Last month’s release of the REC’s jobs outlook figures shows that 81% of employers plan to either grow their agency workforce or keep it at existing levels. Of those businesses, 31% planned to increase the size of their temporary workforce in the short term, compared with 22% at the same point last year.
Under the AWR, which came into force on 1 October 2011, organisations must assign temporary staff the same levels of pay, benefits and working conditions as their permanent staff once they have completed a qualifying period of 12 weeks. It was feared that many employers would choose to lay off temporary staff just before Christmas, with the first 12-week qualifying period due to end on 24 December.
Earlier last year, a report by law firm Allen & Overy suggested that one in three employers of temporary staff would end agency workers’ contracts at the end of their 11th week to avoid having to afford them the same terms and conditions as their full-time staff.
But Tom Hadley, director of policy and professional services at the REC, says that this is not likely to happen: “It is not going to lead to a collapse in the temporary-worker market. The temporary market as a whole is still strong and organisations’ hiring intentions are also encouraging.”
But while many organisations will face increased wage costs as a result of the AWR (the new rules are expected to cost employers an extra £1.8 billion to implement), some employers are looking at different supply models rather than reducing their temporary workforce.
One model, known as the Swedish derogation, means that the temporary worker becomes an employee of the agency, rather than the hiring organisation, and the agency must pay the workers between assignments. This is becoming popular in sectors such as retail, where there is a high volume of temporary workers over the long term.
According to Susan Doris, a senior associate barrister at law firm Freshfields, this is beneficial for HR managers as it not only reduces costs, but passes the liability for any tribunal claims onto the agency: “It’s a good buffer, but HR professionals must use due diligence to ensure their agencies’ employment contracts with workers are up to scratch. As long as the contract is good they should be protected.”
However, employers will need to work in partnership with their agencies if the model is to work, Hadley added. “Where the employer recognises the extra cost and risk taken on by the agency, it will work well,” he said. Some hiring organisations have come to arrangements with their agencies, for example to share the extra cost of paying temps in between assignments. Hadley estimates that around 10% of the total temporary-worker market is looking at using the Swedish derogation at present.
Mike Emmott, employee relations adviser at the Chartered Institute of Personnel and Development, predicts that many employers will choose to keep temporary workers on their books for continuity’s sake, rather than keep swapping staff every 12 weeks to save money. “It’s uneconomic and unappealing to have to recruit someone every 12 weeks, and it’s not good HR practice or good business,” he said.
