The temporary recruitment market remains resilient

Two reports released today reveal just how well the contingent workforce market is coping with the negative economic climate and the Agency Workers Regulations (AWR).

According to the REC the market is holding up well, despite recruiters reporting increasing costs due to the AWR. Their figures showed a slight ‘blip’ in figures in January, partly attributed to a rise in permanent hires. Speaking to HR magazine, Tom Hadley, director of policy and professional services at the REC explained:

“If you look at other EU markets that implemented the regulations before the UK, they experienced blips too, but ultimately had stronger temp markets than before the regulations came in.”

A separate report from Venn Group shows that the usage of temporary agency workers has increased by a third in the first quarter of 2012. They found that the industry has ‘experienced an upswing’ in the commerce industries, financial services and, perhaps surprisingly, the public sector.

The study found that the North of the country is seeing the largest rise in demand. The North West increased usage by 61%, the Midlands by 59% and the North East by 48%.

London’s increase was 36%, unsurprisingly attributed to the Olympics.

Statutory maternity, paternity and sick pay increases.

With the new tax year comes changes, from today the standard rate of statutory maternity, paternity and adoption pay increases and from next week statutory sick will increase too.

It is important to note that despite the Agency Workers Regulations temporary agency workers will not be impacted by the increases. Our Legal Director, Joe Tully explains that the directive does not give temporary workers full employment rights.

“This is one of the big misunderstandings amongst FDs, these temporary agency workers will still be classed as temporary. They cannot request flexible working, redundancy, occupational sick pay, occupational maternity/paternity pay, and they do not have entitlement to pensions.”

Pay rates will increase as follows:

• Statutory maternity, paternity and adoption pay: £128.73 to £135.45 per week
• Statutory sick pay: £81.60 to £85.85 per week

The Agency Workers Regulations – A slow burner?

In the run up to 1^st October 2011, the implementation of the Agency Workers Regulations (“AWR”) dominated the headlines in the temporary recruitment industry.  How would hirers, agencies and temporary workers deal with the obligations and responsibilities placed on them by AWR?  Would many be found to be unprepared, or would it pass without major comment or concern?

In our experience, 1^st October came and went without major fanfare.  Whilst all of our clients were fully prepared for complying with the Day 1 obligations under AWR, it had become clear in the weeks leading up to the legislation coming into force that the majority of our clients were concentrating on ensuring they were fully prepared for their temporary agency workers to receive all the rights they were eligible for when they attained the qualifying period.

However, 24^th December, like 1^st October, came and went uneventfully.  Even now, almost thirteen weeks after the first batch of temporary workers attained the 12 week qualifying period, there has been little noise made by our clients or by any of the approximately 30,000 agency workers who have time recorded in e-tips® for the services they provide.

It is perhaps too simplistic to suggest that AWR has simply been a damp squib.  de Poel undertook extensive consultations with its clients in the eighteen months preceding the legislation coming into force, and in many cases worked closely with our clients to implement and manage an effective AWR solution.  Our e-tips® system has also been greatly enhanced in anticipation of the introduction of AWR.  Considerable developer time and cost was invested in enhancing e-tips® so that it can manage AWR and track the period of supply of agency workers.  e-tips® tracks the period of supply of a worker to a hirer, across multiple agencies where necessary, and it is this ability to track workers across multiple agencies that makes e-tips®, we believe, unique as an AWR technology solution.

So, with no mention of AWR in the latest Budget, and with little coverage in the press over the last couple of months, has everyone forgotten about AWR?  We don’t believe that to be the case, and believe instead that the extensive work undertaken by de Poel in conjunction with our clients has ensured that what could have been a difficult adaptation period has passed relatively smoothly.  However, with the grey areas of the legislation still requiring clarity, and with the only way to achieve this clarity being through decisions handed down by employment tribunals, it is likely that the interest in Agency Workers Regulations will begin to increase again when the first cases are brought by temporary workers.

James Hulsken – de Poel Solicitor

What can the UK learn from the German temp shortage?

Despite being affected by the Eurozone crisis, Germany has seen a more rapid recovery from recent economical issues than most of Europe. However, that could be threatened in part due to a lack of temporary agency workers. In an interview with Staffing Industry Analyst, Dr Alexander Spermann, Director of Talent management Flexworker & Public Affairs at Randstad Germany said:

“These days it takes longer to find the right candidate because it is more difficult to find temporary agency workers who have got the skills that are needed on the labour market – not only with respect to high-qualified jobs but also to low-qualified ones.”

With temporary agency labour a significant component in market recovery, Germany’s jobs growth could be about to decelerate.

So, as the UK lags behind in economic recovery, what can businesses learn from the Germans’ labour market issues?

1. Uncertainty promotes the use of temps

As the UK continues its delicate recovery business confidence is wobbly. Whilst business leaders and hirers remain cautiously optimistic when it comes to permanent hires, flexible, temporary workforces are an ideal way of responding to market fluctuations without commitments.

It’s worth noting that recent Office of National Statistics figures show UK business confidence is stalling.

2. Identify skills shortages early

Temps are an ideal way to fill skills gaps, but if you have that void in knowledge it’s unlikely that you’re the only business with the problem. Forecasting for growth or decline and identifying areas of your business which are likely to be affected by skills shortages will ensure you can implement procedures and processes for dealing with these issues. Engaging with the right supplying agencies early will help to identify just how bad the problem is likely to be, if training is going to be necessary and just how long it will take to employ a temporary agency worker with the skills required.

3. Give temporary agency work the right PR

Temporary agency work has long been something to be sniffed at. Once seen as a domain purely for clerical and administrative work it is now a viable option for workers and over recent years there has been a rise in ‘career temps’. However, to ensure the candidate pool remains fresh and varied, temporary agency work as a choice must be given the right publicity. Recent comments in Germany suggested that temporary agency workers are “2^nd class employees”  and the Opposition party has openly spoke of ‘forbidding’ temporary positions. Add to that a report today that temps are paid half as much as permanent staff in Germany; it’s easy to understand why temporary agency work is not viewed as a long-term option.

The implementation of the Agency Workers Regulations in the UK has seen the temporary arena receiving some bad press, although nothing in the same league as in Germany. UK PLC must ensure that temping is promoted correctly and that those coming into the jobs market are aware of all routes to work.

AWR Mythbuster: Agency workers moving between hirers

Fact or Myth? – An agency worker can move between hirers, week by week, and have qualifying clocks running at all of them.

MYTH! (or is it?)

This is the Agency Workers Regulations (AWR) issue that has exercised the minds of those at de Poel most over the past couple of months, and it is probably the question that meets with the most polarised AWR views within the temporary recruitment sector.

Let’s take the following example: an agency worker (“AW”) works for one week at Hirer A, before moving to Hirer B for one week and then returning to work again at Hirer A. When AW returns to Hirer A, is their AWR qualifying clock at one week (the week that they previously worked), or zero (let’s assume that Hirers A and B are not connected)? de Poel’s view is that AW’s qualifying clock at Hirer A has been “reset” to zero, when AW works a week at Hirer B, and this is a view that is supported by a QC that de Poel has consulted on this point. However, there are many in the sector who believe, equally strongly, that AW will have two AWR clocks running, with one week on both, when AW returns to Hirer A.

During the period immediately following the passing into law of the regulations, in January 2010, there was a generally held view that agency workers could have multiple AWR clocks running where they spend one week at one hirer, another week at another, and so on, provided that the agency worker returns to each hirer within 6 weeks of last working there.  For many, this view changed when focus was placed upon Regulation 7(5)(a) which says that, when determining whether weeks completed with a particular hirer are “continuous” (as required by Regulation 7(2)), where there is a break it must be one in which “the agency worker is not working”.

So what does this mean? de Poel’s view is that this means that, where an agency worker moves between hirers, week by week, they zero the qualifying clock at the previous hirer, because they have failed to fulfil the requirements of Regulation 7(5)(a). This view would appear to be supported by the Guidance issued by the Department for Business, Innovation and Skills which, in the section headed “Reasons for the qualifying clock to reset to zero” puts as the first reason “Most commonly it will be because an agency worker begins a new assignment with a new hirer.”

This appears clear enough to de Poel, but we do acknowledge that there are those who argue the other way. They say that there will be multiple AWR clocks and that where Regulation 7(5)(a) says that “the agency worker is not working” what it really means is that “the agency worker is not working [for that hirer]”, and where the BIS Guidance talks about “Reasons for the qualifying clock to reset to zero” what it really means, when the agency worker goes to work elsewhere, is that the agency worker’s qualifying clock at the new hirer will be at zero, although the qualifying clock at the previous hirer will stay at the accrued hours.  But can it really be the case that we must add words into the regulations to give them their true meaning?  Surely not.

The Guidance notes do confirm that there can be multiple clocks where the agency worker works for more than one hirer in the same week (because, in that instance, the requirement for continuity is preserved),  but this does not detract from our firm view that, where the agency worker moves, week by week, from hirer to hirer, there will be only one clock running.

Another one for the tribunals to confirm, I guess.

– Joe Tully, Legal Director

AWR Mythbuster: Agency indemnity clauses

Fact or Myth? – A hirer can remove all liability under the Agency Workers Regulations by getting the appropriate indemnities from its agencies.

MYTH!

Hirers, temporary work agencies and, indeed, agency workers cannot choose to take themselves outside of the regulations.  Similarly, hirers cannot use their commercial leverage to pass all risk to their agencies.  It is certainly the case that many hirers are seeking indemnities from their agencies for AWR claims brought by agency workers, but those indemnities do not stop the agency worker from joining the hirer into a claim, and neither do the indemnities stop a tribunal from finding a hirer at fault.

A reasonable indemnity would require an agency to reimburse a hirer where that hirer suffers a loss arising out of the fault of the agency.  However, we are seeing examples of hirers going a step further and seeking indemnities for losses that might not necessarily be attributable to the action (or inaction) of the agency.  In any event, although the indemnity might provide for contractual recompense from the agency to the hirer, the agency worker and the tribunal need have no regard for them.  Therefore, where an agency worker believes they have a claim, they are likely to join the agency and the hirer into that claim and, although the indemnity might result in the agency reimbursing the hirer for any award against the hirer, the hirer still cannot contractually avoid the inconvenience and reputational damage of being hauled before a tribunal.

A further risk for hirers is that, although they have managed to obtain an indemnity from an agency, that agency is unable (or unwilling) to stand behind it should a claim materialises.  For example, if the claim is significant, and the agency reasonably small, it is quite possible that the agency will not have the means to honour the indemnity.

Used properly, indemnities are a very sensible and useful tool for allocating cost exposure under the regulations, but they are not the complete Agency Workers Regulations shield that some hirers perceive them to be.

– Joe Tully, Legal Director

AWR and Paternity Rights – Could agencies be left holding the baby?

The Agency Workers Regulations 2010 (“AWR”) became effective in England and Wales on 1^st October 2011, and confer certain rights on agency workers both from day one and once a worker attains 12 continuous calendar weeks on assignment with a hirer.

One of the rights conferred on temporary agency workers after they reach the 12 week qualifying period is that of “pay parity”, where the worker may become eligible for, amongst other things, an increase in their hourly pay to match the rate of comparable directly engaged employees of the hirer doing the same job.

As a result, many hirers have opted to pursue what is known as the “Swedish Derogation” model when managing their agency workforce.  The Swedish Derogation model allows temporary agency workers to be engaged by a temporary work agency or a third party such as an umbrella company, and in doing so the worker waives their right to pay parity under the AWR.

One of the main consequences of an agency or umbrella company engaging workers on a contract of employment is that the workers become employees, and as a result are subject to laws governing the treatment of employees.

Which brings us to the main point of the blog – agency workers employed by their agency or a third party will now be eligible for Paternity Leave, and may also be eligible for Additional Paternity Leave.

To qualify for Paternity Leave, an agency worker must have been with their employer for at least 26 weeks by either:

• the end of the 15th week before the start of the week when the baby is due; or
• the end of the week they are notified they are matched with a child.

They must also be either the:

• biological father of the child;
• mother’s husband or partner (including same-sex relationships);
• child’s adopter;
• husband or partner (including same-sex relationships) of the child’s adopter.

In addition, an agency worker may qualify for Additional Paternity Leave if either:

• they are the father of a child due on or after 3^rd April 2011;
• their wife, partner or civil partner is pregnant and due to give birth to a child on or after 3^rd April 2011;
• they and their partner receive notification that they are matched with a child for adoption on or after 3^rd April 2011;
• their spouse, civil partner or partner (including same-sex relationships) is adopting a child from overseas and the child enters Great Britain on or after 3^rd April 2011.

Additional Paternity Leave entitles a new dad to take the balance of the baby’s mum’s unused maternity leave, up to a maximum of an additional 26 weeks’ paternity leave.  So by way of example, if the baby’s mum only uses 40 of her possible 52 weeks’ maternity leave, then provided that the father gives the correct notice to his employer and is eligible to do so, he can opt to take the remaining 12 weeks of the mum’s maternity leave allowance as Additional Paternity Leave.

In each case, the father may be eligible for Statutory Paternity Pay and Additional Paternity Pay, depending on the circumstances of the agency worker’s individual case.

So what does this mean for agency workers and temporary work agencies?  Well, it means that there is a possibility that an agency worker contracted to a temporary work agency could be unavailable to undertake assignments for a large amount of time, potentially impacting on the agency’s ability to manage its clients’ expectations.  In monetary terms, it shouldn’t affect temporary work agencies unless they choose to offer enhanced paternity pay or rights above and beyond those conferred statutorily.

In short, as with many things Agency Workers Regulations, there may be some unforeseen consequences, and the increase in agency workers engaged on employment contracts (because of Swedish Derogation) is likely to see an increase in agency workers enjoying employment rights, such as Paternity Leave.

AWR Mythbuster: Terminating assignments before 12 weeks

Fact or Myth? – It is illegal to terminate an assignment so that the agency worker does not reach the qualifying period.
 
MYTH!

This is indeed a myth, although it is an area that should be approached with care, for the reasons that I will explain.

There is nothing in the Agency Workers Regulations that prohibit a hirer from terminating an assignment before the worker completes the qualifying period and the BIS Guidance notes confirm this, when they say: “A hirer can obviously decide not to engage workers beyond the 12 week qualifying period.”  However, the hirer and agencies must proceed with caution where the hirer looks to re-engage a worker whose previous assignment was terminated before the 12 weeks qualifying period was completed.  Regulation 9 deals with the “structure of assignments” and prohibits the hirer and agencies from creating a series of short assignments, or from moving the agency worker between “connected” hirers (typically, hirers within the same group of companies) where “the most likely explanation for the structure of the assignment, or assignments……[is]…..to prevent the agency worker from being entitled to, or from continuing to be entitled to, the rights conferred by regulation 5.”

So what does that mean?  Well, if you are a hirer that only offers short assignments (of less than 12 weeks), because, for example, your business demands are such that you only require agency workers for short assignments, you should have nothing to fear from this regulation.  The Agency Workers Regulations are not intended to alter the working patterns of hirers (although, of course, in many instances they have) and, therefore, if you have always operated short assignments, or your business patterns demand that you do so now, there is no reason to change.  However, in doing so, you must be confident that you can defend a challenge from an affected agency worker that “the most likely explanation for the structure of the assignments” was to prevent that worker from being entitled to the rights conferred by regulation 5.  If you have genuine business reasons for the pattern of assignments, defending such a challenge should not prove difficult; however, if the pattern of assignments has been influenced by a desire to stop the worker from reaching 12 weeks, you will be assuming a considerable risk.  The same logic applies, also, to moving agency workers between group companies.

Regulation 18(14) provides that, where a tribunal finds that there has been a breach of regulation 9, and assignments have been structured with the intention of stopping the worker from being entitled to their regulation 5 rights, the tribunal may make an additional award of compensation of up to £5000.  Therefore, an affected worker would be likely to be awarded compensation equal to the shortfall in what they would have received had they been given their regulation 5 rights from the date that they would have reached the qualifying period, but for the breach of regulation 9, plus an additional award of up to £5000.  A considerable sum of money.

Therefore, you can terminate a first assignment of a worker before they reach the qualifying period (because regulation 9 requires at least 2 assignments or roles), but that worker should not be re-engaged unless you are confident that you can demonstrate that the first termination was motivated by business demands, rather than by the Agency Workers Regulations.

– Joe Tully, Legal Director.

AWR isn’t affecting temporary agency worker recruitment

The impact of the Agency Workers Regulations (AWR) hasn’t been as considerable as predicted. A number of reports released recently show that the use of temporary agency workers has actually been increasing since October.

The Recruitment and Employment Confederation (REC) latest report on jobs showed an improvement on temporary appointments in December. Our monthly figures also show a marked increase in the use of a flexible workforce. e-tips ® data shows the use of temporary staff in the UK rose by 13% in January compared to the same period last year.

The Agency Workers Regulations is certainly not yet affecting the temporary jobs market, or putting employers off using them. One thing working in the AWR’s favour is the forecasts of more economic woes – businesses would much rather spend a little more on their temps under the AWR than risk taking on a permanent workforce in an uncertain market.

Last week the Office of National Statistics released its figures that showed unemployment is continuing to climb.

AWR Mythbuster: Workers paid more than comparators

Fact or Myth? – If I hire agency workers who are paid more than employees engaged in a similar role I don’t need to worry about the Agency Workers Regulations.
 
MYTH!

The “basic working and employment conditions” caught by the Agency Workers Regulations (AWR) fall into four categories:

1. the “day one rights” (of which there are two – the right to access collective facilities and amenities and the right to receive information about relevant vacancies
2. pay
3. working time
4. annual leave

It is correct that, in the great majority of cases, the biggest cost burden of these will be “pay” and, for that reason, it is upon “pay” that most hirers and agencies have focused.  Therefore, there has been a tendency in those sectors that typically pay their “temps” more than their “perms” (often the more highly-skilled sectors) to conclude that the workers will not bring a pay claim under the AWR and therefore to treat those workers as irrelevant as far as the AWR is concerned.  That is incorrect.

The regulations would be a more manageable piece of legislation if they included an “all or nothing” provision, so that the qualifying worker who wishes to receive the same basic working and employment conditions that they would have received had they been directly engaged must take all of those basic working and employment conditions (as defined in the regulations), for better or for worse. But the regulations do not say that, and the terms on which the qualifying agency worker is engaged by their agency, in respect of pay, working time and annual leave, must each be compared to the terms that they would have received, in respect of pay, working time and annual leave, had they been directly engaged.  Therefore, just because a qualifying temp receives more in pay does not stop them comparing working time and annual leave, also.

This has created some anomalies which we can only assume were not considered, and not intended, by the legislators. For example, it will often be the case that a temporary worker is paid more than a comparable employee because they do not enjoy the same annual leave entitlement as the comparable employee.  However, the AWR allows that temporary worker to continue to enjoy their higher pay rate whilst also claiming the same higher annual leave entitlement as the comparable employee, and such apparent unfairness is now causing considerable disquiet amongst hirers and perm workforces.

Therefore, hirers and agencies must consider each element of the regulations, even where the temporary agency worker is on a higher pay rate.  That worker is then entitled to be treated the same in respect of working time and annual leave as they would have been treated had they been directly engaged (not forgetting, of course, that worker’s “day one rights”). It may be that hirers, facing anomalies such as that described above, with all the perm workforce disquiet that is likely to follow from it, can approach their agencies to ask them to amend the terms of supply of the qualifying temp, so that such anomalies are ironed out (with, say, a decrease in pay rate or annual leave – provided always that the hirer and the agency continue to comply with Regulations 5 and 6 of the AWR), but that is probably easier said than done, requiring the agency to act within the terms of its contract with the worker, and the worker to agree to accept the reduced terms.

Like many things AWR, it’s a tricky one.

– Joe Tully, Legal Director.