UK businesses could face a five per cent increase in annual pay costs as a result of major new regulations that come into force this Saturday (1 October 2011).

Specialist recruitment consultant REED carried out in-depth analysis of 30 companies and 30,000 agency workers across 1,300 roles to assess the impact of the Agency Workers Regulations (AWR) on business. REED found that if AWR had been in place over the last 12 months, those companies would be facing additional costs in excess of £7 million – which equates to a five per cent increase in pay costs for UK companies.

Linda Marshall, head of HR services at REED, said: “This new legislation will fundamentally change the way that agency workers are treated, by entitling them to the same basic terms and conditions as those directly employed after a 12 week qualification. And, as agency workers are such an integral part of the UK’s labour market, with up to 1.5 million on assignment at any one time, the impact on business is set to be huge. That’s why it’s concerning, that according to our research so many businesses are unprepared.”

REED surveyed over 1,000 businesses and found that two thirds of businesses are not ready for the changes that AWR will bring, with fewer than 30{6060b2de664e4eaa3e7b7e86961ce2c4bbd7a29b6c1097abf8257a4e5b07383e} having the right controls currently in place.

Linda continued: “Government consultations suggest that compliance will be time-consuming, with an average of 1.5 hours work per agency worker. From our own research, we’ve found that two thirds of businesses use agency workers for both short and long term assignments and over 30{6060b2de664e4eaa3e7b7e86961ce2c4bbd7a29b6c1097abf8257a4e5b07383e} use their agency workers for assignments that last longer than 12 weeks. This makes them liable for AWR considerations. It’s important that businesses plan now for AWR as the first 12 week qualification period kicks in at the end of this year.”

REED has developed a diagnostic tool to help businesses assess the impact of AWR on their operations and help them identify exactly what they need to do next. All businesses have to do is answer a simple, online questionnaire and they will receive AWR diagnostic report that includes REED’s recommendations on what they need to do to prepare for AWR implementation.

Credit: onrec.com