Just over six months after the Agency Worker Regulations first appeared, initial findings seem to indicate that they are bringing about three key shifts in the employment market.
While the legislation, which came into force on 1 October 2011, is pushing some employers towards taking staff on permanently, it is encouraging others to hire excluded categories of workers such as the self-employed. Yet others are introducing Swedish Derogation contracts.
According to a survey conducted among 143 organisations by law firm Eversheds, nearly two thirds are now using one or more categories of worker excluded under the Regulations in order to bypass their stipulations.
The adoption of Swedish Derogation contracts has likewise been wider than anticipated. A poll undertaken last year indicated that around 12% of employers intended to use such arrangements, but the latest findings show that take-up has been more in the order of 17%.
The Swedish Derogation model is a form of contractual arrangement, whereby agency workers are engaged by recruitment agencies under permanent employment contracts, which guarantee them minimum levels of pay between assignments.
Richard Sheldon, an associate at Eversheds, said that those employers who went down the latter route tended to use it “extensively, in our experience, exclusively in certain roles or locations” – although there was some nervousness about the “adverse publicity” generated by introducing such contracts.
Temp to perm
But he added: “Amidst current uncertainty as to how some of the exclusions contained in the Regulations will be applied in practice, it is interesting to note that a sizeable percentage of respondents have opted to put in place Swedish Derogation contracts…It remains to be seen how practice will evolve in this area in the coming years and months.”
Sheldon also pointed out that, while the average employer had seen a cost increase of less than 10% following the introduction of the Regulations, a small minority had been hit by dramatic rises of between 25% and 50%.
The Recruitment and Employment Confederation and KPMG’s Report on Jobs, meanwhile, also revealed possible market distortions as a result of introducing the AWRs.
The study conducted among 400 recruitment agencies indicated that, while the number of permanent staff placements rose for the third month in succession during March – albeit at a slower pace than February’s nine-month high – demand for temporary and contract staff fell at the fastest rate for more than two-and-a-half years.
Ronnie McCombe, a KPMG partner, said: “Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them.”
While it was “heartening” to see that the overall number of vacancies was on the rise, salaries for permanent positions were “stagnating”. “There are grounds for cautious optimism, but recovery remains fragile and could all too easily be blown off course,” McCombe said.
