15 September 2011 #Employment
As has been recently well publicised, the Agency Workers Regulations 2010 (due to come into force next month), will provide agency workers with the same rights as employees with respect to pay and benefits after a 12 week qualifying period (i.e. a 12 week period working in the same role). Specifically, provisions with respect to: basic pay, overtime, individual performance related bonuses/commission, holidays etc. In addition, the Regulations will coincide with next year’s reform to the pension system. Therefore, all employers will have to automatically enrol agency workers onto the individual businesses pension scheme. This will include making pension contributions on behalf of the agency worker after the 12 week qualifying period.
The rationale for the Regulations is to protect agency workers from detrimental or less favourable treatment compared to employees of the business. However, the commercial reality is that businesses may seek to terminate agency workers before the 12 week qualifying period in order to avoid the additional financial burden of implementing the provisions of the Regulations.
In fact, a recent report published by Allen and Overy states that the implementation of the Regulations will cost businesses who hire agency workers approximately GBP 1.3 billion per year (approximately GBP 1,755 – GBP 3,722 per agency worker). Employment Partner Stefan Martin of Allen & Overy said: “the advantages of using a flexible workforce during the current economic climate will be compromised as employers feel the burden of additional rules and regulations.” “Rather than strengthening their rights, this may actually make the position of agency workers much more uncertain, exposing them to early termination of contracts.” It is anticipated that approximately half a million agency workers could lose their jobs before the end of 2011 as businesses will be less inclined to hire agency workers and will seek to employ fixed term staff as a more cost effective option.