Coalition Government could be good news for recruiters

After 13 years of being swamped by an avalanche of regulation, much of it from the EU, we have a new Coalition Government, which unveiled its legislative agenda earlier this month. The relatively slim document of less than 50 pages provides some tantalising clues as to what we can expect from the new Parliament and how it will approach the recruitment sector.

The tabloid press my have it in for this Government already, but I’m reasonably optimistic about the way its set about business so far. Though much of the Coalition’s programme is sketchy at this stage, there are some clear indications of what we can expect over the next five years (assuming there is no general election until 2015).

The Coalition has committed itself to improving workforce flexibility (albeit in rather vague terms) and has promised to cut red tape by adopting a ‘one-in, one-out’ rule whereby no new legislation can be introduced without repealing other laws. Whether this means that the Government could introduce more legislation targeted at the recruitment market, while abolishing an unrelated law in a different policy area is unclear at this stage.

The general trend towards greater employment protection over the last 13 years is likely to be halted, possibly even reversed. The Coalition has made much of promoting greater workplace flexibility, so we may see greater resistance on the part of this Government to social and employment regulation coming from the European Union.

So, what of the specifics? The implementation of the Agency Workers Regulations in its current draft, barring a few tweaks, looks likely. Whether the Regulations will assume the same level of priority in the Coalition remains to be seen, particularly as Vince Cable has been handed the brief at the Department of Business Innovation and Skills (BIS). APSCo will focus on ensuring that the guidance notes, which will be an invaluable tool in helping recruiters comply, are clear.

An explicit mention is made in the Coalition’s programme of reviewing IR35 - the test which is used to determine whether a worker is an employee or self-employed. This is encouraging, not least because IR35 is an incredibly difficult test to apply accurately.

What this review means is less clear. The Government could of course end the uncertainty in a way that harms the temporary staffing market. Or it could introduce a simpler, less bureaucratic test which reduces the red tape burden on recruiters. Either way, APSCo will of course be heavily involved in this process.

A Conservative Party manifesto promise, which has made it into the Coalition’s legislative programme, is to cap the number of non-EU migrants coming to the UK. APSCo, as you probably know, has campaigned vociferously to have the rules governing intra-company transfers tightened for several years now. We have never been in favour of an absolute cap, for the simple reason that it could make the system unresponsive to unexpected skills shortages, but it is still too early to tell how such a cap would affect staffing markets in which skills shortages are commonplace.

Undoubtedly, the focus of the Coalition Government will be the £6 billion of public sector cuts earmarked for this financial year. Depending how you look at it, this could be neutral for the recruitment sector, or even an opportunity. It is to be hoped that the public sector refrains from using damaging tools like hiring freezes. It may also undertake more project based work, which requires greater use of contingent workers.

There was no mention of the Conduct Regulations, which were the subject of a BIS consultation last year, in which the Department sought evidence on whether the opt-out should be removed. APSCo campaigned vigorously on this issue and we were delighted when BIS backed down. With BIS earmarked for £836 million worth of cuts, it will be interesting to see how much appetite the Department has monitoring and evidence gathering under Cable’s stewardship.

In summary, there is much to be optimistic about in the Coalition’s programme. There certainly appear to be few ominous dark clouds. The move towards greater flexibility and less employment regulation is to be welcomed. As for other policy areas, it is probably too early to tell what their impact will be, but a new Government certainly augers for a fresh approach. APSCo has built a very constructive working relationship with Government over the years and we will be looking to strengthen that relationship under this new administration.

By Ann Swain, Chief Executive, APSCo