We’ve been covering the upcoming Agency Workers Regulations with some interest. The legislation, due to come into force in October, has the potential to fundamentally alter the relationship some freelancers and contractors have with their Umbrella Companies. There have been many twists and turns, and it looks as though we’re not done yet.
Our resident HR expert laid out the details in our fantastic AWR Guide. Many Umbrella firms had hoped to employ the Swedish Derogation Model to avoid the legislation, however the SDM was labelled “not a miracle solution” in guidance that followed shortly afterwards.
With no AWR review taking place until 2013, the legislation looks as though it will be around for a while. The impending changes, which will see Agency Workers granted the same rights as full employees after 12 weeks service with a company, are causing problems across the recruitment world, not just in Umbrella Company land.
A survey by recruiting giant Reed found that only around 30% of firms had measures in place to deal with the regulations, and Reed predict the compliance activity will be troublesome. A spokesperson said:
“Government consultations suggest that compliance will be time-consuming, with an average of 1.5 hours work for every agency worker.”
Of course, with the added time for compliance activity comes raised costs, and this has lead to many, including the Telegraph, to report the rising costs of using Agency Workers will put many employers off (bad news for Umbrella Company freelancers and contractors). This accusation drew a quick retort from the REC, who claimed there would not be a drop in demand as:
“For most employers, cost is not the primary reason they take on agency staff. Rather, it is to acquire specialist skills and provide workforce flexibility to respond to peaks in demand.”
Meanwhile Umbrella Companies, whose fates are still far from certain until the enforcement of the AWR is determined in court, are putting a brave face on matters – one even going so far as to say they are “excited” about October 1st.
