As you may already know, new regulations are to be introduced on 1st October 2011, called the Agency Workers Regulations, known simply as (“the AWR”). The IPSE have put together an excellent guide to the regulations which you can access at the bottom of this page but we thought it might be useful to summarise the guidance and give you some idea whether you are affected and if so, what the implications may be.
What are the ‘Agency Workers Regulations 2010’ (AWR)?
In simple terms the AWR regulations are designed to safeguard the position of low paid agency workers and ensure that they receive equal treatment compared with permanent employees and also to ensure that permanent employees are not undercut by low-cost agency workers.
How do the regulations attempt to achieve equal treatment?
- On “Day 1”, the hirer is responsible for providing site facilities and access to job opportunities.
- After “12 Weeks”, the “agency worker” has equal rights to pay, holiday entitlement and working hours as permanent employees.
- The hirer, the agency, and any other company in the supply chain all have responsibilities for these 12 weeks rights.
Sounds great, so what’s the problem?
Well, from October, all agencies, end clients and other engaging parties, will become liable for ensuring these regulations are adhered to. In our experience, whenever legislation has been brought in that could have an adverse affect on the agency or client; they tend to react quickly to adopt working practices to protect themselves; we’re sure many of you can remember the introduction of IR35 and the MSC legislation.
In this instance they may be very wary, or even refuse to take on any freelancer that they believe is “caught” by these regulations and only take on those freelancers who can demonstrate that they are not caught.
Ah, so how can I demonstrate that I’m not caught?
The legislation specifically excludes contractors who are in business on their own account.
Ok, but how do I demonstrate that I’m not caught?
The legislation says:
- If you work through a limited company, in business in your own right (those of you familiar with IR35 will recognise that statement) and,
- have a business to business contract with your agency or client.
Then you’re exempt!
What if I operate through an Umbrella Company?
Unfortunately, umbrella companies are “caught” by the AWR. In most cases it will be difficult for an umbrella contractor to show that they are indeed carrying on their own profession or business undertaking of which the agency/hirer is a client or customer. So, where there is a degree of ‘supervision and direction’, they are likely to be an Agency Worker and “caught” by the AWR legislation. Indeed, most umbrella workers will have chosen to work as such precisely to avoid the burdens associated with being in business, and instead have chosen to be employed by the umbrella company. The nature of the arrangement is such that they will not generally have an ownership stake in the umbrella company which is their employer, and will be an employee of (and receive PAYE employment income from) the umbrella. Such individuals will therefore generally fall within the definition of an ‘Agency Worker’, and AWR will apply to them.
Clearly, no-one knows what the reaction to the introduction of the AWR will be; there may be no reaction from agencies or clients at all and everything will continue as it is but forewarned is forearmed!