A couple of days ago we blogged about how red tape for businesses can sometimes be a good thing. But today’s post highlights new rules which are unlikely to be received warmly by UK SMEs.

From tomorrow, agency workers will have additional rights in pay and benefits which are similar to full-time staff once they have completed 12 weeks of service doing comparable work.  This means you’ll have to pay agency staff overtime, shift allowances, holiday pay and bonuses not attributable to individual performance, as well as maternity rights after 12 weeks’ service.

Business groups have suggested the changes could cost firms up to £2bn a year.

With such an uncertain economic outlook, many businesses are using agency workers (it is estimated that there are 1.4 million agency workers in the UK) instead of recruiting permanent members of staff because it gives them greater flexibility. That way, if sales drop off, they can reduce their workforce quickly and easily and vice versa if they suddenly need extra staff to fulfil a big order.

Rights

Agency workers already have certain legal rights including the minimum wage and basic holiday entitlement.

Under the new European rules, which come into force in the UK tomorrow (1 October), agency workers will be allowed to use some of the same facilities as staff.

For example, from the first day of employment, they can use a creche, canteen or transport services. They will also be entitled to information about internal vacancies at the company they are working for, and to be given the opportunity to apply for them. Which all sounds perfectly reasonable because the facilities are already in place and therefore do not cost the employer any more money to provide.

However, after 12 weeks in the same role with the same employer, agency workers will now be entitled to the same employment and working conditions as permanent staff. These include pay, overtime, shift allowances, holiday pay and bonuses not attributable to individual performance, as well as maternity rights.

It isn’t all bad though –  you will still not have to pay agency workers occupational sick pay, redundancy pay and health insurance.

The rules are being brought in after long negotiations between unions and the government.

A survey of agency workers for the TUC found that some felt they were missing out on holidays, pay and overtime payments.

However, some business groups such as the Forum for Private Business suggested that the new rules would make the labour market less flexible and that job creation and recruitment would suffer.

Cut-off

There have been fears that some agency workers will simply be laid-off after 11 weeks so they do not benefit from the increased rights.

A company must not employ these workers again for another six weeks.

However, if a pattern emerged of an employer repeatedly only having 11-week jobs, then an individual could take a case to tribunal where fines of up to £5,000 could be handed out.

What do you think of the new rules?

Don’t misunderstand us. We firmly believe in protecting people’s rights and that everyone should be paid fairly for their contribution to the business. But these new rules could actually stifle the market for temporary staff and that won’t be a good thing for employers or agency workers.

Do you employ agency workers? If so, what do you think of the new rules? How will they affect your business? Post your thoughts and let us know.