Implementation of the Agency Workers Directive has been in the pipeline for years. After several delays, the UK Regulations which enact the requirements of the Directive finally come into force on 1 October. But what do they mean in practice for employers?
Do they apply to my business?
The answer lies primarily in the way your workforce is organised. Many employers do not use any agency workers, some use more or less exclusively agency workers and some use agency workers without even knowing it. Further, so-called “permanent placements” are entirely outside the scope of the Regulations.
What is the big deal?
There is a new 12 week qualifying period, after which agency workers will automatically qualify for equal treatment in terms of pay and benefits alongside permanent employees. For example, if permanent employees can qualify for bonuses or performance related pay then equivalent provisions will have to be implemented for qualifying agency workers. It is estimated that such changes will directly affect some 54% of UK employers who routinely employ agency workers for more than the 12 week qualifying period.
Why do employers use agency workers?
Typical uses of agency workers are for fixed term projects, seasonal work and maternity leave cover. There has traditionally been a perception that the use of agency workers avoids the potentially onerous employee rights and benefits which might prove costly if the alternative of short-term employment contracts is used. It is that distinction which the Directive and corresponding Regulations are directed at removing.
An easily overlooked area is the recent requirement for auto-enrolment of employees in employer contribution pension schemes. All agency workers who have worked for 12 weeks will have to be auto-enrolled.
How is the 12 week period calculated?
What happens if, as is often the case, the use of an agency worker is sporadic, e.g. a few days or weeks on followed by a few days or weeks off. The answer is that the time worked is added up until it totals 12 weeks (so the so-called 12 week entitlement could in fact accrue over a period much longer than 12 weeks). However, the clock is re-set if there is a clear break of more than six weeks.
Who is covered?
On the face of it the answer is obvious – agency workers. However, self-employed contractors invoicing through limited companies could be covered by the Regulations. This type of arrangement is common with IT contractors.
Implementation of the Regulations has already been delayed. It has been estimated that their effect could cost UK employers an extra £40bn over 10 years. In 2009 the Business Minister Pat McFadden said that the Government was “mindful of the need to avoid changing requirments on business until the economic recovery is more firmly established”. Of course, many would say that the economic recovery (if any) is less firmly established than it was. However, time has run out because the Directive requires implementation through national legislation at the latest by October 2011.
Details of the Regulations are beyond the scope of this article. However, the Department for Business Innovation and Skills has published comprehensive and very helpful guidance which you can download here.