Heads in the sand will face penalties

Matt Southall, Managing Director at the Acorn Group, comments about the new Agency Workers Regulations (AWR):

It is almost a month since the new Agency Workers Regulations (AWR) came into force and many businesses are still either confused about how to comply with them or ignoring them altogether.

The new legislation aims to provide the 1.3m agency temps in the UK with equal treatment to permanent staff once they have been with the same employer, working on the same job, for 12 weeks.  It affects any business that relies on temporary agency workers in a whole range of sectors, from manufacturing, engineering and food production to project management, clerical and administrative positions.  And it means a parity of pay, including overtime, shift allowances, unsocial hours’ payments and bonuses, breaks, rest periods and holidays – including public holidays.

Potentially, the AWR could have a major financial impact on businesses that rely heavily on agency temps.  We have been preparing ourselves – and our clients – for this new legislation over the past two years.  But from our observations in recent weeks, it is clear many businesses (although, I should stress, not our customers!) do not understand the regulations and their implications, or are just choosing to ignore them.

We are hearing estimates that about 60% of businesses that should be adhering to the AWR have still not decided how to approach it. And a large number of companies are using the 12-week qualification period to delay making a final decision on the approach they wish to take because they are unsure of the advice they are receiving.

But adopting this kind of “head in the sand” approach is simply not sustainable – and there will be penalties.  Sooner or later, businesses are going to have to respond, because the cost implications could potentially threaten their very viability.

A number of our customers have bitten the bullet and decided to pay for parity because the difference they face in costs is not that great.  For others, the AWR is spelling an entirely different story – one of our clients could have faced extra costs of £2m a year, which is clearly not sustainable if they wish to continue operating flexibly and competitively.

Businesses like these have no option but to look at new ways of managing their temporary workforce and mitigating additional costs.  So we are advising our clients in a number of ways, and this has included assistance in adopting models which mitigate the costs.  For example, a number of our clients have been using our services to employ temporary workers under the Swedish Derogation Model or Managed Service Option.

The regulations have undoubtedly resulted in a lot of additional administration for recruiters – but a good agency will assist your HR team and give advice on the best options

The fact is no affected business can ignore the regulations. As I mentioned, there are penalties for failing to comply – including fines of up to £5,000 for deliberate avoidance, plus a minimum award of two weeks’ pay to affected agency temps.  Those companies that have yet to do anything about the regulations need to seek advice from experts (like ourselves) as a matter of urgency.

Here at the Acorn Group we have a detailed understanding of what the implications of the regulations are for all businesses, and we have solutions that allow companies to reduce their exposure to both significant cost increases and associated AWR claims, while allowing them to continue to enjoy the benefits of a flexible workforce.