The pros and cons of the Agency Workers Regulations

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The Agency Workers Regulations (AWR) thrown up debate in all areas of business and government. With the new coalition planning to water down the original legislation, many are discussing both the morality and business implications of such action. But what is the real cost of the AWR to businesses and the use of temporary workers and do we need to review it?

The AWR currently entitles temporary workers to equal treatment with permanent colleagues on basic pay, holidays, notice periods and vocational training.

Recent reports have alluded to loss of workers’ rights as a result of a review of the legislation, including the loss of any potential holiday pay; but temporary agency workers have been entitled to four weeks’ paid holiday, as well as all bank holiday entitlements since 1998 as part of the Working Time Directive.

The misconception that temporary agency workers get the raw end of the deal is also a fallacy. In some areas, most notably IT, engineering and healthcare, temporary workers invariably get paid more than their full-time counterparts.

Many temporary workers choose to work in this fashion as it gives them freedom and flexibility to take on new projects and lend their skills in a variety of different markets – this is often an overlooked advantage to having a pool of skilled and flexible workers in an economic climate that faces its long-term future with trepidation.

Office staff, builders, health workers and labourers are reportedly paid less than full-time counterparts, and lose their jobs at short notice, but many fail to comment that these workers have more flexibility and the opportunity to try a job before committing to it.

The recruitment of temporary staff is popular among businesses as they prepare for an economic upturn. By supplementing or boosting the skills of a company’s workforce, the use of temporary agency staff allows businesses to respond quickly to market and seasonal shifts for competitive advantage.

A recent survey of HR directors by The Recruitment and Employment Confederation (REC) showed 84% intended to increase their use of temporary workers, citing quick reactions to market difficulties as a primary reason.

Similarly, we found, regardless of changes in the AWR legislation, that the use of temporary staff in the UK increased in July across all industry sectors by 2.8% compared with a universal decrease the previous month of 13%.  This upturn in temporary staff usage is a way for organisations to expand their workforces in a ‘safe way’ to respond to market growth and increased business activity while the economy remains unstable and permanent recruitment remains on hold.

While the AWR must protect temporary workers it should not be at the cost of the business and the economy. HR professionals rely on a temporary workforce as much as permanent staff and ensuring we continue to maintain attractive temporary working conditions is key to the future of UK plc.

Labour leadership candidate Ed Miliband has voiced his concerns over the changes. He said: "Protections for agency workers were hard-fought and hard-won after very extensive consultation. The Government seems to be considering rowing back on them in response to big business pressure."

But we believe that backbenchers are being rash in their attack on the proposed changes and have failed to see the bigger picture.

HR departments often ask whether they should be reducing remuneration for their permanent employees for fear of establishing too well-paid ‘comparators’ for the temporary agency workers after the Regulations come into force.  Instead, HR professionals could consider the rising demand for flexible working and offer flexible hours as an alternative to pay increases in order to keep their permanent workforce happy while keeping pay down.

However, this does highlight the question of whether the adverse effect on permanent employees outweighs any perceived benefit to the temporary agency workforce? And what about the impact on the morale of permanent workforces, many of which will find themselves being paid the same as the temporary workforce alongside them, but without the flexibility?   

The previous Labour Government did push through the Regulations quickly. However, they can still be implemented without damaging business while further protecting the agency workers. But the most fundamental aspect of the AWR is the ability to be able to track when a temporary agency worker has been employed for 12 weeks, after which they will have equal rights with the exception of sick pay and pensions. Software is one way for HR professionals to effectively track and trigger when this period starts and finishes but the real key is preparation and to start preparing now.

Matthew Sanders is CEO of de Poel

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