On 1st October 2011, new legislation came into force that is called the Agency Workers Regulations (AWR), and it has had a huge effect on contractors in the UK.

What are the agency workers regulations?

The agency workers regulations are not as complicated as many believe. Simply put, AWR means that any contractor working for more than 12 weeks with a particular company are entitled to the same benefits as those permanently employed by the company, and this includes equal income and benefits such as holiday and sick pay. Equal rights also include those to breaks, overtime and bank holidays. Of course, for lower paid contractors, this is welcome news. Agency workers regulations also covers contractors who are working as employees of umbrella companies, meaning that they too can benefit from the AWR rules.

Problems since AWR introduction

AWR was expected to be a big hit with contractors, and it was. However the counter impact is that agencies and employees are now reducing the amount of temporary workers and employees that they take on, because the advantages don’t outweigh the disadvantages.

The whole idea behind hiring contractors over permanent staff is the flexibility, and the lack of requirement for HR and HMRC attention – as self employed contractors normally deal with all of this themselves. But since the introduction of AWR, many companies now have to take onboard these issues and far more administration is required for both parties.

Another problem is that many contractors are paid higher rates than full time permanent employees of a firm, and so they will not be wanting to request equal or lower pay. This has caused for an increase in costs of administration, which of course the employer will not bear – they will pass this onto the contractor by cutting rates.

There is a strong possibility that the AWR will not affect you as a contractor, but the problem lies with the employers who automatically think that all contractors fall within this legislation. This makes them assume that it is going to cost more money to contract you in to do work for them, and that you will automatically be given a huge number of rights after 12 weeks of working on a contract with them. It is therefore a good idea to approach clients in an informed manner and confirm that you do not fall within the AWR.

How to avoid being within the scope

Not all contractors and employees are in favour of the agency workers rules as outlined above. But there is a way around it. If you so wish to avoid being within the scope of the agency workers regulations rules, the simple thing to do is to enter into shorter term contracts, and start a new one. For example, you can break up the work that is required into blocks of different tasks, each of which lasts 12 weeks. SO one contract ends at 12 weeks, and another begins.

Also by cutting out the agency and dealing direct with the client, the contractor can avoid being pulled into the AWR.