Crystal Umbrella

David Cameron has expressed his desire to review the effects of the impending Agency Workers Directive on employment opportunities. He is concerned that the extra rights and obligations will result in less contract opportunities.

His comments have been welcomed by the Association of Recruitment Consultancies (ARC). Their chairman Adrian Marlowe commented: “We agree that the issue should be looked at in the round as well as in respect of the Agency Workers Regulations (AWR). There is a clear distinction between agency work and regular employment. The former reflects the concept of short term deployment of labour and allows for the flexibility which has helped to provide UK hirers with a useful strategic tool for years. The distinction must not be blurred and the rules must be appropriate to enable agency work to function properly if jobs are not to be lost.”

Mr Marlowe continued: “Any assumption that a review of the regulations, or any other agency related regulations, would automatically mean that agency workers will be prejudiced would not be correct. What would prejudice agency workers is if the availability of work becomes limited because the rules do not work efficiently and if flexibility becomes unnecessarily restricted.”

The ARC believe that the current qualification period for the AWD legislation to apply to higher paid individuals. Mr Marlowe concluded: “It is perfectly possible for those agency workers who have been or are likely to be mistreated, as set out by the unions, to be set aside from the vast majority who are not. Those most likely to be taken advantage of can be protected more. The idea that only one rule is permitted with extra and over complicated rights for everyone, and that a more flexible approach is therefore to be condemned, must surely go against common sense.”

The Association of Recruitment Consultancies (ARC) had been planning a judicial challenge to the imminent Agency Workers Regulations but, due to a lack of time to gather evidence, they have confirmed that they will not be proceeding with it.

Just last week, the Association of Professional Staffing Companies (APSCo) had actually questioned the possible judicial challenge during in discussion with Shout 99. Despite the decision to withdraw this action, ARC chairman, Adrian Marlowe, has spoken out about their reasons and he has responded to comments made on Shout 99 by APSCo.

He said to Shout 99: “It is important to note that the ARC has always said that it will only proceed with a judicial review if it can obtain sufficient support and evidence from the industry by the cut off date of 19th April. It is now apparent that while we have been delighted by the level of support it is clear that we will not be able to collect and collate the evidence within the very tight time scale. Therefore we do not consider it prudent to commence the claim. However we shall continue to press the issue. We have never suggested there should be a judicial review on employment rights.

“We strongly believe that it is legitimate for us, and indeed it should be the primary aim of any industry body, to examine issues that could negatively affect the industry. Therefore we consider it vitally important to take whatever action is appropriate if it leads to fairer and more workable legislation.

“We have every reason to believe that the Regulations concerned in this case, Rs.3(3) and (4), are likely to be damaging to recruiters and the industry as a whole. That is why we embarked on the exercise, particularly based on the opinion of Queen’s Counsel that we had received. We are entirely convinced that there was a strong case to argue, and we consider there was every justification for consideration of a judicial review in this case.

“In this context it is surely relevant that David Cameron, the leader of the Conservative Party, put his name to an early day motion to revoke the Regulations.

“I note that Kevin Barrow, partner of Osborne Clarke, dismisses the prospect of a judicial review as “an interesting academic exercise”. This is certainly not the view conveyed to us by numerous ARC members and other recruiters and industry financiers who are extremely concerned about the potential ramifications and knock on effect of regulations 3(3) and (4).

“I also note that APSCO apparently considered a judicial review and took up various points with BIS and the CBI over the last year or so. That demonstrates that a judicial review is not just “an interesting academic exercise” but is in fact a serious tool worth considering. However it is confusing for APSCO to refer to their consideration of a judicial review in the context of our current concerns because the draft regulations now in question did not exist at the time of their review in 2008 and last year.

“Furthermore I cannot agree with Ann Swain that guidance will enable anyone caught by Rs.3(3) and (4) to avoid liability. If it is possible to reduce the impact of the Regulations then steps should be taken.

“There are serious issues that must be tackled and now is not the time to roll over. In our experience civil servants respect legitimate and constructive criticism as part of the democratic process and we have pursued an open dialogue on this issue for some time with the interested parties. We have always had an adult and friendly relationship with BIS and are confident that even if this particular issue is not resolved to our satisfaction this will not harm the industry or other issues in the future.”

The Association of Recruitment Consultancies (ARC) is challenging the legality of the draft Agency Workers Directive Regulations which were laid before Parliament at the start of this year. Despite a two part consultation process, ARC have stated that the draft Regulations contain important aspects which were omitted from the consultations and should not be introduced as part of a secondary legislation such as AWD.

The point in question refers to recruitment businesses who have no contact with agency workers. These recruitment businesses do not fall within the scope of the AWD but the regulations provide that they can still be held liable for the acquired rights of the agency worker. ARC have questioned the legality of this position and has subsequently raised this issue with government, requesting that the relevant regulations be removed from the draft. ARC believe that the government is essentially redefining the employment relationship definition within law. However, the Department for Business, Innovation and Skills has yet to comment on this issue.

Adrian Marlowe, ARC Chairman, commented: “It is crucial to understand that this argument does not affect the rights of agency workers to equal treatment or enforceability against the actual temporary work agency or the hirer. It is unfortunate that so little time has been given to consider these regulations when we have pressed for more time, and that they have been laid before Parliament ahead of an approaching election when MPs minds are probably more on their constituents than anything else. However we are where we are and everyone can be assured that the ARC will take whatever action is required to clarify this issue as it could have serious consequences for agencies. The Government’s sledgehammer to crack a nut approach also highlights an element of mistrust of the recruitment industry that regrettably still exists in Government. This makes it all the more important that ARC pursues its objective of improving relationships and understanding between Government and the recruitment industry.”

The Queen’s speech confirmed that the Agency Workers Directive would not come into force until the end of 2011. However the implementation of the EU directive continues to cause potential issues for contractors. In fact, policy-makers are continuing to face issues regarding how to remove the threat to contractors’ work from the scope of the law.

The government has conceded that self-employed workers and limited companies would potentially suffer if caught by the scope of the directive. This resulted in the proposals to exclude contractors on managed service contracts, those working through limited companies and genuinely self-employed workers from the reaches of the legislation. However, last week an MP who is firmly behind the law said that the proposals to exclude these group weren’t “particularly encouraging”.

Speaking in an interview, Brookson founder Martin Hesketh said that Labour MP Andrew Miller believes that policy-makers “don’t have an answer” to this issue. He also stated that a recent discussion with recruiters of IT contractors resulted in the belief that current definitions within the draft regulations are “very unclear”.

This meeting was hosted by the Association of Professional Staffing Companies (APSCo) who stated that the current definition of personal service companies is ambiguous. Marilyn Davidson, APSCo director, has also stated that the policy unit for the Directive were willing to take these issues on board they were not able to answer questions relating to how it will affect the self-employed.

Speaking to Contractor UK, she said: “That [the exclusion for self-employed contractors] is an area that is very foggy and we need to clarify. We will seek clarification through the final draft.”

There has been a great deal of dissatisfaction regarding EU directives which affect contractors of late, specifically regarding the implementation of the Agency Workers Directive. However, another directive has emerged which could actually signal good news for contractors. The European Payment Services Directive, which came into force on Monday, means that contactless payments must be introduced throughout Europe within the next twelve months. This means that direct debits must be available for use throughout Europe, including inter-country payments.

This system has become possible due to the introduction of the Single European Payments Area (SEPA) which will negate the need for companies to have separate accounts in the Euro areas where they are conducting business. This was a costly system which often resulted in payment delays.

If all EU member states implement this new system it will mean that UK companies will be able to receive Euro payments into one bank account which can be held in any EU country chosen by that firm. There should be a standard level of service for the firm no matter which country the account is based in.

Capital Consulting commented that It contractors who regularly receive more than one payment per month for work throughout the EU will be amongst those who benefit most from this new directive.

They said: “For contractors working on the European market, this [directive] can only be seen as positive as it will help remove a small but important barrier to international mobility.”

Banks will now have twelve months to ensure that all of their systems are ‘SEPA-compliant’. Some small businesses may also need to alter their existing payment structures to reflect the new directive.

Shadow minister Jonathan Djanogly has spoken out to confirm that even if the implementation of the Agency Workers Directive is pushed through by the present government prior to the general election, a full review would be carried out by the Conservatives if they were to come into power.

Mr Djanogly was speaking at a House of Commons reception hosted by the Association of Professional Staffing Companies (APSCo) when he stated that the existing AWD consultation period has been too short and he believes that it should have been extended past December.

Ann Swain, chief executive of APSCo said that Djanogly had estimated the cost of the AWD being implemented in its current form at round £4billion per year. Swain also stated that if the controversial Directive becomes law without any further amendments the economy will surely suffer as more jobs are lost at a time when the economy is still trying to recover.

She continued: “We support Jonathan Djanogly’s view that the consultation period needs to be extended and that the draft regulations should be revised if they are too damaging to UK plc. With the implementation of the regulations delayed until 2011 there is now a real prospect that whoever the next government is could make significant amendments to the regulations before they even come into force.”

Damian Broughton, managing partner at accountancy firm Danbro said: “The good news is that there is a delay in the implementation of the AWD to 1 October 2011, and that it will not apply to all those who are genuinely self employed. There is also possible good news in the knowledge that if the Conservatives win the next election they will have a ‘total review from top to bottom’ of this and other regulation that affects this industry.”

The Association of Recruitment Consultancies, however, stated: “Although the change of heart is welcome, there is no room for complacency. There is still much that is wrong with the proposed legislation in its current form, and more work is required.”

It was only last month that the Prime Minster declared that the controversial Agency Workers Directive would become law over the next few months. This was followed by a promise from the Conservative Party that should they be elected at the General Election, they would delay its implementation for as long as possible.

Back in September Gordon Brown said: “I believe the fight for fairness must include agency workers, and so I pledge to you today that when Parliament returns our new legislative programme will include equal treatment for agency workers and that in the coming few months the law will be on the statute books.”

However, his declaration was met with an abundance of criticisms and it would seem that there has now been a u-turn on his pledge. Lord Mandelson, head of the Department for Business, Innovation and Skills has stated that the Agency Workers Directive will not come into force until October 2011.

The directive must be implemented by the end of 2011 under EU rules but its implementation in the UK has certainly been a contentious issue as it will award agency workers the same rights as employees after 12 weeks. It is supposed to protect the most vulnerable agency workers, however high earning contractors fear that clients may think twice about offering them work as a result of the Directive.

A further draft consultation has now been published and Pat MacFadden, Business Minister, had this to say: “Last year the Government secured a deal in Europe on the Agency Workers Directive that allows us to base Britain’s rules on the agreement reached in the UK between the CBI and TUC. This allows us to implement the Directive in this country in a way which gives fair treatment to agency workers and maintains labour market flexibility. It was only possible because the Government is engaged in the mainstream of Europe – actively influencing proposals coming from Europe which affect the UK economy and UK workers. Careful and sometimes difficult negotiations were required to get the CBI-TUC agreement reflected in the final EU Directive.”

He concluded: “As the Prime Minister has said, the Government is committed to getting this legislation on the Statute Book by the end of this Parliament. The law will come into force in the UK in October 2011, giving recruiters and their clients time to prepare and plan. We are also mindful of the need to avoid changing requirements on business until the economic recovery is more firmly established.”

All eyes are on Britain’s major political parties as we count down to next year’s General Election. Top of the agenda for contractors is where their issues will feature on manifestos. The Conservative Party have stated that, should they win, they would delay the implementation of the Agency Workers’ Directive until December 2011.

Anne Fairweather, head of public policy at the Recruitment and Employment Confederation (REC) spoke to The Recruiter at the recent Conservative Party conference in Manchester. She said that Jonathan Djangoly, shadow minister for corporate governance and business regulation had stated that the implementation of this directive would amount to £40 billion for British businesses over the next ten years. This has been the main reason given for delaying implementation.

Chief Executive of REC, Kevin Green, commented: “The REC has been calling on the government to delay implementing this directive until the last possible moment in 2011. We are pleased to see the Conservative Party recognises that the cost of getting the implementation of this directive wrong could be huge. It is vital that the labour market recovers before the regulations are implemented. This will also give recruiters and their clients the time to plan how best to ensure that equal treatment after 12 weeks works in practice. This is a complex issue and by waiting until December 2011, we can ensure that we minimise the adverse effect of this legislation on jobs.”

The trade union body TUC has publicly declared its support of the controversial Agency Workers’ Directive. The TUC have asked the government to make sure that on implementation of this EU directive, all agency workers are protected from exploitation and receive equal pay, holidays and working hours. The Directive has caused much concern amongst freelancers and contractors who fear that their services may be less attractive to clients as a result of these new measures.

The TUC are basing much of their support of the Directive on a survey they have carried out. They interviewed more than 2,700 temp workers, including those who have worked through agencies over the past year. Their finding showed that many temp workers have felt discriminated against in the workplace. 33% said that they were paid less than employed staff for doing the same job. 46% said that the received less holiday entitlement than their permanent counterparts.

There was also confusion regarding statutory entitlements as an agency worker. 75% of those interviewed said that that agency workers were entitled to less redundancy pay and 70% felt that they were entitled to less maternity pay.

Brendan Barber, TUC General Secretary, said: “While agency working has a legitimate role to play within the economy, TUC research has exposed widespread mistreatment of agency workers across the UK. Agency workers have told the TUC they regularly find themselves with less basic pay, holiday pay and entitlement, redundancy pay, maternity pay and access to training and childcare than directly employed staff doing the same job.”

He continued, “The government must introduce the new regulations in the Directive quickly to ensure that temps are protected and that the exploitation of agency workers by rogue agencies ends as soon as possible. The new laws must provide real protection and any loopholes which would allow unscrupulous employers to avoid the law and continue to mistreat agency workers must be closed.”

The final consultation on the Agency Workers Directive (AWD) was held on this week at the Department for Business, Innovation and Skills (BIS) in London. It is now likely the directive will include umbrella company contractors, whereas contractors who provide their services through a limited company will be exempt.

There was an intense debate regarding the definition of a ‘worker’. It is now likely that the definition used in the Working Time Regulations 1998 will also apply to the agency workers covered by the Agency Workers Directive. Umbrella company contractors tend to view themselves as independent contractors but their working arrangements actually make them employees.

BIS has published the consultation document which classifies a worker as, “someone who works under a contract of employment”. It continues, “Any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer or any profession or business undertaking carried on by that individual.”

Union delegates to the consultation did not want any exclusions to the directive, claiming that vulnerable workers would be forced to use those particular working practices to stay outside the AWD. Therefore the BIS are still questioning the apparent exclusion of limited company contractors.

The BIS consultation is open for responses until the end of this month and contractors can use the BIS website to make their views known. They can also write to their MP to request a delay in the implementation of the directive. It does not need to come into force until December 2011 but many groups are calling for the directive to enter the statute books as early as April 2010.