Are companies ‘shunning’ temps because of the Agency Workers Regulations?

I’m starting to think that I should simply dedicate this blog to Louisa Peacock of the Telegraph. Her latest offering is an article claiming that the Agency Workers Regulations have caused companies to ‘shun temps’ – with the clear implication that giving workers rights is ultimately bad for them.

Now the Regulations are a complicated piece of legislation, and I’m  not going to claim that their introduction does not cause some headaches for employers and agencies.  But in this article Ms Peacock manages to link what appears to be a decline in the hiring of agency workers with the burden imposed by the Regulations despite having – it would seem – absolutely no evidence for this whatsoever.

First of all, though, a gripe about the headline ‘Companies shun temps following EU ruling’. I hate to sound picky, but there hasn’t been a ruling! Rulings are made by courts. What has happened here is a Directive has been introduced which has then been implemented in the UK. I know it doesn’t really matter, but its often the little things that annoy me the most.

Reading the article, it’s not entirely clear what has actually happened to the hiring of agency workers. I struggle to understand this paragraph

On a scale where anything above 50 represents an increase, temporary hires fell to 48.5 last month, down from 49 in February and down by 7pc since the new rules came into effect in October.

I would be more concerned about temporary hires falling to 48.5 if I knew what that actually meant. 48.5 what? million? per cent? hours per week? From the article it doesn’t look like Ms Peacock knows either. I think its probably some sort of index, but without some proper explanation its impossible to tell what this figure really means.

The employment law howler comes in this paragraph:

Under the changes, which stem from European law, temps are entitled to the same pay and benefits as permanent workers after just 12 weeks in a job. Previously, they had to wait one year to clock up employment rights.

No complaint about the description of what happens after 12 weeks, but the last sentence is of course quite wrong. Agency workers are not (generally) employees and are unable to claim unfair dismissal (which, until last Friday, had a one year qualifying period). The vast majority of agency workers were no better off if they stayed in the same role for one year or ten. The would certainly not ‘clock up employment rights’ after a year.

Agency workers and employment status

It is worth emphasising that the Regulations made no change to the employment status of agency workers. Either they are employees or they are not – and most are not. They do not become employees after 12 weeks and if they are not employees then they do not qualify for unfair dismissal rights.

I won’t comment on the cost of the Regulations because I’m not an economist. The figures used in the article are presumably extracted from a Government impact assessment. I will say, however, that calculating the cost to the ‘typical’ small business involves working out so many averages and making so many assumptions that the figure is surely meaningless. The fact is, we don’t know how many agency workers there are in the UK nor how much they are paid, nor how long their assignments would ordinarily last if it were not for the Regulations. Any cost assessment is just a made up number.

It is interesting that the article obliquely mentions the Swedish Derogation – the ‘legal loophole’ under which large hirers have urged individuals to ‘waive their rights’. It is of course more complicated than the article makes out. Workers covered by the Swedish Derogation do indeed waive their rights to be paid the same as they would have been paid if directly hired, but they at least get the benefit of being employed under permanent contracts of employment which will give them unfair dismissal and redundancy rights. There is a serious piece of work to be done on the impact of the Swedish derogation – particularly in the sort of large employers mentioned in this article. I suspect that many agencies will find that the loophole is smaller than they thought – but that is an issue for another day.

The art of selective quoting

The Telegraph article ends with a quote from Tom Hadley of the REC who says that the decline in the hiring of temps:

may in part be linked to employer uncertainty over the agency worker regulations

That is a commendably cautious statement – which is no doubt why it was relegated to the very bottom of the article. It is also a carefully selected quote. Here is the full paragraph from the press release:

“This month’s data shows a slight decline in appointments of temporary workers. This may in part be linked to employer uncertainty over the Agency Worker 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. 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.”

Now why did the Telegraph choose to quote the potential link with the AWR and completely ignore what Mr Hadley goes on to say about the possibility that the change is ‘mainly due’ to increasing business confidence?

I know it’s naive to expect balance from the Daily Telegraph, but really its willingness to paint a picture that fits in with the ’employment law is bad for workers’ theme regardless of the actual facts of he case is remarkable.

The main hook of the article is that the ‘survey showed’ that the cost of the new rules was part of the reason for the fall in temporary hires. But did the survey actually ‘show’ that? Sort of. What the survey actually says is this:

March data indicated a reduction in agencies’ short-term staff billings for the fourth consecutive month. Although modest, the rate of decline was the fastest since July 2009. Lower temp billings were in many cases blamed on the effect of Agency Worker Regulations. Competitive pressures in the sector were also cited by a number of panellists.all in temporary hires

Note that the article completely ignores the qualification that the decline in temporary hires is short and that ‘competititve pressures’ were also cited. It is also noticeable that the online news release from the REC has a very different tone from the Telegraph article. Chief Executive Kevin Green says:

The temporary market has shown a slight decline since January and is essentially flat at present. However, agency work continues to provide an important outlet for employers and jobseekers with over a million temporary workers placed on assignments in any given week.

The article also ignores the latest comments from the REC about its monitoring of the impact of the AWR . In particular the REC says:

The REC’s JobsOutlook report – which tracks the future hiring intentions – shows that the vast majority of employers plan to maintain or increase their temporary workforce in both the short and longer term.

Again, this doesn’t fit the Telegraph’s narrative, so it is completely ignored.

The fact is that assessing the impact of the AWR is complicated. Research from Adecco carried out in February 2012 also gives a different picture to that being touted by Ms Peacock (thanks to @anyapalmer for the link). In the Telegraph’s  article however, we are not really given much information – and the information we are given is distorted or wrong.

Well done, Louisa Peacock – another winner!

NB this post has been updated since Michael Carty kindly sent me a copy of the actual report and press release accompanying it.

About Darren Newman

Employment law consultant, trainer, writer and anorak
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