The plans were introduced by the EU back in 2008 in line with the Agency Workers Directive and are due to come into place in 12 months time. However, they have attracted widespread criticism from groups such as the Recruitment and Employment Confederation.

The REC met with ministers at the Conservative party conference and urged them to look into their concerns that businesses may stop offering temporary positions; a major problem for contractors and freelance workers who enjoy the flexibility that comes with their job

The FCSA has also previously warned ministers that a lack of clarity around the Agency Workers Regulations could damage the freelance workforce.

The government may be able to reach an agreement to change the details of the AWR, however they must stick to the basic principles agreed by the EU and have appropriate legislation in place by 1^st October 2011.

The toolkit may also be useful for freelancers and contractors using an umbrella company. Umbrella company workers are thought to be captured by the regulations whereas those who are genuinely “in business on their own account” are not. This suggests contractors working outside IR35 will not be affected but many industry insiders however are yet to be fully convinced that this is indeed the case.

The REC are aware of the impact that the Agency Workers Directive will have hence why they are equipping recruiters with a toolkit which should help them overcome the administrative, legal and practical challenges once the legislation comes into force in October, 2011.

The REC will also be holding a webinar in July for contractors, recruiters and clients to view. They will also be holding a series of workshops specifically targeted to recruiters.

REC wants everyone in the contracting and freelancing marketplace to be prepared for the Agency Workers Directive (AWD).

As well as working with Government on the official guidance for the new Agency Worker Regulations, they are developing a suite of practical tools to help recruiters implement the necessary changes and seize new opportunities.

The practical support includes; training workshops, specific research on client awareness through the REC’s Industry Research Unit, mentoring sessions for agencies and clients, model contracts and a comprehensive AWD Toolkit for agencies.  Contractors who are still not clear about how the AWD may affect them could find these resources from the REC useful also.

Sam Strange, Director of Business Support within the REC’s Academy for Business says:  

“In conjunction with the REC’s high-profile lobbying campaign, work has been going on behind the scenes to develop to kind of practical tools that will help recruiters get to grips with potentially complex regulations. As we shift into ‘implementation mode’, our priority is to help recruiters plan ahead and engage with their clients and workers. Implementing equal treatment measures will be a challenge.” 

Also this week, an agency group announced that they were challenging the legality of part of the draft regulations to give agency workers similar rights as employees. According to the Association of Recruitment Consultancies (ARC), it would appear that the draft regulations contain important new aspects that were not raised in the consultation process.

Still a contentious issue, Independent Contractor Services will continue to report on any developments or news stories relating to the Agency Workers Directive.

The document is available on the Department for Business, Innovation and Skills website and can be downloaded here. The document comes in response to the consultation on draft regulations.  

Recruiter have summarised the report and confirmed that the government’s response to consultation is as follows;

• Agency workers placed with an end-user for 12 weeks or more will be entitled to the terms and conditions that would have applied if they been recruited as permanent employees. They will also be entitled to the same terms and conditions as comparable permanent employees.
• Eligible agency workers will be entitled to equal treatment in terms of “working time” provisions, such as holiday and rest breaks, as well as ‘pay’.
• ‘Pay’ now has a wider definition than proposed in the draft Regulations. While occupational benefits such as pension contributions, sick pay and maternity pay will not amount to pay, some bonuses that relate directly to the quality or quantity of work performed will need to be extended to agency workers.
• Breaks of less than six weeks between assignments will not reset the 12 week qualifying period. The Regulations also introduces a new anti-avoidance provision. If it appears that assignments have been structured in a particular way to try and stop an agency worker from acquiring rights under the Regulations, an award of up to £5,000 may be payable.
• Agencies will be liable for claims if an agency worker has not received equal treatment. However, liability could move to the end user if it has not supplied the agency information about the relevant working and employment conditions.

Limited company contractors are currently not within the scope of the regulations but the employment status of contractors is often challenged by HMRC. This means that clients will not necessarily be able to tell whether contractors are in or outside the AWD before they hire them.

In light of this, clients are asking recruiters to indemnify them against any claims which are brought by workers under the regulation meaning the recruiter would be liable if a claim was brought.  Concern has been raised by Association of Professional Staffing Companies that this will mean that clients will have little incentive to abide by the regulations set out in the AWD. Ann Swain, chief executive of the Association of Professional Staffing Companies (APSCo) added;

“End users will be able to push the cost of complying onto recruiters by getting recruiters to indemnify them in respect of any claims made in connection with the Regulations. This will leave ‘vulnerable’ workers no better off and heap further costs on recruiters. The Regulations will give temporary workers who are pregnant or new mothers more rights than equivalent permanent employees. This will impose significant costs on staffing companies.”

The Recruitment and Employment Confederation (REC) claimed a victory following an announcement on the final regulations for the Agency Workers Directive (AWD) and Kevin Green, REC Chief Executive commented;

“We welcome the delayed implementation date and the decision not to impose potentially damaging restrictions on the fees charged by agencies where a temporary worker is taken on permanently by an employer. However, there are real concerns that these EU regulations are ill-adapted to the UK labour market and could limit job opportunities at a time when flexible working options are providing a crucial route into employment.”

Guy Lamb, head of employment at DLA Piper has warned employers and clients that they should begin preparing for implementation of the agency workers directive. Employers that flout with the rules or who move staff around in very different roles every 11 weeks to avoid triggering their employees’ continuous service rights could face tribunal claims and fines.

Lamb explains: “Although the new rules don’t come into force until October 2011, employers will need to think about how they will budget for these new requirements now, and how they are going to place agency staff within their business in the future, to ensure they can still maintain a flexible workforce without breaking the rules. Obviously it is important that employees receive fair treatment within the workplace, whatever their employment status. However, the cost implications of these new rights could be quite significant for manufacturers in our region, in particular. Employers often rely on the flexibility offered by agency staff. They will be keeping a very close eye on their costs as we move out of recession and into recovery.”

As you can see by the comments from those with knowledge of the contractor marketplace, there is concern about how the AWD will affect contractors and also the recruitment sector and Independent Contractor Services will continue to research the topic and provide further updates when appropriate.

This will be good news for thousands of contractors and freelancers within the marketplace. The AWD, when implemented, will provide agency workers with the same pay, conditions and employment rights as permanent employees after 12 weeks. In response to the consultation held by the Department of Business, Innovation and Skills (BIS), industry bodies including contractor organisations have called for the implementation process to be delayed.

Contractor Calculator said the AWD would impact contractors in different ways. They said that until the Department of Business, Innovation and Skills releases the draft legislation for consultation, the exact impact on contractors is unclear. However, a close reading of the consultation document suggests that the effect of the new laws on contractors is likely to be mixed.

They believe that limited company contractors are thought to be excluded by the AWD, as they fall outside the definitions of ‘workers’ used by BIS in its consultation. Umbrella contractors, however, would almost certainly fall inside any new laws and qualify for equal treatment.

Only last week, the Conservatives said at their party conference in Manchester, that they would delay implementation of the Agency Workers Directive. They were concerned that at a time when unemployment is increasing and business is demanding less regulation, it is an inappropriate time to be increasing regulation.