Time for a rethink

With new rules on agency workers coming into force next week, Amanda Jones considers the implications for local government and outlines the steps authorities should take to protect their position.

Staffing costs represent a significant proportion of local government expenditure, with the cost of agency workers alone set to top £1.8bn annually. As authorities assess the impact of the Agency Workers Regulations, which come into force on 1 October, do the new rules provide an opportunity to be exploited or a challenge to be overcome?

The workforce planning strategy produced by Glasgow City Council a couple of years ago had at its heart the desire to deliver a more flexible workforce. Against the backdrop of large-scale projects, such as the M74 extension and Commonwealth Games 2014, the talk was of changing the balance between permanent and temporary staff, making more use of fixed-term, temporary contracts and agency staff.

This strategy is likely to ring true across many local authorities. But it is perhaps one that was embarked upon before the drafting of the Agency Workers Regulations. If so, it will now need to be re-visited as the economics of using agency workers for 12 weeks and more is set to change. After completion of this continuous period of qualifying service, the worker becomes entitled to equality of certain terms and conditions with a comparable permanent employee.

As a result of equal pay issues, local authorities are now well versed in identifying comparators. The biggest difficulty could be identifying when the 12-week trigger point has been, or is about to be, reached.

It is quite possible that an individual will have been supplied in the same type of role but in different areas of the authority and by different agencies. If so, the individual will accumulate the necessary qualifying service. But how will this be flagged?

One solution is to build into contracts with agencies an obligation that they keep you informed. Alternatively, you could consider moving to a master or neutral vendor arrangement. The former would involve appointing a master vendor, i.e. one agency, to manage the recruitment process. The master vendor would use other recruitment agencies as ‘second tier’ suppliers, as necessary. Alternatively, a management company may be appointed as a neutral vendor, which would not normally supply any worker directly. However, this organisation would manage the recruitment process and ensure the supply of agency workers from others.

Where there may be a temptation to change the job roles of agency workers, remember that the Equality and Human Rights Commission has been quite clear that one of the main sources of avoidance of the Equal Pay Act by employers was the segregation of jobs into male and female genders. This was often achieved by providing different job titles and minor variations to the type of job and/or shift patterns. However, any move to develop creative solutions for agency workers, which venture into the realms of avoidance of the Regulations, will be punished by an additional penalty of up to £5,000 per worker, in addition to the prospect of an unlimited compensation award.

In avoiding such a consequence, assessing the potential equality impact of a change of policy in workforce planning will be crucial. The expanded Equality Impact Assessment (EIA), prepared by the Department for Business Innovation and Skills (BIS) offers some guidance. The initial EIA only covered three of the protected characteristics: race, gender and disability. The latest version adds age, plus religion and belief. As the data is principally based on the Labour Force Survey (LFS), no information is available for sexual orientation.

This is a good starting point in assessing the characteristics of agency workers. However, sectoral variations will need to be factored in to individual assessments. In broad terms, agency workers tend to be younger, minority ethnic groups are over-represented, disabled people are under-represented, and there is a divergence of opinion on female agency workers. The LFS says around 43-45% of agency workers are female, while the Recruitment and Employment Confederation puts the figure at 58%.

The BIS assessment also explores differentials on pay, paid holiday entitlement and access to training as between agency workers and comparable permanent employees. Areas where agency workers are at a particular disadvantage are also highlighted. Given the sparsity of data in this area, working with other authorities on evidence gathering will help ensure equality impact assessments are robust.

Cuts are set to hit hard over the coming months and the public sector is already taking steps to reassess spending plans. Some 150,000 agency workers are estimated to be engaged by local government at any one time. Whether authorities have entered framework agreements for the procurement of agency workers with other authorities, or are going it alone, there is considerable work to be done in this area. Achieving cost savings, complying with equalities duties and implementing the requirements of the Regulations looks set to be a difficult balance to strike.

Amanda Jones is a partner and head of the employment department of Maclay Murray & Spens LLP. She can be contracted by email at This email address is being protected from spambots. You need JavaScript enabled to view it..