Is the use of temporary agency staff providing the benefit it should for employers?

Implemented in October 2011, the Agency Workers Regulations (AWR) saw the UK interpretation of an EU directive designed to safeguard and balance two things:

• Fair and equal treatment of temporary workers and thereby prevention of exploitation and the use of temporary agency workers as a means of cheap or cheaper labour

• Retention of temporary workers as an accessible, flexible staffing resource to support dynamic and changeable or peaking workloads

With the methodology employed in the UK staffing industry largely unchanged in decades, complying to AWR has required a complete review of labour support services and has caused a number of operational headaches, particularly for larger manufacturing companies who traditionally rely heavily on agency staff. A basic premise of these 'issues' is the increased expense of compliance to AWR, particularly in ensuring parity of pay for temporary workers as of the thirteenth week in post and equality of paid annual leave. Given the staid nature of supply methodology in this sector, the UK staffing industry has unsurprisingly based its response to AWR in moves to echo other European states where such legislation is already in force.

Resulting approaches include the complex and debatably unspirited Swedish Derogation Model. Many employers, in a bid to reduce the increased burden of compliance causing increased direct 'agency fees' , have significantly reduced their use of agency staff, attempting to build their own pools of temporary or flexible employees. Without wading into a more complex study of the costs, inefficiencies and implications involved in any single response, one thing remains clear - the UK staffing industry as a whole has been unable to significantly adapt its methods to meet the challenges of a new operating climate and deliver service users with a well adapted, innovative response.

AWR could and should have been an opportunity for creativity - a chance to reassess how staffing services are supplied, with the prospect of showcasing efficiencies afforded by economies of scale and evolving technology to refresh and drive forward a service and industry that, despite its critics, supports large sectors of the UK economy.

However, what has actually been witnessed is a failure to move forward. 

Pricing and supply models have remained rooted in the traditional hourly charge plus mark-up, which only adds to the inefficiency of attempting to match comparator pay and relevant benefits. There has been no major innovation or industry-wide attempt to rethink the boundaries of the staffing industry's approach to providing services and, as such, minimal evolution in service delivery. Therefore, what we are actually witnessing is increased inefficiency, which itself is driving employers to look for alternative approaches to staffing their workloads. This could not only potentially see a reduction in the number of available agency positions available, but also the shifting of jobs out of the UK.

It's not a question of the staffing service providers taking the sole blame. Employers and industry leaders need to engage forward-thinking providers and take time to discuss and debate potential new methodologies that are both compliant and effective. It may even be possible to deliver cost savings rather than just avoid increase. In an industry that has become sales-driven, too many staffing suppliers are not willing to reassess their operating (and earning) infrastructures. The saturation of the market with quick-buck seeking providers leads service users - the potential beneficiaries of change - to raise the defences against communicating openly with new and innovative suppliers.

Having taken time myself to analyse AWR, what it means and what could be achieved - particularly for medium to high volume service users - there is a real opportunity for change, exciting change. By thinking creatively and intelligently about the logistics and benefits of AWR compliance, the staffing industry should be making substantial leaps forward, innovating in a way that other industries regularly do. Achieving this will require a complete overhaul of culture and a ground-up redevelopment of staffing services; it remains a question as to whether this is something the UK staffing providers are willing to do.

Our response is the development and launch of Swann's Evolve service model, based on a progressive infrastructure of technology at the supply end combined with harnessing economies of scale to create a systemised model. This delivers AWR compliance and potential savings of up to a third on the comparable 'agency fee' portion of service costs. These savings more than negate the required increases in pay and other benefits when workers are retained on an ongoing basis after twelve weeks, delivering overall cost savings alongside the benefits of an equally treated workforce.

In short, AWR could and should be an opportunity for the UK staffing industry to shine. So far, the opportunity by and large, has been well and truly missed.

To respond to this article, discuss approaches to AWR compliance, the requirements of the legislation or our Evolve service model in more detail, please contact Andy Swann directly.