Companies are increasingly relying on exclusions to avoid the worst impact of UK Agency Workers Regulations. This is according to research by law firm, Eversheds, into the effect of the Agency Workers Regulations on business six months on from their introduction. It found that organisations have faced a hike in costs since the Regulations took effect, with some reporting increases of more than 10%, some even citing increases of between 25 and 50%.
As a result, nearly two-thirds of respondents are relying on at least one or more exclusions to avoid the worst of the impact of the Regulations.
Richard Sheldon, Associate at Eversheds, explained:
“Four years ago a very large proportion of respondents to one of our studies (80%) told us that they feared a hike in costs once the Regulations took effect.
“More recent feedback suggests considerably fewer organisations have encountered a rise in their overall UK labour costs although, clearly, some of the impact will have been absorbed – or avoided – in other ways in the long run up to the Regulations.
“In terms of the extent of current increases, the results of our study show the majority of costs rises are less than 10%, although a small minority of organisations have faced the dramatic rise in costs some feared of between 25 and 50%.
“Despite the inevitable rise in costs borne out by the results of our study, what proved particularly revealing is the extent to which the responses suggest many employers are avoiding the worst of the impact currently, by relying on exclusions from the Regulations.
“Nearly two-thirds of respondents claim to rely on at least one or more such exclusions. Short term assignments (of less than 12 weeks) or engagement of excluded categories of worker, such as the genuinely self-employed, are clearly legitimate circumstances to which the Regulations may not apply.
“Interestingly, and despite some resistance from trade unions and employee representatives, use of Swedish Derogation Contracts appears wider than was anticipated, possibly as awareness of such contracts has increased. This is a form of contractual arrangement whereby agency workers are engaged on permanent contracts of employment which guarantee them minimum levels of pay between agency assignments.
“Last year just 12% of employers told us they would be adopting Swedish Derogation Contracts. Our latest survey results suggest take up of this option is in excess of 17%.”