Employers may be swapping temporary workers for permanent staff because of uncertainty over the Agency Workers Regulations (AWR), a report has claimed.
However, the same report indicated that other factors may be to blame, such as competitive pressures experienced by some organisations in their sectors.
Under the Regulations, which came into force on 1 October 2011, agency workers are entitled to the same basic employment conditions as someone directly recruited by the hirer after working for the company for 12 weeks in the "same role".
The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs found that temporary appointments fell at the fastest rate in two-and-a-half years during March, while permanent placements continued to grow.
The report said that the shift from temporary to permanent staff may be due to the introduction of the AWR, as respondents "frequently indicated" that they had chosen to convert temporary workers into permanent employees because of the effect of the Regulations.
Tom Hadley, director of policy and professional services at the REC, explained that, while the AWR may be having some impact on hiring decisions, there may also be other factors behind the shift.
"This may in part be linked to employer uncertainty over the Agency Workers Regulations, although it could mainly be due to the fact that increasing business confidence has resulted in more employers being prepared to take on permanent hires rather than temporary or contract staff," he argued.
"The benefits of flexible staffing arrangements are well established and other REC data provides some positive indications in terms of the outlook for temporary work in the UK."
Indeed, the REC's recent JobsOutlook report found that 85% of employers were planning to grow or maintain their temporary workforce size over the next three months and 89% were looking to do so in the long term.
In addition, recent research from recruitment firm Adecco found that 78% of employers had noticed no effect from the AWR since their introduction and just 16% believed that the Regulations had effected their hiring plans for 2012.
Darren Newman, XpertHR consultant editor, said that it is difficult to identify a clear link between the AWR and the number of agency temps engaged at any one time as there are a lot of factors that can affect employers' hiring decisions.
"Most employers use agency workers only for genuine short-term assignments that last for less than 12 weeks. In these cases, the Regulations have only a minimal impact," Newman explained.
"The impact of the Regulations varies enormously between sectors. Agency workers in IT and other specialist roles are often better paid than the equivalent directly employed staff. For these workers, the Regulations have little impact."
He added that, if the shift from temporary to permanent staff is due to the AWR, it could still be seen as a positive consequence: "If the Regulations are encouraging employers to think about hiring individuals as employees rather than keeping them engaged on insecure agency-work arrangements for extended periods of time, then that is surely a good thing."
Employers can find information on requirements when hiring temporary staff under the AWR on XpertHR's FAQs.