Temporary workers may cost the retail industry more if employers don't think ahead

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Take with one hand and give with the other? By Gavin Matthews, Head of Retail at Bond Pearce.

Retailers have recently heard the government's proposal to cut two thirds of retail legislation but of more pressing concern should be the new employment regulations that are being introduced this autumn.

One of the biggest changes to employment law this year is the Agency Workers Regulations which come into force on the first of October. These will provide agency workers with basic working and employment conditions that are no less favourable than those of permanent employees.

It's estimated that there are 1.3 million agency workers in the UK and a large proportion of those work in the retail industry so what does this mean for retail employers?

Basically there are two sets of rights. The first arises on day one of an assignment and those include equal access to a company's facilities such as staff canteen, creche and transport services and also the right to know about permanent job vacancies. The more significant set of rights only kick in after 12 weeks of an assignment and those include equal pay, working time, holidays and so on. Pregnant workers will also get equal rights in respect of health and safety and paid time off for ante-natal appointments.

The time frame for the twelve weeks is actually worked out in a relatively complex way but it's probably easiest to get the gist by imagining a stop watch that ticks from 0 to 12 when the worker gets their full suite of rights. The clock starts ticking on day 1 of the assignment. There are certain events that'll cause the clock to reset, for example, if the worker leaves the company or if they change assignments to something that is completely different or indeed if there is a pause of six weeks or more where they go away to another company and then return in the same role.

Other events will simply pause the clock, annual leave, sickness leave or jury service will pause the clock and it will carry on ticking when they return. In other cases such as pregnancy, child birth and parental leave the clock will actually keep ticking as before and keep going down towards 12.

It's worth pointing out that the clock will start ticking for existing temporary employees on 1st October, which leads us 12 weeks later to Christmas Eve, not the best time to be remembering to change your employee's terms for any retailer!

It's been reported that one in six companies plan to sack their temps after 11 weeks in order to avoid paying them the same as permanent employees but it simply isn't that easy to flout these new laws. There are some very comprehensive anti-avoidance provisions in the Regulations that are designed to prevent exactly that sort of action. Essentially if it looks like it's structured to get around the Regulations, a worker could take a claim to the Employment Tribunal. If they are successful they will be automatically entitled to equal rights as at the point they would have reached 12 weeks.

Of course there may be some situations in which an employer needs to move workers around jobs but employers would need to be very careful how they justify that. There is a hefty fine of up to £5,000 for a breach of the provisions.

The Government thinks that the annual cost of this new law is going to be £1.5 billion and with the retail sector especially reliant on seasonal workers that is an unwelcome statistic but it's important to remember that employers who don't currently use large numbers of agency staff or who pay them the same, or similar to permanent staff are unlikely to be greatly impacted by the Regulations anyway. But for those employers who are, there are a number of options. These include setting up a bank of temporary staff that would fall outside the Regulations, out-sourcing work currently done by agency workers, using zero hours contracts or increasing the availability of overtime to existing staff.

There is also a specific get out clause in the Regulations known as the Swedish derogation. What that means is that if the worker is directly employed by the agency and paid between assignments, the employer won't have to pay them the same rate as permanent staff.

What retail employers really need to be doing now is taking a really good look at their permanent terms and conditions of employment as well as their reliance on agency workers so that they can get a feel for the impact that the Regulations are likely to have. Secondly, they need to be talking to the agencies that supply workers to get a feel for what the agencies are thinking and how they are likely to plan around this. They should also look at their terms of supply with agencies to make sure that any liabilities arising out of a breach of the Regulations will be sensibly apportioned.

As long as employers plan sensibly and really think through this new legislation through, there shouldn't be too much negative impact. This is not a good time to bring in a new law that will increase costs for retail employers, but they will still be able to have a flexible workforce as long as they're prepared.

For a detailed discussion of this new legislation from Drake's Circus Shopping Centre please click here.

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