Contractors working through umbrella companies may need to adjust to much shorter temporary contracts if soundings from a poll by APSCo are borne out.

Thanks to the Agency Workers Regulations, which went live on 1st October last year, 29% of employers plan to end contracts before the twelve-week limit that entitles temporary staff to equal employment rights with their permanent counterparts.

Commenting on the survey, APSCo’s Director, Ann Swain, said that AWR “is definitely having an impact on all areas of the market.” Christmas Eve marked the occasion of the first ever qualifying limit, and if the poll proves accurate, Swain believes that “tens of thousands” of temporary contractors could be without work by the end of January.

According to Phil Hutchinson, the Operations Manager of the recruiter G2, a number of clients have already begun terminating temporary contracts as the 12-week limit nears. Several PAYE umbrella contractors have been offered permanent posts or received offers to “buy them out” of their contracts.

The news isn’t all doom and gloom and the 29% figure may in fact reflect adjustment anxieties amongst some employers. The fact remains that PAYE umbrella contractors are usually prized by the employers who hire them because they are known to be highly skilled and efficient; the same poll revealed that less than a fifth of employers believe that the AWR will cause demand for contractors to drop.

As the REC has consistently maintained, measures do exist to enable employers to retain valued contractors beyond the ‘cut-off’ point, without incurring extra costs. Employer education about these options remains a pressing priority, the REC argues.

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