It has been announced that fixed tribunal fees are going to be introduced in a bid to avoid unnecessary claims arising from the Agency Workers Directive. The set fees do away with uncertainty and could give employers the confidence they need to increase the size of their umbrella company contractor workforce.

AWR came into being on the first of October last year but employers did not feel the full impact of the regulations until Christmas Eve when they were required to provide temporary workers with 12 weeks service the same rights as their permanent counterparts. Employers who fail to comply with the regulations could find themselves facing a tribunal hearing.

The decision to implement fixed tribunal fees has been warmly welcomed by the British Chambers of Commerce. Adam Marshall, the director of policy at the BCC said that charging claimants to access the employment tribunal service should boost confidence amongst employers.

Currently, employers often decide to settle out of court, even if they feel a claim is unjustified, to avoid the costs associated with defending themselves at a tribunal hearing. It costs an average of £8,500 for an employer to defend his actions at a tribunal and yet the average out of court settlement is only £5,400.

AWR is in force to protect contractors and employers now have some protection against unjust claims. Hopefully employers will now have the confidence they need to increase the size of their temporary workforce and provide more opportunities for contractors.

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Umbrella company contractors are no doubt well aware of the Agency Workers Directive that came into effect at the beginning of October.

Basically, AWR was designed to put contractors and temporary workers on an equal footing with their permanent counterparts when it comes to pay and working conditions.

Ever since AWR was announced, some companies have been looking for ways to get around it.  Tesco recently confirmed that it was going to use the Swedish derogation model to avoid paying its temps the same wages as its permanent employees.  In order to do this, Tesco will source temporary staff from recruitment agencies that directly employ their temps.

The Agency Workers Regulations do contain anti-avoidance measures, but employers are legally entitled to use the Swedish derogation model. The Sunday Telegraph recently reported that Tesco has asked a recruitment agency that supplies it with truck drivers in Kent to employ the temps directly. As a result, 400 drivers could lose £150 a week.

Tesco has defended its actions saying that a lot of agencies are using the derogation to ensure that temporary work remains flexible and competitive. The government, the Confederation of British Industry and the British Retail Consortium have all recognised this approach.

The supermarket giant added that this move is not a Tesco initiative and it is not asking agency workers to sign a new contract.

Meanwhile, the FPB has launched a new guide to help employers understand the recent changes to UK employment law.

The chief executive of the FPB, Phil Orford, explained that employment law can seem like a minefield that is continually changing. AWR is one of the biggest changes we have seen in recent times and it is vital that employers understand their responsibilities and stay on the right side of the law.

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Umbrella company contractors may be interested to learn that the government has confirmed that it has no plans to make any changes to the Agency Workers Directive that came into force on October 1^st.

The REC’s Industrial and Drivers sector groups met recently to discuss the Swedish Derogation model. Several employers are reported to have been asking recruitment agencies to use the model because they believed that it would take temporary workers out of the scope of AWR.

Rod Harris, the chair of the REC Drivers, said there still appears to be a lack of understanding about the complexities of the different supply models and it is important that there are no misunderstandings about the requirements of AWR.

The REC has also started reviewing the AWR Regulations and Guidance that were published last week for Northern Ireland and has said it will keep its members informed of key points before the Regulations come into force on the 5^th of December.

One recent survey had suggested that as many as 500,000 could be out of a job before Christmas as companies preened down their temporary workforce in order to avoid complying with the new legislation.

Rather than reduce the size of their contractor workforce, the Royal Bank of Scotland has decided to give them all a mandatory holiday between December 19^th and December 30^th. Furthermore, the bank is no longer going to subsidise holiday parties and has actually vetoed any staff entertainment for the remainder of 2011.

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Umbrella company contractors might be interested to hear the REC’s opinion on the latest unemployment statistics.

Data from the ONS, released on Wednesday, showed an increase of 114,000 in the number of people without a job. The UK now has 2.57 million unemployed people, 991,000 of them between the ages of 16 and 24.

Tom Hadley, the Director of Policy and Professional Services at the REC, said that although these figures were worrying, there is still significant demand across a range of sectors. However, the government needs to address the disparity between the skills available and the needs of business.

With 21.3% of the UK’s young people out of work, the coalition must implement measures such as an NIC holiday for companies that hire young jobseekers. The recruitment industry is already contributing through the Youth Employment Charter, but the business community as a whole should become more involved.

The REC expects unemployment to plateau at around 2.6 million. The UK has a resilient jobs market and we do not expect unemployment to reach 3 million. Employers are always going to be looking for workers with the right drive and skill set to help their firms compete. And despite the Agency Workers Directive, there is still a high demand for contractors and temporary workers, he added.

Contractors working in the hospitality industry could be set to benefit from next year’s Olympic Games. Despite a reduction in consumer spending, the hospitality industry has continued to create jobs and Ian Burke, a director of Caterer.com, said he expects demand to increase further as we get nearer to London 2012.

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The Cranfield School of Management thinks the implementation of AWR will cause small business owners to think more carefully about using workers from umbrella companies.

The Agency Workers Directive went live on the first of October. This EU-inspired legislation is designed to put temporary workers on a par with their permanent counterparts after they’ve completed 12 weeks in the same role.

Dr Clare Kelliher, from Cranfield School of Management, said a lot will depend on the reason why businesses employ temps. Companies that use temporary workers to fill seasonal peaks in demand will more than likely continue to do so, although they may find it costs them a bit more. On the other hand, businesses that saw temps purely as a way of cutting costs will need to rethink their recruitment strategy.

ACAS recently warned employers that they could be fined up to £5,000 by an Employment Tribunal for breaching AWR.

There are currently about 1.4 million agency workers in the UK who rely on recruitment agencies to match them with employers. However, a study conducted by the REC shortly before implementation date discovered that only 10% of employers were fully prepared for the new changes.

As well as being entitled to the same pay and conditions as permanent employees after the 12 week qualifying period, they will be allowed to use collective facilities such as the canteen, crèche and transport, from day one. Agency workers are also entitled to be made aware of any job vacancies that arise in the company.

Temporary workers will not be entitled to childcare vouchers, season ticket loans or subsidised gym membership and they cannot claim unfair dismissal, maternity leave or redundancy pay from the employer.

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Lawspeed, the recruitment law specialist firm, claims there could be a conflict of interest between HR and finance departments when the Agency Workers Regulations are enforced in October this year.

Lawspeed’s director, Ravi Murphy, said that unlike other rules relating to recruitment agencies, the new regulations contain issues that could lead to conflict.

He cited an example of HR staff finding it hard to fight the unions over the payments made to agency staff whilst finance directors will want to keep costs to a minimum wherever possible. The AWR grants temporary workers the right to the same rate of pay as their permanent counterparts once they’ve been in the same contract for 12 weeks.

The REC has recently raised concerns with the BIS over the draft AWR guidance. The Confederation says further clarification is needed on certain aspects of the AWR including the Pay between Assignments exemption. It would also like to see clearer criteria laid down for the exemption of genuine self-employed limited company contractors.

The REC met with BIS officials last month to highlight concerns and suggest ways in which the final version of the AWR guidelines can be made clearer for recruiters.

Gillian Econopouly from the REC said the organisation has been working with the BIS by holding one-on-one meetings and attending guidance workshop sessions over recent months. More recently, the two bodies met to discuss the guidelines in detail and expect some of the issues raised to be addressed in the final version of the document.

Although the guidance document can never wave a magic wand over dealing with AWR, the REC will continue to urge the coalition to make it as business-friendly as possible.

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The Agency Worker Regulations were back on everybody’s mind at the end of last week.

Following publication of the draft guidelines last Thursday, a two week consultation period is under way during which time the REC will be collecting feedback from its members and submitting a response to the BIS.

The REC has played an active part in all the consultation workshops run by the BIS and this has enabled them to flag areas of specific concern to recruiters. The REC’s legal team will analyse the draft guidance and further information will be provided to members over the next few days.

Last week, the REC met with the TUC to discuss implementation of the Agency Workers Directive as well. As well as highlighting common ground, the meeting underlined the importance of positive dialogue between the Trade Unions and the recruitment sector.

There are differing perspectives on how some of the equality measures should work but the two sides agree on other areas such as making sure employers only work with agencies that are compliant. It was also agreed that the government needs to enforce existing employment regulations effectively.

Sarah Veale, the head of equality and employment rights at the TUC, said it is in the interests of all concerned parties to work together and make the best of the AWR. Honest agencies can gain a lot by demonstrating to clients their understanding of the regulations and helping them get it right.

The director of policy and professional services at the REC, Tom Hadley, said that although there will always be differing views of some issues, progress had been made. The REC will continue to build on its relationship with the TUC and explore common ground. It will also be crucial to maintain regular dialogue with both the unions and employers as implementation draws closer.

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Self-employed umbrellas seem to be the new “in thing” – it’s almost like umbrella companies around the country had a eureka moment all at once and decided to run a “new model” to catch everyone they couldn’t put through the typical PAYE umbrella.

Self-employed models are nothing new, they’ve been around for years – particularly in the construction industry and when you take into account that all the self-employed model is doing is effectively making one straight payment to the guy (after retaining its margin) without the headache of PAYE it seems far too simple.

It is in fact simple, and there’s no fancy tricks to it, no complicated formulae, or backward calculations. There are no messy expenses issues to navigate or P45s & 46s, P11Ds or P60s – the individual does his own return at the end of the year – simple! So why not make everyone self-employed and avoid the umbrella headache? And what is the “self-employed” umbrella actually doing for its margin?!

If it’s done right (and therein lies the problem) it does work well. It isn’t suitable for every individual and that is the first minefield to overcome, yes you can give the guy a self employed contract but it has to contain the fundamental self-employed status criteria of lack of personal service, lack of control and lack of mutuality of obligations AND it has to reflect what actually happens in practice – does he have to give personal, is he controlled and is he obliged to do the work – if so he shouldn’t be self-employed.

On top of this there is the Working time Directive to navigate, he might not be an employee but is he a worker? If so he will be entitled to holiday pay – the rules are very similar to status but they aren’t clear cut. If he’s a worker he can be self-employed for tax purposes yes, but he must have certain employment rights, including his holiday pay.

On top of this there is agency legislation to consider, is the “self-employed” umbrella set up correctly are its contracts up the chain contracts for the supply of services? If they are contracts for the supply of people, or their invoices detail a list of people they could be deemed an agency themselves by HMRC and all the individuals are now agency workers – that’s PAYE and NI on all you’ve paid them thank you very much Mr Inspector!

And that’s not all – there’s MSC issues to consider – self-employed models do not appear on any specific exemption anywhere? The guys are simply getting salary, none of their remuneration is taxed at source. The truth is the MSC legislation is worded so widely that, unlike fully compliant PAYE umbrellas that have a first line defence, the only defence to self-employed model under the MSC legislation is that there is no third party promoter or facilitator – so that agency you’ve agreed to give a kick back to has suddenly dropped you right in it!

And then of course there’s the impending AWD – are the guys genuinely self-employed, are you definitely not caught by the agency legislation, are the guys definitely not workers, are you definitely not an MSC – then you should be ok!

So yes the self-employed model is seemingly money for old rope, and simple to run, but it’s got to be done right – and those who thought setting up an self-employed arm to their umbrella was a simpler, less compliance intensive option, should think twice – there is no such thing as less compliance in the contracting world!

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The next four years will see employers paying out an additional £23.87 billion due to new employment laws, according to the British Chambers of Commerce.

Reform to the existing pensions legislation will cost companies £4.5 billion a year, the Agency Workers Directive (AWD) will add another £1.5 billion and a further £174 million will be eaten up as employees take advantage of “time off for training”.

The director-general of the BCC, David Frost, pointed out that the coalition says business growth is at the top of its agenda and yet UK companies are going to be hit hard when these new regulations are enacted.

The government promised to cut the regulatory burden and it must make good on this promise.

Frost continued by saying that until the bureaucracy is reduced, the UK will carry on having high unemployment and that could lead to the possibility of the economic recovery becoming derailed.

The AWR is one of many new regulations that is still bamboozling recruitment agencies and employers. APSCo has come to the aid of agencies and their clients by producing a toolkit to help them comply with the Regulations.

This toolkit will be launched in advance of the BIS guidance documents which will be published in the middle of March. There are three sections to the kit. Section one is a short guide, written in plain English, which explains the Regulations. Section two is a risk assessment toolkit for members of APSCo. This will let members identify whether they will be affected by the AWR. The final section is a toolkit that provides the user with a full list of the implementation issues they need to take into consideration when dealing with their clients.

APSCo’s chief executive, Ann Swain, said that the Association’s members are hungry for information about the AWR. The toolkit will be able to sit on a recruiter’s desk and will help keep AWR compliance costs to a minimum.

Although APSCo is working with the BIS on the guidance notes, the Association feels a toolkit which helps recruiters and clients perform quick impact assessments was of significant value.

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The controversy regarding the Agency Workers Directive continues, as in fact it is likely to so do for some time to come. Although the AWD does not come into force until next October, the recruitment industry is already starting to prepare for implementation. However, there are still aspects of the regulations that require further clarification.

Danbro, a contractor accountancy firm, thinks that some employers will stop hiring temporary workers because they will need to be granted equal rights with their permanent counterparts after 12 weeks in a similar role. The firm also thinks that professional umbrella company and agency payroll contractors, who value the flexibility that comes with temporary roles, will find the new regulations inconvenient.

Damian Broughton, a partner at Danbro, said that he was pleased that the REC is going to discuss industry concerns with George Osborne and Chris Grayling and hopes that changes can be implemented before the regulations come into force next year.

Recruitment firm Adecco recently surveyed HR professionals and discovered that many of them are confused about the AWR and in particular the timeframe for implementation. 61% of the survey’s respondents did not appreciate that the regulations go live within the next 12 months, and 80% have no idea what will happen if they do not comply.

Whilst the government does have some flexibility when it comes to amending the AWR, they must abide by the regulations’ principles. However, the UK’s flexible workforce will play an enormous role in securing the country’s economic recovery and so it is vital that any discussions lead to a positive outcome that will benefit everybody.

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The REC is holding a series of regional workshops around the country to help its members understand how the Agency Workers Regulations will impact their business.

The AWR do not come into force until October next year but the REC has been tirelessly working to ensure businesses and umbrella companies have as much information to hand as possible so that they can start making the necessary preparations for implementation.

The half-day workshops will be held from the end of next month until the middle of November in Birmingham, London, Manchester and Leeds and will give attendees a comprehensive understanding of what affect the Agency Workers Directive will have on them. The London workshop has already been fully booked and the REC is compiling a shortlist of other interested parties in anticipation of adding another date to the schedule.

Employers are now becoming more aware of the Regulations and it is therefore imperative that recruitment agencies can answer questions posed by clients and candidates.

The REC launched its AWR Implementation Pack in June, followed by a webinar in July for members to ask questions on specific aspects of the Regulations. The Confederation has also met with Edward Davey, the minister responsible for implementing the AWR, to make sure he understands the recruitment industry’s concerns about the Regulations.

Kevin Green, the chief executive of the REC, said that they have asked the government to publish official guidance regarding the Regulations as soon as possible. It is vital that everyone get plenty of time to prepare for the far-reaching changes this radical legislation will bring about, he added.

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De Poel, the temporary procurement agency, says that industry ambassadors and the British press need to get their facts right in light of rumours that the coalition government intends to water down some of the Agency Workers Regulations.

One story that appeared recently implied that temporary agency workers would lose potential holiday pay as a result of legislation being revoked. However, temps have been entitled to paid holidays since 1998. Another misconception is that temps get a raw deal and yet in some sectors such as engineering, healthcare and IT they get paid more than permanent staff members.

Matthew Sanders, CEO of De Poel, said that although it is important to protect temporary workers, doing so should not be detrimental to business and the economy.

Last week De Poel joined forces with the ARC which has continually raised concerns regarding the legality of the regulations which are due to come into force in October next year.

Meanwhile the government is set to push ahead with the review of the AWR although any amendments are likely to be minor. All EU member states must implement the agency workers directive by 5 December 2011 and the UK coalition must make sure it complies with the requirements or face the prospect of legal challenges in the future.

The REC is hosting a live webinar this Wednesday to update both clients and candidates on the facts surrounding the AWR and help them prepare effectively for their implementation. Although the event is now fully subscribed, it will be available ‘on demand’ as from Friday 23rd July.

The REC has also compiled a comprehensive implementation pack containing information, tools and advice for businesses.

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