As the implementation of the Agency Workers Regulations draws closer (it becomes law on October 1st), umbrella companies, and recruiters have received another warning to get their AWR houses in order, this time from the Freelancer and Contractor Services Association (FCSA).

The new EU directive grants temporary workers the same rights vis-à-vis pay and conditions as permanent employees, although the UK has successfully exempted contractors who can demonstrate that they are “genuinely in business on their own account”. The rules are designed to protect vulnerable, low-paid workers from exploitation but highly skilled contractors do not fall into this category and usually earn more than their permanent counterparts earn.  FCSA Chairman Stuart Davies says that compliance with AWR for this segment of the workforce will be “less problematic” – but the staffing industry must nonetheless be clear about compliance before the rules come into effect.

Mr Davies went on to explain that there are three broad options for highly skilled contractors under AWR.  The first is to adopt the “Swedish Derogation” approach, which involves working for a company that offers full pay and employment status between assignments.  Many umbrella companies are likely to adopt this approach.  Alternatively, contractors may work for a company with a “match permanent pay” model, with full employment rights as part of the package.  Thirdly, contractors may choose to work through their own limited companies.

Proper compliance is achievable, Davies believes, but will of necessity involve some difficult business decisions for some end users, recruiters, and service providers alike.  He warned that any companies ignoring the issue or attempting “clever” tactics to evade the regulations will find themselves heavily targeted by both BIS and the trade unions.  Preparing for compliance now is the best option, he said.

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