A year ago, the Agency Workers Regulations 2010 (AWR) came into force. What impact have they had? Are they a resounding success in providing protection for vulnerable workers, or an administrative headache for businesses and a damp squib of little help to agency workers?

Contrary to expectations and no doubt to the relief of hiring organisations and agencies alike, we have not seen a flood of tribunal claims yet. This may suggest agency workers are not a terribly litigious lot, or perhaps it demonstrates an acceptance by agencies and hirers of the need to comply with the AWR.

Maybe, however, it simply reflects a reduction in the use of agency workers against a backdrop of challenging economic conditions and a shrinking labour market.

To recap...

The AWR are intended to ensure:

  • That after 12 weeks in a given job, agency workers are entitled to equal treatment in respect of certain basic working and employment conditions (the '12-week' rights).
  • From the first day of their assignment, agency workers are entitled to information about vacancies in the hirer's organisation (to give them the same opportunity as other workers to find permanent employment). They are also entitled to equal access to collective on site facilities, such as childcare and transport services (the 'day one' rights)
  • Provide additional rights for new and expectant mothers.

Where are we now?

An administrative headache with increased cost?

Early surveys suggested the introduction of the AWR had not reduced the use or expected use of agency workers. For instance, the Recruitment & Employment Confederation's (REC) JobsOutlook survey reported in February that "demand for agency staff stays solid" and that 84% of businesses expect to either expand or keep the same level of temporary workers.

However, the outlook of several surveys reporting at the six months mark signalled that all was not rosy. The 2012 XpertHR Agency Workers Survey reported a 22.1% decrease in the use of agencies, and 36.4% of respondents stated that where possible assignments were kept to under 12 weeks.

Significantly, most respondents perceived the AWR as having created an additional administrative burden (55.5%) and that the increased cost of using agency workers means they are less likely to use them now and in the future (51.7%).

Other surveys also revealed that the majority of employers have seen increased costs in using agency workers. Furthermore, businesses were looking to rely on exclusions from the AWR where possible in order to limit any adverse impact.

The latest Employment Trends Survey carried out by the Confederation of British Industry and Harvey Nash records that 57% of the 319 businesses surveyed had reduced their use of agency workers, with 8% having stopped their use entirely.

This research, published in August 2012, suggests that the extra cost, compliance and administrative burdens resulting from the AWR has meant employers are turning to alternatives such as:

  • Short fixed-term contracts (directly employed casual workers) (36%).
  • The Swedish Derogation Model where agencies pay workers a minimum amount between assignments, effectively becoming their permanent employers. This excludes the agency workers from the '12-week' rights in so far as they relate to 'pay' (27%).
  • Asking existing employees to put in more overtime work in preference to the use of agency workers (17%).

This research concludes that "the AWR have reduced opportunities for agency temp staff as companies are changing their approach to using temporary staff".

So, have agency workers been well served by the AWR?

The early signs are that the AWR have contributed to a decrease in work opportunities for agency workers. A survey of agencies developed by The Employment Agents Movement (TEAM) in conjunction with the Department for Business Innovation and Skills (BIS) compared temporary usage during the first quarter of 2012 with the first quarter of 2011.

The survey revealed over half (53%) of the agencies had increased their charge rates as a result of the AWR. More than a quarter of agencies (28%) had opted to use the Swedish Derogation. The survey also reported an overall 16% net decrease in the use of temporary workers.

Where agency workers continue to be used, the survey found that almost 60% of temporary workers have received little or no change in their remuneration.

The one year verdict?

So far, not a resounding success. The surveys paint a picture of increased cost and administration for users with decreased opportunities and little, if any, benefit for agency workers. However, more time is needed to evaluate the impact of the new legislation in the longer term.

Tribunal claims take time to make their way through the system. Future case law will shed more light. Also, the extent to which the various survey results reflect the current economic conditions and shrinking labour market, rather than simply the impact of the AWR, is hard to say.

Wragge & Co's experts have outlined some action points for businesses to consider, one year on from the regulations first being introduced.