With the delay of the Agency Workers Directive (AWD) until October 2011, there is at last some relief for contractors. Make no mistake, AWD as drafted would have a big impact on contractors given that agencies and end-clients would be forced into processes that would at best delay placements and at worse, remove some of the roles available.

But it’s only a temporary relief, October 2011 is fixed in stone but at least there is time to plan properly and get all our heads around it. The really ironic thing for umbrella contractors is that much of what AWD tries to do (equal rights with permanent employees) is already provided by businesses like Parasol. On the other hand some contractors don’t want the same rights as the “permie” but because Europe and UK Government can’t differentiate between true vulnerable workers and contractors then everyone is caught.

I would still urge everyone to lobby the government to push the point around understanding the labour market in the 21st century as without continued focus everyone will be classed as “vulnerable”. Make no mistake, I am no advocate of exploiting workers and some of the previous practices are rightly condemned but we seem to be blindly lumping everyone together because Europe don’t “get” contracting and the UK Government are scared to define anything.

I understand the last point to some degree, they will be concerned that sharp operators will find a loop-hole and that’s another reason why umbrellas (who mainly employ professional contractors) are caught specifically.  It did not make a world of difference to Parasol contractors as we have a very robust employment model and a true accountancy practice but of course, by association we get pulled in.

So business as usual for us all in a time when that does make sense for a change. Contractors can get the roles that are coming up, agencies can plan and end clients won’t be hassled for pay rates and conditions, well not yet anyway.

I have a long held belief that UK plc is stuck between two camps and never gets clarity as a result. As a member of the EU we are held to some of the social chapter practices that don’t work for our markets. We also try to be entrepreneurial yet quite often go too far with that too (banking anyone?). AWD is a good manifestation of that problem, socially driven with the desire to protect workers not getting rights (a good thing) versus some complicated carve outs to try and allow the UK to function (excluded if you work for less than 3 months on one client) for our more flexible approach to business.  So we are stuck between the two and guess who ends up paying?

A braver person may have produced a definition of worker and a framework to prevent abuse (that’s what we lobbied for).  That’s an opportunity missed in my opinion and AWD will loom in the background as a distraction we could all do without.

Rob Crossland is the Managing Director of Parasol
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Many contractors have already heard about the proposed Agency Workers Directive (AWD), but not everyone truly understands how it will affect the contracting and recruitment markets in the UK.

Whlst attempting to establish the EU economy as the best in the world, the AWD’s objective is to create the most appropriate framework of employing temporary workers in the EU and to ensure that these individuals are not discriminated against.

Of all the countries in the EU, only the UK has such a well established recruitment marketplace, which is why approximately 1/3 of all EU agency workers are based here. In Italy, employment agencies were considered illegal until only very recently.

With consultations on-going until 18th October 2009, the Government is now studying the possible impact of the AWD on temporary agency work in the UK. The EU is expected to adopt the proposed directive by September next year, to be implemented into UK Law in two years time.

Impact on UK Contractors

So what does all this mean for UK freelance contractors? Well, there are several proposals currently in consideration, most of which have been included to provide temporary workers with the same (or at least similar) rights and conditions to permanent workers. Recruiters are being asked to scrap Temp-to-perm transfer fees and end clients will need to inform agency workers of available permanent positions.

According to the proposals, member states may refuse the equal treatment of temporary workers but only in the following circumstances:

* temps are paid between assignments (this is rare in UK);
* they are covered by collective agreements (this is also very rare);
* the assignment is for less than 6 weeks (the Government is pushing for a 12-month limit whilst some MEPs believe that there should be no limit at all)

The DTI predicts total costs of between £80 and £194 million to recruitment agencies and the cost for clients between £239 and £387 million. Costs to payroll and umbrella companies have not been estimated. According to some, the DTI’s Regulatory Impact Assessment lacks any objective data on temporary work in the UK and the EU – its quoted figures are therefore questionable.

Since the AWD requires equal pay and benefits for temps, it is believed that temporary work on the whole in the UK could decrease considerably. The UK government contests that the AWD must not include workers pay since Article 137 of the EC Treaty clearly states that, ‘the provisions of this article shall not apply to pay’. The inclusion of pay would mean that the payroll company (umbrella) or recruitment agency must obtain detailed information on a client’s pay standards in order to ensure that temps are not paid less.

Conclusion

The proposed AWD, once adopted, could greatly impact the freelance recruitment industry in the UK and contractors should prepare for the possible consequences. We recommend that you write to your MP and MEP to explain and give examples of how much this proposed directive could cost you.

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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