By Marcus Leach

Small and medium businesses (SMEs) in the UK face a penalty of up to £5,000 per agency worker if they try to circumvent the new Agency Workers Regulations, which come into force on 1 October 2011.

Under the Regulations, any benefits such as car parking, crèche, prayer room and canteen facilities, must be made as equally available to agency temps as they are for the employer’s permanent members of staff from the outset of the assignment.

After 12 weeks, temps will be entitled to the same basic employment and working conditions. These include pay, overtime, shift allowances, holiday pay and bonuses not attributable to individual performance.

There are 4.8 million SME businesses in the UK, and according to recent statistics 79 percent of all employers are looking to increase or maintain agency worker numbers over the next 12 months. Failure to comply with the new Regulations could mean hundreds of thousands of businesses could be fined.

Employment Tribunals will be able to order compensation without any limit in cases where the same employment conditions aren’t provided after 12 weeks.

Employers who deliberately try to avoid the Regulations by, for example, rotating temps between different roles or taking them on under a series of short assignments, will be liable for an additional penalty of up to £5,000.

The Regulations only cover basic working conditions. Temps will not be entitled to benefits such as occupational sick pay, redundancy pay and health insurance.

James Wilders from Dickinson Dees LLP warns SMEs on the potential impact.

“These penalties are for each individual agency worker you take on, if you do not get your house in order before the beginning of October, the financial implications could be serious," he said.

“SME owners and managers need to familiarise themselves with the new Regulations to avoid potential costly Employment Tribunal claims. All staff records must be kept up to date and temporary staff carefully monitored. It is advisable to produce an ‘introduction pack’ setting-out clearly and concisely what agency workers can expect from their employment from the outset.

“Prepare yourself now to avoid getting caught out later. Companies that do not follow the Regulations could end up paying out compensation to which there is no ceiling if an agency worker were to take their case to a Tribunal.

“By their very nature, the majority of SMEs do not have a dedicated HR team. It is hard to monitor exactly how long individual agency workers have been in work, particularly if they have been supplied by different agencies. Managers must make a concerted effort to regulate their temporary staff carefully.

“Small businesses look for flexibility and for costs savings by employing temporary staff. This is no longer the case. Soon the costs of employing agency workers will be equal to having permanent staff on board.”

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