Most end-users avoid agency worker rules

Almost two-thirds of employers are relying on at least one or more of the exclusions under the Agency Workers Regulations to avoid the worst impact of the rules, a survey shows.

Having quizzed 143 end-users, Eversheds found that 17% have put their temps on Swedish Derogation contracts, while at least 40% have cut temp roles to less than 12 weeks or only engaged the genuinely self-employed.

“Feedback suggests considerably fewer organisations have encountered a rise in their overall labour costs although, clearly, some of the impact will have been absorbed – or avoided”, the law firm said.

“Short term assignments (of less than 12 weeks) or engagement of excluded categories of worker, such as the genuinely self-employed, are clearly legitimate circumstances to which the regulations may not apply.”

Due to end-users using the exclusions, or ‘exploiting the loopholes’ as one national paper preferred, the majority of labour cost rises since the AWR took effect on October 1st 2011 emerged as less than 10%.

Although only a small minority of the end-users polled saw staff costs since October increase between 25 and 50%, in line with warnings by business groups, the finding that most employers have bypassed the AWR is angering unions.

The TUC, for example, reportedly says it will complain to the European Commission about how the directive (the AWD) has been applied in the UK if employer avoidance proves to be widespread.

That’s despite the Swedish derogation involving the engagement of agency workers on permanent contracts of employment which guarantee them minimum levels of pay between agency assignments.

Still, with the use of short-term assignments as a way to bypass the AWR, employers seen to have a permanent need for labour are being urged to ensure agency temps are not repeatedly taken on for only 11-week assignments.

“[This could be] perceived as an unlawful avoidance tactic under the regulations,” warned Eversheds associate Richard Sheldon.

“Furthermore, organisations will need to be sure that the relevant workers genuinely fall into an excluded category and their working arrangements bear this out. This is likely to prove an interesting area going forwards and one where case law is likely to emerge.”

 

Editor's Note: Further Reading - Contractors' Questions: Is my umbrella company ignoring the AWR?

Apr 11, 2012