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Results Of Osborne Clarkes AWR Survey

Results Of Osborne Clarkes AWR Survey

An online survey was carried out between 18th May and 19th July 2012.  Unlike other AWR surveys carried out to date the Osborne Clarke survey was aimed specifically at staffing suppliers rather than hirers, looking at liability and indemnity issues from a staffing angle. A representative spread of staffing suppliers from large to SME (55:45) and professional/technical/engineering staffing and blue collar/industrial/high volume temp (60:40) responded to the survey.

AWR claims are starting to happen with just under 30% of respondents having had a claim threatened or received.

49% of respondents have an average of 2 or more intermediaries involved in their staffing supply chain, inevitably leading to complex claims.

Just under 60% of respondents have received an AWR information request from their contract staff but 46% have yet to agree with their clients, and 57%  with their suppliers, what to do if they receive a request.

63% of respondents have signed AWR indemnities.

78% of respondents confirmed that they do not have insurance against AWR claims.

AWR claims?

Osborne Clarke’s Staffing Supply Chain Survey reveals that AWR claims are starting to happen.

Just under 30% of respondents have had a claim threatened or received.  This corresponds to what we are seeing in the industry more generally.  We are aware of at least 12 claims to date, all of which relate to different aspects of the AWR.  It would be premature to say that any trends are emerging but staffing suppliers and hirers need to prepare for the real possibility of claims.

63% of respondents estimated that their administrative costs had increased by more than 6% due to implementing AWR measures, with 11% reporting an increase of 20% or more.

Complex supply chains means complex claims

49% of respondents have an average of 2 or more intermediaries involved in their staffing supplies before they reach the hirer, with 17% involving 3 or more. 

75% of respondents confirmed that they supply one or more clients via an MSP/RPO arrangement and 44% confirmed that they themselves run MSP/RPO or similar services.   In practice this means that, unlike most conventional employer/employee employment tribunal claims, AWR claims will tend to involve 4 or more parties.

Information requests – underlining the need for a co-ordinated approach

Notwithstanding the practical problems of co-ordinating a response, given that multi-party supply chains are now a reality for many staffing companies and given the adverse effect for all if just one party is in breach, it is essential to ensure that risks, such as those posed by the AWR, are approached in a co-ordinated and joined up way.

Our survey showed that just under 60% of respondents have received an AWR information request from their contract staff.  However 46% have yet to agree with their clients and 57% have yet to agree with their suppliers what to do if they receive an information request.  

AWR Indemnities and Insurance

78% of respondents confirmed that they do not have insurance against AWR claims.  This may be worth looking into if the level of claims starts to increase.  Some specialist recruitment sector insurers have started to offer insurance against certain costs relating to AWR claims.

63% of respondents have had to sign AWR indemnities in favour of hirers and RPOs, with a higher proportion (81%) amongst the blue collar agencies. 

Scope

Interestingly 25% of respondents said that they treat PSC contractors and CIS subcontractors as falling within the scope of the AWR and 22% said that it depended on the hiring client.  This is perhaps more cautious than the industry would have expected 12 months ago but possibly indicates that staffing companies are approaching this issue on a risk assessment basis.  In many cases PSC contractors will be more highly paid than their comparable employees and so the risk of claims will be low, except perhaps where large bonus payments are at stake.  PSC contractors' IR35 tax status should also reduce the likelihood of claims. 

Swedish derogation ("pay between assignments" model)

60% of the blue collar staffing companies have workers engaged under a Swedish derogation arrangement vs 45% of professional staffing companies.

The survey shows a clear difference in impetus for the use of Swedish derogation arrangements, with 68% of blue collar agency respondents indicating that their clients and/or MSP/RPOs have insisted on use of the Swedish derogation compared to just 25% amongst professional staffing respondents and 65% of blue collar agencies confirming that they regarded hirers as driving the need for Swedish derogation arrangements. 

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