'500,000 temporary contracts at risk from AWR'

Up to half a million temporary employment contracts could be threatened by the new agency worker rules coming into force from next month, a legal advisor has calculated.

Having polled 200 HR officers, Allen & Overy found that one third of mid to large-sized employers may cut their temporary agency worker contracts before the 12-week qualifying period for equal pay and benefits applies.

Pointing to the employers' underlying concern – the cost of compliance, the legal firm estimated that the equal treatment rules could come in at £1.3billion a year – equating to a price tag per employer of £90,000.

This industry-based estimate, not too far off the government's own impact assessment of 2009, includes a projected cost per worker – anywhere between £1,755 and £3,722 a year, the firm estimated.

Outlining its figures, Allen & Overy said that, in addition to potentially having to award temporary agency workers the same pay, pension and benefits as direct staff on the payroll, employers will also bear the cost of having to liaise with agents more closely.

"Users of agency workers need to assess how they are going to manage their temporary workforce going forward and should review their contracts with agencies", the firm said.

"The…result [is] further red tape for businesses, requiring employers to provide a raft of information to agencies to determine what level of pay and benefits workers should be entitled to after completion of the 12 weeks qualifying period."

Although the advice is not new, one in four end-users emerged as still not knowing how much the Agency Workers Regulations will cost their business, despite the rules being less than two weeks away.

Elsewhere in the firm’s research, a fifth of bonus-paying employers indicated they face an increase in their annual bonus pool of up to 15% from October 1st, while 37% said they haven’t considered how to appraise temps for such awards. Slightly more (42%) say they plan to provide temps with the same appraisals they give full-timers, indicating employers face greater time constraints.

Allen & Overy employment partner Stefan Martin reflected: "The advantages of using a flexible workforce during the current economic climate will be compromised as employers feel the burden of additional rules and regulations.

"While businesses will undoubtedly continue to use agency workers, this will result in increased costs. Rather than strengthening their rights, this may actually make the position of agency workers much more uncertain, exposing them to early termination of contracts."