The risks and rewards of employing temporary staff
David Woods, September 17, 2010
As companies strive to have the exact amount of people on board to fulfil fluctuating business demand, finding optimal temporary staff has become a priority for many employers. So what are the risks and rewards associated with temporary staff and what steps can organisations take to build a reliable and flexible workforce to meet seasonal as well as ongoing business demands?
According to the latest figures from the International Confederation of Private Employment Agencies (CIETT), the UK has the highest number of temporary workers in Europe, with over 1.3 million temps working in the UK – that’s 5% of the UK workforce.
Temporary employment is now a permanent feature of the business landscape and for many organisations, it has become integral to business strategy. Temporary workers can be quickly deployed to cope with unforeseen demand, cover sickness, holiday absence and maternity leave and provide extra support during seasonal periods like the Christmas rush or financial year end.
When it comes to meeting seasonal demands specifically, the organisations that tend to have a greater demand for such a temporary workforce, also tend to be organisations where these workers are most likely to have close access to customers, either directly (in the case of retail and the hospitality industry) or indirectly (in the case of call centres or financial institutions). In both cases, the implications of placing the wrong person in a temporary position could be severe and have potentially high financial, legal and reputational consequences.
Experian has found organisations use temporary staff and contractors while largely ignoring or being unaware of the risks. While the timescales associated with recruiting temporary staff are short, this should not be an excuse for not carrying out appropriate background checks on temporary staff. By doing so, these employers are taking massive risks affecting their own organisations and the public at large.
So what are the specific risks and what implications do these have for employers?
Many organisations, which have fluctuating seasonal and temporary demands, employ a significant number of migrant workers. The Immigration, Asylum and Nationality Act 2006 makes it a criminal offence to employ someone who is subject to immigration control and who has no permission to work in the UK. In 2009, the UK Border Agency imposed 2,210 civil penalties on employers of illegal workers totalling £22.1 million, almost double the number of civil penalties issued in 2008.
With forged identity documents often very hard to spot, the importance of electronic identity validation and appropriate background checks should not be underestimated when it comes to temporary employees and complying with immigration legislation.
The Corporate Manslaughter Act places a legal obligation on employers to ensure that the staff they employ do not pose a threat to themselves or others. In order to protect themselves from legal and financial repercussions further down the line, organisations must satisfy themselves that the temporary staff they employ have the appropriate qualifications, a full and valid employment record and no previous convictions.
The possibility of hiring someone who may pose a direct criminal threat may seem rare, but the fact that the value of reported fraud in the UK has increased by 153% since 2003 reminds us how serious a threat this is to UK businesses. The latest figures from CIFAS, the UK’s fraud prevention service, show a substantial rise in the number of cases of staff fraud identified in 2009 compared to 2008. CIFAS also reports an increase in the number of cases of employees selling personal data. The implication of this finding is that more staff are being approached by organised criminals and bribed to reveal personal customer data. Indeed, it has been claimed by the police that one in 10 of Glasgow’s financial call centres has been infiltrated by criminal gangs.
Clearly, organisations that hold large data repositories or deal with sensitive financial information are at greater risk from insider fraud. In these days of identity theft, criminals will pay a healthy price for personal information and the temptation for someone in financial difficulties is clear. For these organisations, temporary or contract employees are often the biggest threats when it comes to employee fraud. Generally, they have less to lose, have less loyalty to the company and can also have wide access to sensitive customer information. Fraudsters are also more likely to obtain entry to an organisation through temporary or contracting roles where background screening may be lax or often non-existent.
When it comes to managing the risks, organisations should consider developing an employee screening policy that includes carrying out identity checks, adverse financial checks and criminal record checks specifically on temporary and contract staff and not just those in permanent positions.
Fiona Dawson is head of product, Experian Background Checking