Further details are emerging about the ongoing effects of the AWR on the flexible workforce, with many PAYE umbrella contractors remaining concerned about the potential negative impact on their prospects.

A survey of 140 companies by international law firm Eversheds reveals that most have seen labour costs rise. The majority report costs climbing by up to 10%, but a minority have experienced more eye-watering hikes of 25%. A small number have seen a shocking 50% increase.

Most companies have adopted strategies to minimise increased costs, however, by cannily adopting exclusions to the regulations. By far the most widely used exclusion is the so-called ‘Swedish derogation model’, which permits the hiring of temporary staff on permanent contracts: effectively, the agency pays such workers a minimum rate between assignments, which prevents them from claiming the ‘equal measures’ entitlements after twelve weeks.

Meanwhile, the REC is continuing to monitor the AWR. The latest data suggests that the regulations are indeed creating significant bureaucracy and costs for recruiters, but demand for highly skilled contractors working through umbrella companies remains strong, as does that for other temporary workers. The vast majority of employers polled in the REC’s JobsOutlook report are planning to increase or maintain their temporary workforce in both the short- and long-term.

Tom Hadley, Director of Policy and Professional Services at the REC, said:

“The overall demand for temporary and contract staff has remained strong overall despite a slight blip in some sectors. Looking ahead, a key priority is to continue actively promoting the benefits of temporary and contract work through ongoing research and initiatives such as the Flexible Work Commission”.

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