01 Jun 2010

The Agency Workers Directive

Many people remain unaware of the potential impact of the Agency Workers Directive (AWD) which will be introduced into European Legislation in October 2011. The precise wording of this Directive is still being drafted but it could have a massive impact on any organisation – including the logistics, warehousing and freight transport industry, which utilise large numbers of temporary labour.

Most people would fully support the aims and objectives of the AWD, which is to give temporary agency workers equal treatment to permanent employees. Based on current negotiations, the “Least worse option” would mean that Temps (i.e. temporary staff) are entitled to the same basic pay & conditions as equivalent permanent staff after 12 wks as if employed directly. So is this a damp squib or big problem?

The reasons for using Agency Workers are interesting. A recent BCC Workforce Survey found that employers use Temporary staff for the following reasons:
•67% Improves flexibility of workforce
•18% Short term staff cover
•10% less regulation around agency staff
•7% Expensive to recruit directly
•6% Seasonal requirements
•3% Agency paid less than perm staff
I guess most respondents would be a little candid about using Temps purely as a least cost measure, but our experience corresponds with the above. Temporary labour is generally used to provide staff flexibility, not to drive down unit cost at the expense of the worker. Employers always attack the Agencies margin, but usually seek a fair hourly rate for the worker. So is the AWD a piece of legislation required?

The current areas of debate around the AWD are:

•Equal treatment to be limited to basic hourly rate?
•Holiday should not be included?
•Comparator or direct employee?
•4 week break between assignments?
•12 Calendar weeks
•Specific Job & Specific Location
•Liability - agency or end user?
•Resolution through the Employment Tribunals
•Ltd Companies & Umbrella companies excluded?
•Derogation through workplace agreements?
•End of Temp to Perm fees?
As is often the case with new legislation, there is an administrative burden that will almost certainly be passed on to the Recruitment Agencies and their clients; specifically:

For the Recruitment Agency

•Need to amend Terms Of Business to include information on equal treatment
•Update software to flag when an assignment reaches 12 weeks
•Update software to show how and when equal treatment started.
•Potentially chase client for information on equal treatment
•Renegotiate cost of temporary placement as assignment reaches 12 weeks
For the Client

•Appraise current pay scales to see if entry rates are suitable for temps
•Manage use of temporary staff – be aware costs may change after 12 weeks
•Update agency of any changes to pay and benefits structure
•Create responsibility and awareness of responsibility for providing info.
For businesses that use a significant amount of Temporary staff, many may consider alternative staffing models such as Staff Outsourcing or building their own temporary staff pools, but for many, doing nothing isn’t an option.