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Office Hours: 9am to 5.30pm

AWR issues to avoid with an Umbrella Company

It has been three years since the Agency Workers Regulations (AWR) came into effect, yet confusion among many recruiters and contractors remains over what the regulations actually mean for them, both in practical terms and the way in which certain provisions should be interpreted.

The act was introduced as a measure to protect contractors, freelancers and temporary workers, providing them with the same pay, working conditions and employment rights as their ’employed’ counterparts. However, the ambiguous nature of how the AWR was explained when first introduced has been a cause for confusion among many within the staffing industry, with the potential to affect compliance levels too, if not properly understood.

For instance, one of the biggest grey areas is that of status. Although pay and conditions are placed on parity with their employed colleagues, the AWR directive does not alter the agency worker’s employment status. In other words, they are not granted ’employment status’.

Another key area of concern is the extent to which benefits, such as bonus pay, holiday pay and how to calculate basic pay, apply to agency workers with the regulations seemingly distinguishing between performance-related elements. So to add some clarification to this, there are two types of rights that the AWR directive grants to temporary workers:

  • Week 12 rights: Put simply, if a contractor remains in the same role for 12 weeks, they then become entitled to the same pay and working conditions as if they had been recruited and hired by the client to do the same job.
  • Day one rights: From day one of their contract, the temporary worker is fully entitled to have access to what are known as ‘collective facilities’ – company canteen, childcare, gym membership, car parking, subsidised transport, etc,. They also have the right to be informed of any relevant internal vacancies which may arise for which they may wish to apply.

But it’s not just recruiters and contractors who are sometimes unclear about how the AWR is supposed to be applied in practice, some employers are too. Many employers have misinterpreted the directive to mean that all they need to do is simply find someone within their organisation with the same job title or job role and then match this to the agency worker’s pay and benefits to this individual. This is not the case, but this lack of understanding of how AWR works in practice on the part of an employer has been seen to have a knock on effect throughout their recruitment supply chain.

Indeed, this confusion about rights or whether limited company contractors are or not at fault for any breaches, led to the first significant claim under the AWR less than 12 months after it came into effect. In that case, potential claims were made against the hiring organisation, and all of the staffing companies involved – an early indication that any subsequent AWR claims would invariably involve multiple parties and could potentially incur multiple costs.

Responsibility for ensuring that workers are afforded equal rights is shared between the hiring organisation, the recruitment agency doing the hiring, and the Umbrella Company. The consequences for any party breaking – or appearing to break – these rules can be costly.

But how can you be sure that your agency is abiding by the rules and how much of your time is taken up determining if you are compliant?

By working with a reputable Umbrella service provider such as One Click Umbrella, and by taking advantage of their compliant models you can limit the risk of AWR claims, mitigate risk and pre-empt any potentially damaging issues from arising, ensure all parties fully understand the regulations, and adopt a system which ensures all agency worker enquiries are dealt with quickly and efficiently. Thereby, freeing up your time and enabling you to focus on what you do best!


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