The Daily Telegraph recently published a story suggesting that the Agency Workers Regulations may be watered down or even dropped.

The newspaper claims that lawyers for the Prime Minister have informed him that he could amend or scrap the new rules completely. When the present government took office, it explained that it would be too expensive to oppose the EU over AWR and so the regulations would be implemented. But as implementation draws closer, the picture has changed.

Trade associations have welcomed the news but said consideration must be given to any costs incurred in making changes at such a late stage.

Solicitor Nicola Tager questioned whether David Cameron had left it too late to seek legal advice. The AWR come into effect on the first of October and the Agency Workers directive must be implemented by December 5th or the government will face hefty fines from the EU.

Kevin Green, the chief executive of the REC, said he welcomed the fact the Cameron was taking an interest in the impact of AWR as the Confederation has been tirelessly highlighting some of its complexities. However, there would have legitimate cause to question why it has taken so long to pursue this option after agencies have devoted a lot of time and money into preparation for implementation.

He went on to say that the impact will be minimal in a lot of sectors and recruiters have already started working with clients to ensure equal treatment works. A realistic way forward would be if the coalition agreed to review the Regulations as soon as possible after the first year.

Ann Swain, the chief executive of APSCo, said she welcomed signs that a review will be undertaken into how the AWD excludes limited company contractors and pointed out that APSCo has given the government a methodology to clarify the issue and hopes this will be adopted.

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The majority of employers are still not prepared for the impact the Agency Workers Regulations will have on their business, according to a new survey from the REC.

The Confederation’s latest Jobs Outlook Survey discovered that 70% of employers are aware of the regulations but only 10% have planned to make specific changes in the run up to the first of October implementation date. 42% of employers said they were currently “weighing up their options.”

The Agency Workers Regulations will provide temporary workers with some of the same rights as their permanent counterparts once they have completed 12 weeks continuous work in an assignment. However, interesting research from the CIPD and REC has found that as few as 13% of temps will have their pay and benefits increased when current pay levels and short-term assignments are taken into account.

The REC’s head of policy, Gillian Econopouly, said that with so many employers unprepared for implementation, it’s up to recruiters to discuss the matter with their clients. Some employers will use the AWR as a catalyst for a review of their usage of flexible staff and this might lead to slight reduction in the number of temporary contracts. However, on the plus side, some businesses intend to increase the amount of temps they use over the coming twelve months.

The UK legal director of Ranstad, Ian Naylor, has warned that organisations that do not embrace the spirit of AWR risk losing out on talent.

He told companies that are looking at alternative supply chain solutions that their reputation might be damaged if workers believe solutions have been implemented solely to avoid parity with the permanent workforce. Naylor went on to point out that candidates are much more likely to be attracted to companies that embrace the spirit of the regulations.

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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 draft AWR guidance was issued at the beginning of April and interested parties were given two weeks to provide feedback.

The Association of Recruitment Consultancies was quick to give hiring managers and recruiters a chance to put forward their questions to representatives of the BIS by hosting an interactive meeting on April 12th.

During the event, Adrian Marlowe, the ARC chairman, presented legal analysis of the AWR guidance. He tackled each area, clarifying and explaining ambiguities and asking the BIS for further guidance and examples.

180 recruitment and HR professionals attended the meeting and they were given the opportunity to explain their suggestions and requirements to the BIS.

The feedback was incorporated in real time by lead officials from the government department, who made amendments to the guidance to make sure the final document will be both workable and practical and help the recruitment industry understand and implement AWR successfully.

The lead official from the BIS said the seminar was extremely helpful. It was an excellent opportunity to learn of any remaining concerns the recruitment sector had and will help the department produce the best guidance possible.

Participants from the recruitment industry also found the seminar enlightening. The MD of the Resource Group, John Larkin, said the event was very lucid in the points that were raised. The seminar was another example of how proactive the ARC is in tackling current issues for its members.

Stephen Buxton from the FDM Group concurred saying the meeting was a comprehensive and knowledgeable presentation on the AWR draft proposal and recruiters were allowed to put forward their views to the people who are drawing it up.

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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 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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Vince Cable has pledged to review the incoming agency workers directive but some employers are warning him not to jeopardise a deal that was previously agreed with the unions.

The CBI and the TUC brokered an agreement stating that temporary workers will get the same pay and working conditions as their permanent counterparts after they have been in a job for 12 weeks. The unions had originally demanded this equality as from day one.

The concern amongst businesses is that if the regulations are changed this could infuriate the unions who will then abandon the 12 week deal and return to their demands for equality from day one.

Business leaders say that giving temporary PAYE workers equal rights from day one will cost company’s more and therefore they will hire fewer temps. And yet one of the attractive features of our labour market is its flexibility. Businesses can respond quickly and effectively to market changes without the need to make a long-term commitment.

Everybody wants to see red tape and bureaucracy reduced so it is imperative that any changes are carefully thought out.

The hospitality industry uses a lot of temps to help out during peak periods and the chief of HR at the Thistle hotel group, Christian Armstrong, said they would think twice about hiring workers from agencies if equal rights kicked in right from the start.

The chairman of the Association of Recruitment Consultants, Adrian Marlowe, said that business leaders were being unnecessarily cautious and that his Association wants the 12 week rule to be more logical and equitable, rather than abolished.

The AWR have to be implemented into UK law by November 2011.

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Since the Agency Workers Directive was published last week, various professional organisations have voiced their concerns.

The SPA, which represents some of the biggest umbrella companies in the UK is spearheading a new campaign to further awareness of the various different types of worker operating within the flexible marketplace.

Stuart Davis, who is Chairman of SPA has claimed that the BIS’ response to the Agency Workers Directive reveals a worrying lack of understanding with regards to the freelancing in the UK.

He is also calling on the government for greater differentiation between self employed individuals, limited company contractors and those that work through umbrella companies.

Davis believes that the new regulations are yet another piece of ill informed legislation that risks damaging the flexible labour market. Of course these new regulations are yet to be fully carved in stone. The AWD are not due to be implemented until after 1 October 2011 and we could have a new government then.

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There appears to be more confusion over the timing of the implementation of the Agency Workers Directive (AWD), which many are concerned could have far reaching implications for umbrella companies and contractors that work through their own limited company.

The government had pledged to refrain from implementing the AWD until October 2011 and yet it now seems they are keen to have it in place before the dissolution of parliament. In parliament recently Chris Mullin, MP for Sunderland South, asked Pat McFadden about his plans for implementation of the AWD.

Mullin pointed out that he felt the matter hadn’t been properly thought out and may well have been rushed through before dissolution.

At this point John Penrose, the Shadow Minister for Business, challenged McFadden saying that the government had previously expressed it’s intention delay full implementation of the AWD until the last possible date under European Law.  He also asked whether the government could reassure interested parties that they do in fact have the best interests of the country in mind.

McFadden replied by saying that, in bringing forward the AWD, the government are simply abiding by TUC-CBI agreement and that voters would have the opportunity to make their feelings know at the forthcoming general election.

In light of this debate, it is now clear is that the government is keen to gets things moving and have a blueprint in place as soon as possible in an attempt to reduce the uncertainty within the UK recruitment market. They will shortly be releasing their response to the recent consultation document and it is believed that this will clear up many of the issues raised by the industry.

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