Agency Workers Directive: Plan now for life after the directive

Employers that use temporary workers regularly should assess their staffing needs in the light of the draft Agency Workers Regulations published on 15 October 2009.

The regulations will not take effect until October 2011 (only a couple of months before the final EU Directive “deadline”). However, this should not encourage employers to be complacent. The trade unions have been pressing hard for an early implementation but the government appears to have been more persuaded by business and recruitment sector warnings that an early implementation (ie October 2010) would be damaging to the delicate economy.

While it may be tempting to place the agency worker file towards the bottom of the in-tray, prudent employers will take advantage of the greater lead-in time to better plan their resourcing needs.

The government has already consulted on the main policy aspects of the legislation, with the final period of consultation on the detail of the draft regulations now ending on 11 December 2009. It is then likely that final regulations will be laid before Parliament in early 2010, entering the statute books before the general election.

Although a Conservative government is unlikely to be hugely in favour of this legislation, given that the key terms of the directive are “non-negotiable”, it would be naïve to conclude that a Tory government would have the flexibility to change materially the current proposals. In addition, one has to question whether amending this legislation would be a major priority for any new government given the challenges facing the UK.


It is therefore highly unlikely that the final legislation will differ greatly from that now proposed. Overall, the government and social partners (ie the CBI and TUC) had limited room to take a more minimalistic interpretation than they have. We appear to have a reasonably balanced piece of legislation, albeit that some difficult questions remain.

Going forward, the government estimates increased annual costs of up to £1.4bn (private sector hirers) and up to £337m (public sector hirers).

It is inevitable that agencies will seek to maintain their margins and employers will probably need to work with their existing agencies and perhaps test the market to determine if better value providers/terms can be negotiated. Note that there will be a reasonableness test on temp-to-perm fees.

Employers should consider conducting a workforce planning review now and examine what staffing leads and skills they will need to resource for their business in the medium term. They should also assess to what extent they rely on temporary workers supplied via third parties – technically employment businesses, but usually called employment agencies – and determining what premium is paid to the agency for enjoying such flexibility. Can dependence be reduced by, for example, shifting to direct recruitment, or can administration be eased by exclusivity with one or a handful of suppliers?

In summary, employers need to analyse their use of agency temps and assess what effects compliance with the legislation will have in terms of costs and practices. For some employers, the status quo will be the appropriate course. However, for many employers in both public and private sectors, these changes afford an opportunity to look at how its flexibility needs are met and at what cost and whether there are any better value ways of meeting those needs.

Key points

  • Temporary labour could be contracted on a ‘managed service’ basis, whereby individuals contract via a limited company, which may make it more difficult for an individual to argue that he is a worker. It should not be regarded as a solution where the individual is genuinely not self-employed.
  • Look at steps needed to comply with the ‘day one’ rights of access to employment information and collective facilities such as leisure/refreshment, transport facilities and crèches.
  • If you continue to use agencies, adjust your systems and consider that you will be obliged to disclose to the agency the pay rates etc of permanent comparators (this may well cause concern in terms of confidentiality).

Mark Hammerton, partner, Eversheds

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