Can i minimise the impact of tawd?

9-Jul-2008

Although the Temporary (Agency) Workers Directive (TAWD) is yet to be made law, recruiters should be aware of the effect it could have on their business and how to lessen its impact

It is unlikely that the Temporary (Agency) Workers Directive (TAWD) will be made law in the UK before late 2010. However, long-term staffing, managed-service and RPO contracts entered into now could still be in force then.

Therefore, staffing companies should start considering the likely affect of TAWD on their relationships, contracting and pricing models with end users (and agency workers).

What can my company do to minimise the impact of TAWD?
TAWD will give agency workers the right to be treated 'equally' to comparable 'perms' (at least in terms of basic pay). The process of engaging agency workers is therefore likely to change and we consider that there will broadly be six models (individually or in combination) which staffing companies will be able to use to minimise the impact of TAWD.

Model 1: The Swedish derogation (for fully employed temps)
Under this exemption an agency worker who works under a contract of employment with a staffing company or an umbrella company, and is paid between assignments, will not be entitled to 'equal treatment'.

Staffing companies (and umbrella companies) which want to use this exemption will have to consider issues like how they deal with employee termination costs, travel expenses and vicarious liability for acts and omissions of employees.

Contracts with guaranteed minimum paid hours per annum (rather than full-time employment) may fall within this exemption provided the minimum hours are set at a reasonably high level.

Model 2: Limited company contractors
The legislation does not appear to capture agency workers who supply their services through personal service companies (ie limited company contractors)

Model 3: Elevenweek assignments
In the UK, agency workers will have to serve a 12-week qualifying period before the right to equal treatment cuts in. Therefore, perhaps the most straightforward way of avoiding liability in the UK may be to engage temporary workers on 11-week contracts.

However, the situation is unlikely to be as straightforward as engaging them for 11 weeks then re-engaging (as if in a new assignment) after a week's break. The UK implementing legislation will need to specify how long a break will stop continuity and start the clock ticking again at zero.

Eleven-week arbitrary cut-off dates may also expose staffing companies and end users to indirect discrimination claims under sex and race discrimination legislation. Diversity monitoring will be essential.

Model 4: Engaging agency workers on a project basis
Workers engaged on a project or piecework basis rather than a 'time spent' contract will probably be outside TAWD.

Model 5: Treating agency workers as trainees
By treating all agency workers as being equivalent to trainees when establishing pay rates, their basic pay (and holiday entitlement) would be no more than that enjoyed by trainees. This approach is used in France.

Model 6: Workplace agreements
TAWD allows many of the rights under it to be negotiated away by workplace agreements reached between the 'social partners' and there may also be provision for local workplace agreements to override the TAWD provisions with end users and their permanent employees together deciding rates of pay for agency workers at that site.

Conclusion
Even though the final detail of TAWD has not yet been settled, staffing companies appear likely, even at this early stage, to have a number of good options for supplying agency workers in the future outside the TAWD framework. The final legislation is unlikely to remove all of these options.


Kevin Barrow is a partner in the recruitment and resourcing department at solicitors Blake Lapthorn Tarlo Lyons