How Agency Workers Regulations affects IT contractors

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Agency Workers Regulations
Agency Workers Regulations and how they affect contractors

Agency Workers Regulations

What exactly is Agency Workers Regulations?

The fundamental principle of Agency Workers Regulations (AWR) is to provide agency workers with the same basic working and employment conditions of that of a comparable employee (someone doing similar work to you on a permanent basis for the client) after a qualifying period; this being just 12 weeks.

After this qualifying period, you would, therefore, have the right to the following conditions;
– Equal Pay to that of a comparable employee
– Commissions, bonuses and over time rates
– Annual leave
– Night work
– Rest periods and breaks
– Access to staff facilities; i.e. canteens, childcare schemes and transport
– The right to hear about vacant job opportunities

NB: In the event that you actually receive better conditions than the comparable employee (e.g. pay), the regulations would not require your pay to be brought in line with that of the comparable employee.

What Agency Workers regulations doesn‘t cover…

– Pensions
– Redundancy payouts
– Occupational sick pay
– Share schemes
– Loyalty schemes or long term-service rewards
– Any payment relating to maternity, paternity or adoption leave

So, how will this affect you as an IT contractor?

Firstly, it‘s important to establish what the main objective of Agency Workers Regulations actually is;

Agency Workers Regulations is being implemented to protect the more vulnerable, lower paid agency workers who could be exploited by unscrupulous hirers.

We are of the opinion that the majority of IT contractors are not exploited and deemed ‘vulnerable‘.

IT contractors enjoy the flexibility, pay rates and working lifestyle associated with contracting.

Whilst we completely oppose unscrupulous hirers taking advantage of lower paid temporary workers, we feel it inappropriate to implement the agency worker regulations in such a broad manner.

The Recruitment and Employment Federation (REC) found that 80% of flexible workers are happy with their assignments. So this would suggest that the Agency Workers regulations (AWR) would only benefit a minority.

Is anyone outside the regulations?

As things stand, however, it appears that if you are ‘genuinely one of the following: the self-employed; those working through their own limited liability company; or those employed on Managed Service Contracts’, you will be excluded from the regulations.

However, one area that needs more clarification is that of IR35 and the role it will play.

Therefore, IT contractors operating through their own companies while inside IR35 are still likely to be covered under the agency workers regulations. However more clarification is still necessary.

So, if you are a contractor operating through a PAYE umbrella company, the regulations will most definitely apply.

AWR could have a negative impact for many IT contractors

Although the focal point of the Agency Workers regulations is to protect the vulnerable, lower paid agency workers from exploitation, it could in fact have a negative impact for IT contractors that receive good pay and choose temporary work as their preferrential method of making a living. Here are, therefore, some potential implications the AWR could have on you;

– The extra admin costs for hirers and agencies could well be subsidised. This could be through reducing contract rates on offer to agency workers. This would in fact contradict the main objective of the AWR anyway, as it should be improving standards for agency workers not diminishing them!

– End clients may become more reluctant to engage with certain contractors for more than 12 weeks due to the increase in ‘˜employee‘ rights, which would result in agency workers having to find work from different clients on a more frequent basis.

– A rise in the number of contractors forming and operating via their own Limited companies could heighten the role of IR35 – potentially leading to more red tape and an increase in investigations.

Summary of AWR

There are, therefore, a number of things that are changing after the AWR’s implementation in October 2011.

Although commendable, the Agency Workers Regulations is not suitable for all types of agency worker, which is why the regulations may change.

As an IT contractor it is important to keep up to date with the latest news surrounding the AWR, so that you can understand how it will affect you.

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