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Trouble Temporarily Ahead

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RSS 30 July 2009
With the consultation period for the Temporary Agency Workers Directive (TAWD) ending on 31 July, the final shape of this much discussed piece of legislation is still very much up in the air.

Behind the scenes, the various organisations representing the recruitment industry are hard at work lobbying the government and other interested parties, such as the CBI (Confederation of British Industry) and the TUC.

While all of the trade bodies representing the industry have signed up to supporting the main aim of the directive to protect agency workers, and particularly vulnerable ones, each one argues that its proposals will best achieve this. In its consultation document, BERR (now the Department for Business Innovation and Skills) proposes excluding those who are genuinely self-employed, those working through their own limited company or employed on managed service contracts. BERR intends to include workers contracted to an umbrella company.

However, Kevin Barrow, a partner at law firm Blake Lapthorn, whose company has been working with the Association of Professional Staffing Companies (APSCo) on TAWD, argues that since the stated purpose of the directive is to protect vulnerable agency workers, it is incompatible for it to include workers who are highly qualified and generally paid well above minimum wage levels.

Professional workers, who operate through umbrella companies and have their own limited company, are not vulnerable workers, he argues, and clearly do not require the protection of TAWD.

It is believed that the best way to define who and who isn't a vulnerable worker is on the basis of what they earn. Therefore it is suggested by several parties that any workers earning three or more times the national minimum wage should be excluded from the directive. This case would clearly see a system that is not based on whether someone is self-employed or not, which is complicated, but on a simple test based on what is paid.

A matter of ethics could well enter the arena, however, with arguments that the government's proposal to exempt limited company contractors will not have the desired effect of protecting vulnerable workers could well worsen the situation. The danger is that employers or unethical agencies could force people who should never be running a business on their own account; such as cleaners, into becoming limited company contractors against their will. One reason for agencies pressurising workers into this is because they would rather not have the responsibility of them on the payroll and find it far simpler for contractors to invoice them directly.

However, there are arguments that oppose these ideas with some industry specialists claiming that excluding workers on basis of their earnings is simply not possible under the directive because TAWD applies to anyone who comes under the definition of an agency worker, and there is no provision under the directive to exclude anyone on the basis of what they earn. Regardless of earnings, a worker who is assigned to a user undertaking to work under their direction or control, falls under the definition of being an agency worker.

An alternative solution, posed by Adrian Marlowe, MD of recruitment industry legal consultants Lawspeed, is to have a two-tier derogation period before the directive would apply. The first derogation period of 12 weeks would be for workers earning up to 1.5 times the minimum wage. The second of 12 months would apply to workers earning more than 1.5 times the minimum wage. The advantage of this proposal is that it would reduce the likelihood of employers terminating temporary workers after 12 weeks to avoid granting them the additional rights which would take a lot of agency workers out of the danger zone.

However, Tom Hadley, director of external relations at the REC, says that legal opinion received by the REC is that there's nothing in the directive that would allow workers to be exempted on the basis of their earnings. He claims the proposal to exempt workers on the basis of their earnings has no support from recruiters. Hadley says the only way this idea could be progressed is if the discussion on the 12-week derogation period between the UK social partners, the TUC and the CBI were to be reopened but does not believe this will happen.

The REC's view is that while genuinely self-employed workers should be exempt, which would take out a lot of IT contractors and interim managers, the directive has got to work for everyone and not depend on earnings.

It is also a concern that under the BERR proposals workers who work though umbrella companies would come under the directive. Many, such as Crystal Umbrella, provide a very good service to contractors. Properly administered, with proper employment of workers should mean umbrella exclusion.

With the draft regulations for the directive due to be completed towards the end of the summer, time is running out for the industry to influence TAWD.


The key objective of the Temporary Agency Workers Directive (TAWD) is the protection of temporary workers through ensuring they receive at least the same treatment as if they had been taken on directly by the hirer in the same job.

The main areas where equal treatment applies are:

  • duration of working time
  • basic pay, including overtime
  • holiday entitlement

The directive only applies to temporary agency workers after they have been in a job for a 12-week qualifying period.

The earliest the directive is likely to appear on the UK's statute books is October 2010.

© 2009 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: approach of the apocalypse by wildpianist

30th July 2009

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