When Agency Worker Regulations came into force in October last year recruitment agencies feared the worst. Nick Woodward, MD at Etz Timesheet Solutions, examines the effects of the regulations over the past six months and looks at how many recruitment firms have successfully ‘tamed the beast’.

The Agency Worker Regulations came into force in October 2011. Designed by the EU to stop vulnerable workers being exploited, the legislation brought with it significant implications for the temporary worker sector. Whilst the key objective was to prevent the exploitation of vulnerable workers, some areas of the market viewed the regulations as more bureaucracy; another example of interference from Brussels. Recruiters were increasingly asked to look at alternative supply models and whilst some held the view that ‘AWR avoidance’ measures were disproportionate and unnecessary, many agencies felt it was a little too far ahead of the curve to focus on strategies before determining whether a shift was really needed.

Now, after seven months’ operation of AWR we have seen it’s impact on recruiters and how the use of cloud technologies have enabled some agencies to ‘tame the beast’. Leading UK recruitment industry trade body REC (The Recruitment & Employment Confederation) has committed significant resources to assisting the industry with AWR and from its position as the voice of the Recruitment Industry, the REC AWR Monitor has highlighted their feedback from members. This feedback details administration problems, reluctance of clients to share relevant information for equal treatment purposes, ongoing confusion surrounding the status of contractors operating as Limited Companies, sector discrepancies and misunderstandings and misconceptions surrounding AWR entitlements.

There is little doubt that many see AWR as a challenge; however recruiters have identified specific challenges in lower-margin blue collar sectors and education. Despite the issue of some clients’ not sharing information, the overall mood is more upbeat than might have been expected; one upside of AWR is that clients have worked constructively with agencies which has enabled stronger relationships to be forged. The burden of increased administration was predicted for recruitment agencies driving up payroll and administrative overheads. Agencies attempting to manage worker assignments and client contracts through manual systems face a paper chase, a problem that only increases with scale. Such an approach tends to expose recruiters to risk of compliance failure and increasing scale would only serve to magnify the risk factor. A key issue highlighted in has been the inadequacy of manual management systems, which can lead to compliance failure.

NationRecruit.com a leading UK recruitment agency with 20 years experience of high street recruitment, has eliminated paper timesheets from the administrative workflow to help their compliance with the new regulations, and to better prepare themselves to respond to future changes. When AWR came into force the company recognised the changes which would need to be made to their operational framework and the challenge that would be faced by their back office processes. “We considered a manual system to manage compliance,” explained Operations Director, Evette Easton, “but we felt this would have been a backward step. Then we learnt about the introduction of AWR functionality to our existing online timesheet solution system. This automates AWR within it’s system, avoiding the need for a time consuming manual approach to compliance.”

Evette continued, “The AWR functionality is easy to set up and warns us when a candidate has worked for 10 weeks on a contract. This gives us 14 days to manage contracts in keeping with the 12 week AWR rules. The system then prevents timesheet production. This saves at least 2 hours a week in AWR administration and ensures compliance in a way that a manual system cannot.” The compliance mission for the recruitment industry is burdensome. Contravention of employment law is treated very seriously and the financial liabilities and reputational damage that result from prosecution, even if successfully defended, can be significant. Although AWR can add to that compliance burden, good cloud-based timesheet solutions provide AWR compliance functionality as a standard feature.

One of the little-publicised benefits of the cloud-computing revolution is the speed and ease with which new regulations can be incorporated, from any location, into any type of existing payroll system. New software allows business to offload the number-crunching and timesheet-processing into the cloud, slashing admin costs by 70 percent, and helping business instantly seize opportunities or avert risks from upcoming tax and regulatory changes, without additional admin work, by offering “out of the box” updates.