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Agency Workers Regulations - Agencies Should Take The Lead by Amanda McCulloch of Thorpe Molloy Recruitment

There’s been much hand wringing and negative speculation about the impact of the Agency Workers Regulations (“Regulations”) which came into force on 1st October giving additional rights to agency workers.

The Regulations are the biggest regulatory change the recruitment industry has undergone for many years and give agency workers entitlement to the same basic employment and working conditions (pay, holidays, working hours) as permanent staff once they have completed a qualifying period of 12 weeks in the same job. Agency workers are also now entitled to Day 1 rights which relate to access to information on job vacancies and collective facilities (such as canteen or workplace crèche) from the first day of an assignment. Benefits including occupational sick pay, pension, redundancy payments and maternity/paternity pay are excluded.

The Regulations aim to tackle discrimination and promote equality and, of course, it’s only right that agency workers are well treated and rewarded. However, in the oil and gas sector many agency workers are already paid a higher basic rate than their permanent counterparts. There can be a number of reasons for this, perhaps the higher rate compensates for less favourable holiday entitlement or is a premium for highly skilled specialists who work on a relatively short term project basis.

So what are the implications of the Regulations for the oil and gas industry? We do not anticipate a negative impact on the demand for agency workers because their flexibility and high skill status is valuable. However the potential for increased costs and additional administration must be acknowledged.

We believe that the fear of reduced employment opportunities for temporary agency workers is unfounded as companies are placing greater value on their relationship with agencies which can help them get to grips with the new statutory requirements, rather than implementing radical changes to their own temporary hiring methods. Without question, agencies have a leading role to play. By demonstrating the value of service while minimising concerns over the Regulations and confidently enabling a smooth transition, the Regulations are an opportunity to develop client relationships rather than diminish them.

It’s up to the agency to drive information request processes to make sure equal treatment is being met. However, taking a collaborative approach is essential to minimise disruption, resolve queries and avoid liability. If the agency is unable to establish equal treatment, because the hirer (the entity which engages agency workers via a temporary work agency) has not been responsive to the information request, then the agency will have a defence and the hirer may be liable. Also, the agency can only provide for pay and employment conditions based on information provided by the hirer. If this information is incorrect, or the hirer fails to notify the agency of any changes then the burden of liability will transfer from the agency to the hirer. Therefore, written agreement before an assignment starts, or as early as possible into an assignment, is critical and so is continual communication for the duration of the assignment.

Although many companies are up to speed with the Regulations, others are still trying to establish the additional cost implications, audit terms and conditions, review systems, introduce transparent pay scales and implement procedures and training. Being prepared is time consuming and resource draining, so it will be interesting to observe over time whether there is an increase in direct hiring, under the terms of a fixed term contract, because the Regulations do not apply to fixed term contractors.

There are still areas of uncertainty. For example, because the Regulations do not handle the individual elements of equal treatment collectively, it may be the case that agency workers, who are already on a higher basic pay, will also become entitled to increased holidays and flexible working patterns if agreement otherwise is not reached before an assignment commences. The treatment of bonus entitlement and payments, holiday accrual and pregnancy rights are potential areas which may lead to claims too.

Some limited company contractors are also raising concerns, because they aren’t excluded. This is causing acrimony in situations where the limited company contractor and the hirer disagree on the work status, ie, whether the contractor is under direction and supervision, which may potentially jeopardise the contractor’s IR35 status.

Concerns over areas of uncertainty and implementation aside (though these should not be underestimated), the Regulations will make agency work a more attractive option, increasing skilled candidate availability. Alternatively, some companies may decide that temporary agency workers are no longer a cost effective solution. It will therefore be some time before the real impact of the Regulations in the oil and gas sector is fully understood.

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