13/09/11

By Jonathan Lindon, founding director of creative industry specialist recruiters Source

It’s happening again. On October 1st 2011, the EU will enforce new legislation on the UK.

Generally, this type of edict prompts a series of emotional responses in a UK employer: 1) anger (why are they interfering with my business again!); 2) confusion (what do they mean and how does it affect me?); 3) worry (what do I need to do to comply and how much will it cost?) and even 4) denial (they’ll never find out if I don’t comply as it doesn’t really apply to me).

Unfortunately, in the case of the Agency Worker Regulations (AWR), denial is not an option. The new legislation is confusing, costly and in the case of some industries, simply not fit for purpose, but it will nonetheless be enforced on about 1.5 million U.K workers and countless businesses, leading to significant increases in staff and compliance costs and a sea change in the way businesses recruit and treat staff.

In summary, the AWR will entitle freelancers to equal access, treatment and working conditions as permanent staff, impacting everything from pay, bonuses, holidays and maternity to appraisals and benefits. Freelancers could actually become better off overall than permanent staff.

Freelancing is booming during the recession; over twelve months to April 2011, Source, which specialises in recruiting creative communications people, filled 7,732 freelance bookings. Many companies seek freelance support as a way of reducing costs and managing the increase in project-based work.

Freelancers generally earn more than permanent staff, so access to new levels of pay and benefits could tip the scales too far in their favour, encouraging even more people to freelance and exacerbating the problem for employers. So, what do you need to do? The internet is swamped with fairly impenetrable and impractical information. Here we hope to make some sense of it all for you:

From day one of an assignment, freelancers will now need to be informed about any relevant job vacancies within the hirer’s organisation, granted access to collective amenities, including canteens, childcare services and company training.

After twelve weeks, freelancers will be entitled to the same basic working and employment conditions as comparable permanent staff. They will be entitled to equal pay, including fees, commissions, vouchers/stamps, bonuses, overtime and any other payments directly attributable to the amount or quality of the work undertaken by them. They will also be entitled to the same working hours and breaks and even equal annual leave. The freelancer will have the flexibility to choose to either take the leave or receive additional pay which many companies do not even offer to permanent staff.

Simple? Not really. Consider the roles each company has; most people, even in the same position, will be on different salaries, could be on different holiday entitlements with different responsibilities and different performance metrics counting towards bonuses. Many employers dispense those bonuses on ‘feel’ rather than fact, making it very difficult to draw a comparison between freelancers and permanent staff.

To complicate matters further, the twelve weeks don’t need to be continuous, and freelancers also sometimes work in more than one role, meaning that there are sometimes multiple ‘clocks’ to count. This helps to create an administrative nightmare.

If there is a gap of more than six weeks between working periods the clock is reset, but once someone has gained the twelve week rights, they are entitled to those rights each time they work for the client. There are other things to be aware of here too - certain personal circumstances start and stop the clock:

What doesn’t stop the clock?

•Breaks due to pregnancy, childbirth or maternity which take place during pregnancy and up to 26 weeks after childbirth

•Statutory maternity, paternity and adoption leave

What does stop the clock?

• Jury service (for 28 weeks)
• Sickness absence (also 28 weeks)
• Annual leave
• Industrial action
• Compulsory shutdown
• The clock pauses for breaks of not more than 6 weeks

Employers who think there are ways round the Regulations by employing freelancers directly should proceed with caution. Agency workers cannot claim unfair dismissal, redundancy pay or request maternity/paternity leave; employing them directly, even on zero-hour contracts, means they may qualify for those rights.

Infringement will cost the recruitment agency and/or client £5,000 per offence if they are found to either adopt ‘avoidance’ tactics or just plain ignore the regulations. A freelance worker that feels that they have been discriminated against can lodge an appeal to an employment tribunal.

But don’t panic. Recruiters should make it easy for you, whether you are a client or a freelancer. After all, you pay them for their expertise, not just in talent finding, but also in terms of legal compliance.

We recommend that businesses talk to their recruiters ASAP. Here are ten questions to test the preparation their agencies should have undertaken to protect themselves and the freelancer.

1)Are you a corporate member of the Association of Professional Staffing Companies (APSCo) and/or The Recruitment and Employment Confederation?

2)Do you know what AWR is and what percentage of your workers could be affected by the AWR?

3)What are the ‘Day One’ and ‘Week 12’ rights for agency workers that are in scope?

4)What systems do you have in place to monitor each worker, the weeks they have worked and the associated comparables, of a full-time employee?

5)How will you manage to count accrued weeks of work, including where there are gaps of more than a week between work periods, whilst not forgetting those breaks that both do and don’t stop the clock?

6)How will you manage your comparable testing and what do we, the client need to do?

7)What assurances can you give us that you will be able to clearly identify the workers that will need comparable tests applied to their working status?

8)What is your implementation process when a worker is found to be due additional benefits?

9)Will you indemnify us against AWR if we supply you all the necessary information?

10)Have you amended your terms and conditions of business to accommodate the AWR for both your clients and for your freelancers?

For more information on the AWR please go to www.wearesource.co.uk.