Time for reflection, but not inertia.. says Mark Hammerton
With implementation delayed to 1 October 2011, it may feel like the pressure is off for now. However, whilst there may be time for reflection, it is not a time for inertia. As the cost of the Regulations is estimated to be 0.3 per cent of the UK pay bill, hirers should act now to identify just how they will respond. Accommodating the Regulations will require planning and new working practices, which will take time.
The Regulations – key issues
Broadly, the final Regulations contain few major policy changes. However, there are some changes in the detail (eg the comparator and pay definitions) and the anti avoidance provisions which should not be overlooked.
Workers supplied by a temporary work agency to work “temporarily for and under the supervision and direction of a hirer” will be covered by the Regulations i.e. those workers commonly referred to as “temps”. The definitions adopted are complex but are intended to exclude the genuinely self-employed, those working through their own limited liability company (provided they are genuinely self employed) and those working on “managed service contracts”. “Sham” arrangements are unlikely to succeed.
Upon completion of a 12 week qualifying period, an agency worker will be entitled to the same basic working and employment conditions as if he/she had been recruited directly by the hirer on day one of the assignment, whether as an employee or a worker. In identifying those terms, agency workers may compare their terms with direct recruits of the hirer working in “the same” or “broadly similar” role, not necessarily in the same office or establishment.
“Basic working and employment conditions” may sound a fairly simple concept and, in certain respects, it is. It will, for example, include comparable salary, overtime or commission payments, rest breaks and holidays entitlement. In practice, however, calculating increased holiday entitlement or identifying commission owed to agency workers is likely to prove less than straightforward. The issue becomes more complicated when one considers the list of payments for which agency workers are not eligible. Again, some are straight forward such as company sick pay, redundancy pay and pension. However, bonuses, incentive payments or rewards “not directly attributable to the amount or quality of the work done by a worker” are similarly excluded.
Also, benefits in kind are excluded but vouchers or stamps of a fixed monetary value (such as luncheon vouchers) are included. Will hirers know which employee payments or benefits apply? For example, staff discounts? Although not intended to be caught (according to the Impact Assessment) the issue is not clear cut -might they reward staff loyalty or constitute payments or vouchers to which agency workers are entitled? Or, where they are provided via an onsite shop, are they a collective facility to which agency workers should have equal access? While some of these issues will be clarified in future Guidance, the cautious option for hirers will frequently be to include agency workers or introduce service qualifications for their employees or, more drastically, remove certain facilities etc. Also, there will be Day One rights to access collective facilities (eg canteen, creche, transport) on the same basis as employees/workers.
Time for reflection, but not inertia..
Many hirers have already started to review how compliance will impact upon costs and practices and to consider whether there are more cost-effective ways of meeting their flexible labour needs. This might include ensuring agency workers never pass the 12 week qualification (easier in theory than in practice), a move to direct recruitment, engaging casual workers through an ‘in house’ bank, or an arrangement whereby a third party (possibly an agency) employs workers directly. Another option is to increase the use of self-employed workers and managed service contracts, both falling outside the scope of the Regulations. Other hirers, particularly those with short-term staffing gaps, will need to find ways of absorbing the increased costs. Negotiating exclusivity with fewer agency suppliers, whilst also renegotiating terms to reduce risks and costs, may ease administration if the hirer has sufficient purchasing power.
Some hirers may decide only to use agency workers for less than 12 weeks where this is feasible. However, repeating such practices or moving workers between different jobs where they stay longer, will not pose a viable means of avoiding the Regulations. Any ‘structure of assignments’, such as placing agency workers on a series of 11 week contracts or varying their roles every few weeks, is prohibited and may also attract additional financial penalty in the form of a fine of up to £5,000.
Another alternative is for hirers to scrutinise the way in which their pay and benefits are packaged and whether they fall within the equal treatment requirements of the Regulations or, with adjustment, can be excluded. Suddenly, October 2011 does not seem so far away! The government estimates that, in addition to the £1.8 Billion per year of increased costs,1.5 hours of a HR manger’s time per agency worker will be required in terms of monitoring & administration. How will you respond to these challenges?
By Mark Hammerton, Partner at Eversheds LLP
I think agency workers should be treated more fairly if an indavidual is multi trained within the company and has proved him/her self ie,timekeeping flexability punctuality, performance.should be paid the same hourly rate as a full time employee and same holidays if worked for the same company for at least 1 year.
I have been a “”temp”” , same job , same location , same hours for 3 years.
NOT very temporary is it ?
“”Temp”” workers are a loophole for business.
There are also 30-40 “”temps”” who have all been working with me for over a year.
The company has not employed anyone in the 3 years I have been there.
We get no bonus , like the “”real”” staff.
Lower wages for the same work.
We work longer hours, “”real”” staff can leave when they reach their daily target.
We are last in line for holidays AND days off.
If you disagree with your “”employer””(agency) they can put you at the bottom of the list…Give you only 1-2 days work per week.
This has happened to people who argue about the amount of holiday pay they get , compared to how much they are entitled to. ect…
The agency staff are ON-SITE.. They actually have an office.
So the reality is , the agency is a Shell company of sorts.
The Regulations ,alought welcome ,don’t go far enough to stop the abuse of greedy employers.
*I will get fired if the agency staff know , I wrote this.
NO questions , NO responsibility , the can do what they want !
I have been employed as a temporary agency worker with the same company for the last 4 and a half years.
I work twice as hard, get to work every Saturday and finish the latest shift every day as well as helping them reach their targets for the 6 monthly bonus payout. I have not had a pay rise other than the minimum wage in the last 3 years, they have just had another pay rise and are on £10k more than me.
This is not right
I have worked for agencys for years aswell, i’m working for the council now and have been for two years.
These new regulations arn’t enough if someone has been in a job for over a year they should have the same rights as a employee of the company there working for. mainlly the right not to be fired for no reason.
I think agencys should be abolished all together it’s slave labour.
I too have been employed by a third party via an agency for a year at a low rate of pay,expected to take on additional responsibilities from which I was employed,have to provide your own protective clothing, (wet weather gear as well as boots and hi vis etc),and have to use days holidays to cover Bank Holidays,but possibly the worst one having to work long hours at basic rate when the agencies charge companies overtime rate over 37.5 hours.
The Government is set to crack down on people who abuse the benefit system, because I have a small pension from a previous employment I am not entitled to any benefits so I have to work, however you can understand why people who can claim benefits are not prepared to get out of bed for the low pay and loss of holidays these agencies offer.
I ehco all the above comments but if i start to get messed about i will be onto the HMRC with some names of the people running all these dodgy shell companies.
I’ve been working at the same job since June 07 with the same agency, in the time I’ve been there, only 2 new jobs have been created (both of which went to people from outside the company who are coincidentally related to our floor manager).
I know exactly how this company operates, they will fight tooth and nail to avoid actually paying the 20+ long term agency workers their due.
“Any ‘structure of assignments’, such as placing agency workers on a series of 11 week contracts or varying their roles every few weeks, is prohibited and may also attract additional financial penalty in the form of a fine of up to £5,000.”
All they’re going to do is pay us off after 11 weeks, replace every one of us with new agency workers, then after another 11 weeks take us back, rinse repeat.