Irwin Mitchell Warns That Changes Could Undermine Proposals

Reports that the government has assessed the potential to ‘water down’ proposed employment law changes could only serve to undermine the proposals in the eyes of many businesses, an expert at Irwin Mitchell has warned.

The Daily Telegraph has claimed that David Cameron’s own office has taken legal advice in relation to the upcoming Agency Worker Regulations – or AWR – changes which are expected to be introduced at the start of next month.

It is believed that advisers have informed the office that certain aspects of the legislation were “gold plating” the Agency Workers Directive, so could be removed in order to potentially reduce the perceived impact of the Regulations.

However, Tom Flanagan, national head of employment at Irwin Mitchell, has revealed concerns that some myths have developed around AWR and warned that reports of changes could lead businesses to view the AWR in an increasingly negative light.

He explained: “As we edge ever closer to the introduction of the AWR, there is increasing coverage about the perceived complications and costs of implementing the AWR.

“However, we believe that the cost of AWR may not be as significant as many think. For example, research by the Recruitment and Employment Confederation has revealed that little more than one in ten employers would need to increase agency worker pay in order to implement the AWR. 

“In addition, the impact of AWR is often exaggerated.  This legislation provides agency staff with rights to some common facilities and information about jobs from ”Day 1” and after 12 weeks, the same ‘basic working and employment conditions’ to which they would have been entitled had they been recruited directly. This is not necessarily complicated to identify nor expensive to provide, particularly when it does not include rights for the likes of occupational pension schemes.

“Employers also still have the ability to manage their affairs in a manner to prevent AWR affecting them, subject to some provisions related to avoidance.”

Tom reminds us that the AWR in its current form, particularly the 12 week qualifying period, was agreed between the TUC and the CBI to allow it to proceed through parliament, so any changes now could potentially lead to that agreement falling away.  That scenario, as well as the suggestion that the UK Government either waters down or ignores the Directive, would leave the UK open to enforcement proceedings by the European Commission, with financial penalties, and direct action by Government’s or quasi Government employees. 

He added: “There is very little “stripping out” of “gold plating” which could have any significant impact on costs.  For instance, the example in the Telegraph article of people setting up their own firms and contracting their services through them would not be covered by the current AWR if the result would be that workers are self-employed and in business on their own account”.

Tom concluded that the overall Government themes of encouraging growth and helping business out of recession are laudable and to be encouraged. 

However, he advised: “It may be counter-intuitive to launch a risky legal challenge to the validity of these regulations, as this could have the effect of creating uncertainty, launching individual legal challenges and actually increasing costs to businesses, perhaps for some time.

“Business would benefit more from guidance on how to manage the AWR, keeping them in the relatively narrow context in which they exist and getting them bedded into business practice as quickly as possible, rather than suffer from what may be perceived to be an ideological debate about the UK’s presence in Europe.”