First off let’s look at the easier analysis. The study found that almost one in five (17%) employers have opted for a regulation 10 contract for their agency workers as a way of mitigating some of the responsibilities under AWR. Taking a straw poll amongst our Field Sales team would back this up, albeit anecdotally.

Secondly, the survey also found that while AWR had increased employers’ costs, almost two-thirds (65%) had seen a rise of between zero and 10%.  More than one in five (22%) reported a cost increase of between 11 and 25%, while “a small minority” of 3% of organisations saw costs rise by between 25 and 50%. 10% said they didn’t know the impact on their hiring costs.

Again, if you speak to our team in the field, and from the conversations we have with staffing businesses and their clients, this rings true. Nobody was under any doubt that the introduction of AWR would lead to an increase in the cost of employing a temporary worker and our industry has worked hard to ensure these costs were kept to a minimum for everyone in the supply chain.

So, on both the main points of the report it’s hard to disagree.

However, the FT’s headline read; ‘Employer’s dodging temp pay rules” and its opening line claimed that; “almost two-thirds of employers are exploiting loopholes to escape the worst impact of new rules giving temporary workers equal pay with permanent staff….”

Last week we covered in some detail why the phrase ‘loophole’ is wrong in so many ways and you can read that here.

But two-thirds? Really?

This is quite an accusation to make, especially when the sample size of the survey is just 143 companies and organisations such as the TUC, which has promised to complain to the European Commission about Britain’s introduction of AWR, are looking for campaign angles. There doesn’t seem to be any explanation of how this figure was arrived at which doesn’t help either.

We’ve seen surveys from industry bodies and service providers on a regular basis lately, and all have their own agenda at heart. There is still no commitment other than to a ‘paper review’ in October from DBIS but what our industry really needs now is a detailed, impartial analysis into AWR which looks at more than 143 businesses and drills down into the size of companies affected, their industrial sector, the size of their temp workforce, the region they are operating in, the breakdown of skills amongst their temporary workers, and so on.

This is the only way to see the full impact of AWR and the only way to make intelligent decisions as to how we all move forward without the politicking and clamour for publicity.

If you were in charge of the research project what questions would you be asking?

According to their report, the introduction of the new regulations has led to a ‘wave of consolidation’ in the temporary staffing industry as businesses involved with the supply of temporary labour get to grips with the legislation.

As recruiters and staffing businesses have worked to adapt to the changes, the additional administration, and in some circumstances the additional costs created by AWR, have led some of the smaller staffing businesses to struggle. This can’t have been helped by some of the tales we regularly hear about the squeeze on margins that can occur when some clients are reluctant to increase costs and staffing businesses simply can’t absorb them either. This seems to be a particular issue for staffing businesses involved with the supply of ‘blue-collar’ temporary workers where pay parity must be achieved as part of a Match Permanent Pay (Regulation 5) model. Another issue is that smaller businesses simply can’t afford the additional manpower required.

Interestingly, the article cites Regulation 10 (Swedish Derogation) contracts as one way of reducing the cost burden associated with AWR.

William Shirley, an analyst at Liberum Capital states in the article that AWR has prompted a growing number of the UK’s 17,000 staffing businesses to seek buyers or consider closing, although he does acknowledge that some of this activity would have happened anyway due to the weak UK economy.

So do you have firsthand experience of this? Are you the owner/manager of an SME staffing business looking to sell up or shut up shop? We’d love to hear from you so leave a comment below.

There was some good news in the Recruitment & Employment Confederation’s (REC) latest AWR Monitor published last week as the report indicates that there has been only a slight decrease in temp billings. This is largely attributed to the poor economic conditions in the UK as opposed anything AWR related and future forecasts remain strong with 87% of employers looking to grow or maintain temporary staffing levels over the next 12 months.

So demand for flexible workers hasn’t dropped off since the introduction of AWR if the latest reports are anything to go by.

Swedish irony
The Parasol Group remains supportive of the Swedish Derogation model, or Reg 10 solution to AWR, as long as it is applied correctly and in the right circumstances. There is no getting away from the fact though, that the model is still being debated in our industry and will continue to be so until case law sets the record straight. However, perhaps the biggest irony of AWR’s progress has always been that Sweden has never adopted the model it first proposed to the EU itself. Upon further reading however, this might not be strictly true.

When talking about the Swedish Derogation, you immediately think of the qualifying period element of the legislation and the provision for pay between assignments.

But there has always been a third element that has not been discussed in the UK despite it being adopted by many other EU countries. This third element allows for derogation from the equal treatment rules of AWR if there is a collective agreement in place which gives appropriate protection to agency workers.

A collective agreement is an agreement between employers and employees which regulates the terms and conditions of employees in the workplace and sets out their duties and those of their employer. These agreements usually come about after a process of collective bargaining between an employer (or a number of employers) and a trade union representing the workers.

However, in the UK, collective agreements are deemed to be not legally binding under the Trade Union and Labour Relations Act 1992 (section 179 if you are interested) unless specifically included in the agreement. As a result, we don’t have industry wide collective agreements in the UK as a consensus would be difficult to achieve.

It’s hard not to form the opinion that if labour relations were less confrontational in the UK then a lot of the issues currently surrounding AWR could have been avoided all together and that the AWR itself would largely be obsolete.

What do you think?

We recently reported how BMW was heavily criticised by the Unite union for both its plans to close down its pension scheme and its use of the Swedish Derogation. Large employers such as Jaguar Land Rover, Morrisons, Premier Foods and Carlsberg have already gone on record as users of the model and BMW looked set to follow suit.

A BMW statement said: “The company and Unite, the union, have jointly agreed to enter into discussions relating to the use of agency staff. While these discussions are ongoing the company will not proceed with its plan to use regulation 10 of the Agency Workers Regulations [the Swedish derogation].”

As the negotiations develop we’ll keep a close eye on it and will report any news here.

Finally today, one sector of the UK that we receive a lot of AWR queries about is supply teachers and the staffing businesses that place them.

Supply teachers have very much been a special case on all things AWR and separate guidance was issued last summer.

The National Union of Teachers (NUT) has issued fresh guidance for its supply teacher members this week which you can access here.

Do you place supply teachers as part of your role or are you a supply teacher yourself? If so we’d love to hear from you. Tell us what you think.