Implementation of AWD sees major cost implications for the recruitment industry
Agency Workers Directive explained, by Stuart Talbot, head of the Recruitment Finance Division
The new regulations are designed to grant all temporary agency workers parity in terms of both pay and employment conditions as they would have been entitled to receive had they been recruited to do the same role directly by the hirer.
This means that the implementation of the directive will have major implications on the costs and use of agency workers throughout the whole of the recruitment industry.
The regulations apply to all temporary agency workers regardless of whether they are on a contract of employment or contract for services. PAYE workers who are employed via an umbrella company are also within the scope of the regulations.
However, workers who are genuinely in business on their own account, e.g. self-employed or who are working through a corporate vehicle, are expected not to be within scope.
Where the hirer uses a Managed Service Company to manage the contracts this will need to be assessed separately as currently they will be outside of the legislation, unless, in reality, the user, rather than the managed service provider, supervises and directs the staff. But this remains a very grey area of the regulations.
The agreement specifically provides that equal treatment for the majority of the rights will not be required until the agency worker has worked continuously in the relevant role for 12 weeks. The regulations dictate that for the purposes of calculating the qualifying period, continuity will normally only be broken by a break of at least six weeks between assignments.
It is also important to state that the regulations include a complex set of anti-avoidance provisions designed to make it difficult for hirers to circumvent the qualifying period.
As a funder the Recruitment Finance Division of Lloyds TSB Commercial Finance we are looking to get confirmation from our clients as to how they are protecting themselves against the impact/costs of AWD, much in the same way as we ensure that they comply with legislative and compliance requirements in other sub-sectors.
If a recruitment business isn't able to evidence compliance then I wonder whether financiers may look to revise available funding? At Lloyds I am currently looking at our policies in this respect.