Agency chiefs are being warned that new regulations designed to give freelances the same basic working and employment conditions as permanent employees could set them back tens of thousands of pounds a year in extra costs.
The Agency Workers Regulations, which come into force in October, mean that after a qualifying period of 12 weeks in the job, freelances will be entitled to maximum working time and night work protection, rest breaks and annual leave entitlement, as well as the principal issue of equal pay and bonuses.
Companies caught trying to avoid the 12-week qualifying period by rotating staff could face fines of up to £5,000 under anti-avoidance provisions.
The agency sector has seen a major rise in the use of freelances over recent years, driven mainly by the fact that they have been cheaper to hire than permament staff. Most start-ups use a bank of freelances for exactly this reason.
According to the IPA Census, there has been a 100 per cent increase in freelances working in IPA member agencies, up from 886 in 2009 to 1,702 last year. Overall, about 4 per cent of the UK workforce are agency workers – the highest figure in Europe.
Critics of the regulations argue that equal treatment for agency workers and contract workers doing similar work to permanent employees will impose unnecessary administrative and cost burdens on recruiters and hirers. Hirers will be required to share unprecedented detail and information on how they pay and reward their permanent staff, if they are to avoid legal liability when agency workers are not equally rewarded.
Wendy Trehy, a partner in the employment team at Davies Arnold Cooper, said: “Companies who use temps now need to consider practical strategies for data sharing with the agencies they work with to ensure clear communication, monitoring and compliance. It is important to take steps now to prepare and agree how this information will be provided and shared.
“Depending on the nature of any temporary workforce, there may be costs issues to consider. Inevitably some companies will have to make a decision as to whether any extra cost and the burden of compliance negates the value of retaining a flexible workforce.”
The Department for Business & Skills has just published its guidance on the regulations, which come into force on October 1. For a copy of the guidance, visit the BIS website.
