Goodbye, flexible trend

With the UK having perhaps the highest number of temporary agency workers in the EU (most estimates put the number between half a million and one million for the UK’s entire industry), the new EU Agency Workers Directive (AWD) heralds significant changes for businesses.

The AWD is scheduled to take effect in the UK in October 2011. It is designed to stop the exploitation of vulnerable agency workers such as those exposed by the 2008 study into employment in meat and poultry processing by the Equality and Human Rights Commission.

The report found that a quarter of firms used agency workers to avoid paying for the rights and benefits that accompany permanent employment.

These companies would use agency workers all year round as a cheaper alternative to permanent employees and, due to their migrant status, many of the staff did not realise the full potential of their employment rights.

The AWD would limit this activity by guaranteeing certain rights to temporary agency workers who log 12 weeks with a company, regardless of the number of agencies through which they were contracted.

Temporary workers would gain pay equal to permanent employees, rights to overtime and breaks and access to intranet facilities, internal job listings, canteens and transport.

It is clear that the AWD will provide necessary cover for some of the most vulnerable employees in the industry but the devil is in the detail.

The devil in the detail​

Many firms use agency workers for their flexibility, rather than their cost benefit. They allow employers to cover seasonal variations and peak flow periods. “So often [the work is on] short notice, making agency workers a good solution to flexible requirements,” says the director of HR at the Food and Drink Federation (FDF), Angela Coleshill.

The AWD will increase the administrative burden on those employers looking for flexibility in their workforce.
For one, problems arise with what the Confederation of British Industry’s (CBI’s) head of employment policy, Neil Carberry, calls, “the least bad of the available options”.

Namely, the 12 weeks before agency workers gain equal rights to permanent employees. The Trade Union Congress wanted equal rights to come into play from day one of employment, but conceded the 12-week period as part of a compromise with employers.

However, the delay in equal rights means that someone must keep track of the number of weeks individual employees have logged with each company through multiple agencies, which could prove to be an exceedingly difficult task.

Owen Warnock, a senior partner at Eversheds Law who specialises in employment, believes the onus of tracking the number of weeks employed should be placed on the individual.

Coleshill partially disagrees: “It’s a good theory but you could easily find yourself in a bad position if employees are not in a position to keep good records themselves.

“Ultimately, the remedy is with the employer or the agency not with the individual. Any business would want to protect itself and keep its own records of what’s going on.”

There are also problems regarding the definition of what a similar comparative permanent role constitutes to determine the rights and pay of temporary staff.

“What would this person be paid if he or she had been taken on directly? It is simple if there are other people on a production line for example, doing the same thing,” says Warnock. “But there are nuances to this: agency workers tend to be doing the simpler, less skilled jobs. Multi-skilled production line workers could reasonably be earning more.

“There may be a situation where there is no comparable situation because all similar workers are agency workers – for example in harvesting.”

However, Carberry says that the theory of what constitutes a similar worker has been specifically discussed and advises interested parties, “to consult the extensive case-studies done by the CBI”.

Possible solutions​

Companies must, of course, implement the AWD while trying to keep their overheads down. Which, as Warnock points out, could be hard for manufacturers in more rural locations: “In a small town they may not be able to not employ people for less than 12 weeks. There may literally not be enough people around.”

Businesses in this position will have to look hard at alternatives to agency workers, including ideas such as increasing the number of permanent staff – perhaps on a lower salary (a move that is in line with what the draftees of the AWD intended).

Alternatively, manufacturers could employ people on temporary contracts and even use the agencies to find them, but then employ them directly. “They would then not be an agency worker,” according to Warnock.

Companies could also look at more drastic alternatives such as, “extended overtime and/or capital-intensive processes such as further mechanisation,” says Carberry.

The most drastic reaction that employers could have to this legislation would be looking at getting the work done elsewhere in the world where the workforce is cheaper to employ. This is most definitely not what the draftees of the AWD intended.

All is made murkier by the recent elections. The coalition government, wary of tying any of Labour’s millstones around its neck, has promised a review of all pending legislation.

But, with a final date of December 2011 by which to fall in line with EU directives, time is fast running out on a second consultation period if the government wants to leave businesses enough time to draw up the corresponding legislative guidance.

Opinion is divided over whether the government will change much industry legislation before the implementation of the AWD. Coleshill said: “We are quite heartened by the response that we have had.” But many feel that there is neither the time nor the inclination to address the AWD with so many other pressing problems, such as the fiscal deficit.

What is clear, however, is that when October 2011 rolls around the industry will have to make some significant changes. “Companies will have to invest quite a bit of time to see if their business plans will work out,” says Carberry.

An ominous statement that starkly lays out the alternatives without saying them.

EQUAL RIGHTS ARE GOOD FOR BUSINESS:​

Unsurprisingly, the industry’s unions are welcoming the arrival of the Agency Workers Directive (AWD).

The introduction of the EU regulation was the culmination of “many years of campaigning for equal treatment of rights on pay for agency workers”, according to The Trade Union Congress’s (TUC) employment rights policy officer Hannah Reed.

Despite employer associations’ claims that the AWD will put too onerous a burden on employers in terms of cost and administration, Reed says: “There is much evidence that good employment practices are good for business.Particularly having staff that are trained, know an organisation and have skills that are worthwhile to employers.”

The TUC believes that there is a clear business case for the adoption of equal rights for agency workers. “We believe that equal rights reduce the turnover of staff and protect agency workers from discrimination and mistreatment,” says Reed.

The GMB Union’s European officer Kathleen Walker-Shaw believes the administrative workload will not be as bad as employers are making out. “If everybody had a knee-jerk reaction every time the CBI [Confederation of British Industry] and employers blustered on about some threats, sadly, there’d be no social rights in the UK.

“It’s the same argument that we had from the employers when we were talking about the introduction of the minimum wage in the UK.

“There’s a difference between red tape and requirements and I think employers should just get on with the job. That is all part of their management role.”

However, one of the problems that led to the 2008 Equality and Human Rights Commission’s investigation into employment in meat and poultry processing was agency workers not knowing their basic rights.

This problem wasn’t helped by many of the migrant workers having language difficulties. Thus far, the unions have not addressed this problem. Next year Walker-Shaw hopes to change this.

“Collectively we’ve been working at a national and European level, on guides and advice to be circulated through the union. It will be the basis of our whole range of training that will be rolled out regionally within the UK.”