Firms ‘set to shed thousands of contractors over AWR’

Tens of thousands of temporary staff, including IT contractors, could be jettisoned onto the labour market over the next three weeks, assuming hirers stick to their plans of avoiding exposure to the Agency Workers Regulations.

Issuing the alert, an agency staffing group said that almost a third of its member firms expected clients to cancel professional contract assignments before the 12-week qualifying period of the AWR takes effect.

As the ‘equal treatment principal’ came into force with the rules on October 1st 2011, the first period expired at the end of last month, raising the prospect that “tens of thousands” of temporary staff could be laid off this January.

“Contractors and temporary workers engaged by end-users for less than 12 weeks are not entitled to equal rights, including pay,” the Association of Professional Staffing Companies added, explaining its findings yesterday.

“The majority of workers affected are likely to be young graduates. At a time when unemployment among young people has surpassed one million, any barrier to securing work has to be questioned.”

But not by clients, the APSCo research suggests. In fact, member recruitment agency g2 says the process of terminating contracts to head of the 12th week is already underway at some organisations.

Other clients are currently looking to ‘buy people out’ of contracts or transfer them to fixed term contracts, while a few even want to transfer them to full-time positions, says the firm’s operations manager Phil Hutchinson.

Still, only 19% of APSCo agents believe the AWR is currently dragging demand for contractors, although more than twice as many (43%) expect to see a “greater impact” once the first 12-week qualifying period ends.

“The AWR is clearly having an impact, even at the professional end of the market,” the association said, seemingly referring to earlier research from another staffing group that found only a “little effect” on higher end candidates.

“Contractors and temps in areas such as IT or banking usually earn more than permanent staff, but this is not true for all roles, particularly at the entry level, where the AWR may lead to increased costs.”

Jan 10, 2012