We’ve recently reported on a number of surveys which suggest that contractors working through umbrella companies have been relatively unaffected by the recent implementation of the Agency Workers Regulations. However, a new survey of recruitment agencies suggests that the EU directive may well start to impact adversely on the very people it was designed to protect – vulnerable, relatively unskilled temporary workers.

A poll conducted by the Association of Recruitment Consultancies (ARC) suggests that over half of its corporate members anticipate that their clients, who between them employ many thousands of temporary agency workers, will reduce their temporary personnel over the coming year as a direct consequence of AWR. Moreover, they are unlikely to replace them with permanent employees.

Highly skilled PAYE umbrella workers are unlikely to suffer, as their talents remain much sought after. Agency workers on the less skilled end of the spectrum could well find temporary opportunities drying up or reducing in duration. Over half the respondents forecast that firms will cut assignment durations to below 12 weeks in order to avoid the added expense of full employment rights, which become mandatory after this period under the regulations.

Cost is cited as the main reason for these developments: companies hiring temporary staff have to invest in expensive software installation and in increased administration to ensure AWR compliance.

ARC Chairman Adrian Marlowe called on the Government to commit to an early review of the EU directive, adding “Our survey has shown that rather than protecting agency workers, the regulations are actually undermining the job market for them, yet increasing the administrative workload.” He went on to add “These regulations are doing more harm than good.”

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