Nearly a third of businesses expected to terminate temp contracts early because of Agency Workers Regulations

9th January 2012

 

  • Survey among recruiters
  • 19% of recruiters think AWR is supressing demand for temps

Nearly a third of organisations (29%) are likely to terminate contractors and temporary workers assignments prematurely because of the Agency Workers Regulations (AWR), according to research by the Association of Professional Staffing Companies (APSCo).

A poll among recruiters found that close to a third are expecting hirers to terminate assignments before the 12-week qualifying period for equal rights under the AWR elapses. This is because contractors and temporary workers engaged by end users for less than 12 weeks are not entitled to equal rights, including pay.

APSCo points out that the first 12-week period after the AWR came into force (1st October 2011) expired at the end of December, which means that thousands of temporary workers and contractors could find themselves laid off this January.

The poll was conducted among APSCo members who supply professional-level candidates in markets such as IT, banking & finance and engineering.

Ann Swain, Chief Executive at APSCo, comments: “The AWR is clearly having an impact, even at the professional end of the market. Contractors and temps in areas such as IT or banking usually earn more than permanent staff, but this is not true for all roles, particularly at the entry level, where the AWR may lead to increased costs.”

“The initial 12-week qualifying period expired at the end of December, so if these concerns are even close to being accurate, we could see tens of thousands of temporary workers jettisoned onto the labour market in January.”

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She adds: “The majority of workers affected are likely to be young graduates. At a time when unemployment among young people has surpassed one million, any barrier to securing work has to be questioned.”

Phil Hutchinson, Operations Manager at g2 Recruitment, comments: “Some clients have already begun the process of either terminating assignments as the 12 week qualifying period approaches. Others are looking to ‘buy people out’ of contracts, transfer them to fixed term contracts, and a few are looking to transfer them to full-time permanent positions.”

Despite the concern over hirers terminating assignments early, just 19% of recruiters think that the AWR is contributing towards reduced demand for contractors and temps. 43% of APSCo members, however, felt that the impact was likely to be greater once the first 12-week qualifying period ends.

Ann Swain says: “Even where temps and contractor are better paid, or outside the scope of the Regulations entirely, there is still a significant compliance burden for both hirers and recruiters. One of the main areas of concern is collecting pay comparison data. A lot of recruiters are saying that getting the information from hirers, which is crucial from a compliance perspective, is proving difficult.”