Tuesday 25th Oct 2016 - Logistics Manager

Agency worker regs could hit supply chain costs

Supply chain costs could be driven up by new regulations governing the use of agency staff which come into force on 1st October, a recruitment consultancy has warned.

Adrian Hobbs, managing director of Flex Plus, said: “October’s implementation of the Agency Worker Regulations (AWR) will potentially see the costs of agency labour in the supply chain rise at a time when UK business needs less employment legislation and more flexibility to cope with uncertain demand patterns and a tedious continuation of business uncertainty.”

The regulations introduce new rights for agency workers.

From the first day of work, an employer must ensure that agency workers can access facilities (such as canteen, childcare facilities, etc) and can access information on the employers job vacancies.

Once an agency worker has been in the same job for 12 weeks equal treatment entitlements relating to pay and other basic working conditions (annual leave, rest breaks etc) come into effect.

After completing the qualifying period, pregnant agency workers will now be allowed to take paid time off for ante-natal appointments during an assignment. However, this is not retrospective and for those agency workers already on assignment, the 12 week qualifying period will start from 1 October 2011.

A study by employment agency Reed found that only 30 per cent of the 1,000 employers surveyed had the right controls in place to deal with the new regulations. Linda Marshall, head of HR services at Reed, said: “Government consultations suggest that compliance will be time-consuming, with an average of 1.5 hours work for every agency worker.”

Adrian Hobbs of Flex Plus reckons that the cost of compliance for organisations using temporary agency labour as a strategic element of their workforce could have an enormous impact on the operational bottom line.

He said: “Unfortunately the solutions are limited and non compliance risk will be high, particularly if agencies misinterpret the regulations or design a cheapskate solution driven purely by cost without looking at the longer term impact.

“We believe there is an enormous opportunity for the logistics industry to redesign the way it works with temporary labour and to refocus on some challenging issues in-house like productivity, warehouse labour outsourcing and managed services within functional areas.

“The days of cheap agency labour will be replaced by retained, productive flexible labour with permanent contracts with the emerging professional employment organisations overtaking the traditional agency model and taking full employment and deployment risk on behalf of the 3PL or shed operator”