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Agency Workers Regulations: A 'damp squib', say recruitment experts

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The much-anticipated Agency Workers Regulations (AWR) have come into effect, but industry experts predict the changes to the law will come as nothing more than an “inconvenience” to employers that are well prepared.

Agency workers now qualify for equal pay and benefits to permanent staff, after a 12-week qualifying period. Commentators fear this will result in red tape, requiring employers to provide information to agencies about the level of pay and benefits their employees have.

But last month scaremongering reports emerged - ranging from threats 500,000 agency workers will face unemployment, to fears the cost of the regulations will be £1.8 billion.

In mid-September, the prime minister, David Cameron, was said to have waded in, allegedly investigating the option of watering down the legislation.

So, in face of the growing uncertainty, HR asked the recruitment industry what the AWR changes could mean for HRDs.

The Recruitment and Employment Confederation has made no secret of its opposition to the EU legislation, but CEO Kevin Green told HR: "This will be a damp squib. It will be a pain for employers because there is bureaucracy and complexity associated – and there is no value for agencies or employers. But law firms spread doom and gloom. CIPD research has found only 13% of temp assignments will be affected and 50% of assignments last less than 12 weeks anyway."

Ian Naylor, UK legal director at recruiter Randstad, said: "Estimations of AWR costs are way off the mark. We know there is a spectrum of awareness among employers, depending on sector and size, but if there is a cost, it will often be absorbed by the agency. In fact, there might be a benefit to employers because they can review how they engage with agency staff.

"A lot of media have been unaware of what the changes actually mean – this is a significant piece of legislation, but a lot of what is being said is misinformed and this is leading to panic."

Some agencies might opt to use the 'Swedish derogation' clause, whereby they pay temps themselves at the end of their placement and charge employers accordingly, which could hike up costs. But Andy Smith, head of regulation and employment at Adecco, said: "Not a lot will do this. But if they do, some agencies will be very clear about this with employers; others will not."

Addressing the question of an increase in tribunal claims from agency workers, Chris Hitchins, partner in the labour and employment practice at law firm Morgan Lewis, said: "This is the biggest piece of legislation since the last piece of legislation – there will not be a lot of claims because of costs to temps."

Employers have until December to get their house in order with the regulations, and given the time in preparing a case, going through tribunals and appeals, it could be up to 18 months before news of cases on AWR begins to filter through. Only time will tell.

Guy Dullage, European HRD at Johnson Controls Automotive, which employs 8,000 people in the UK, including 370 temporary workers, has worked closely with his recruitment provider Randstad to prepare for the changes. While he admitted it's a "storm in a teacup", it could be "daunting" for SMEs.

He said: "There was a cost increase for us because we had to standardise and increase holiday pay for temps, so it will affect the bottom line, but we have worked closely in partnership with the Randstad team since January to make our systems more robust.

"A lot of our permanent recruitment comes from our temporary workers, and it is important to convert temps into our company culture. We have a five-step development process for employees, so we will put temps on the first step. It is about doing the right thing," Dullage said.