of the implementation of AWR, but a real lack of understanding of its implications on their business and what agencies need to do to operate within the AWR.”

The IOR, Lockton and Clarke Willmott LLP are also rolling out a series of workshops over the coming months for recruitment agencies to advise them on the implications of the AWR, and the risk management procedures that they need to implement.  In addition the IOR will be running webinars on its website providing information for its members giving advice on preparing for the implementation of the AWR.

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