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Many workers like the flexibility of being temporary – but new rules could affect employers' willingness to take them on
When Steven Clarke gave up the comfort of salaried life and started selling his wares on the open market as an IT contractor, he was slap, bang in the middle of the IT bubble. Demand for his skills was at a premium and he pocketed some serious money: "In one month I earned £17,000," he claims.
The 51-year-old IT support worker from the London area of Sydenham, who works for City banks including RBS, Standard Chartered and Citi, says he's mostly enjoyed every minute. "But it's not just the money. You're brought into a business because you have specific skills … you can put them into action straight away and the result is immediate. It's very rewarding."
Clarke is one the UK's 1.4 million (and growing) army of skilled temporary workers.
As cost-cutting firms opt for the flexibility and reduced overheads agency staff bring, more and more have made temping a lifestyle choice.
Today there are 300,000 more "full-time temps" than there were in 2008, and this in-demand labour pool is not all potato pickers, either, spanning IT, legal and professional services. According to data from recruitment agency De Poel, by July 2011 UK businesses had increased their year-on-year use of such workers by 21%, while some sectors, such as business services and logistics, were up 56% and 36%.
Yet, it seems, like all good things, something is threatening to spoil the party. This month the long-awaited, European Union-conceived and business-loathed Agency Workers Directive (AWD) finally comes into force.
Its aim is to address the historically low wages paid to many temps (34% less than permanent staff doing the same job, according to law firm Eversheds), and is being hailed as the last major piece of equal pay legislation.
But of all the detail, the part that concerns employers is the fact that after 12 weeks' continuous service, workers paid via PAYE, through an agency or an umbrella organisation (ie, not the self-employed), will now have the right to the same basic hourly/daily rates as full-time workers in the same job.
Other AWD conditions oblige employers to offer the same overtime/shift work, equal unsocial hours premiums, bonuses and comparable annual leave to that enjoyed by permanent staff. Clarke, for one, says he is concerned at what it all may mean for him.
"My day rates have come down considerably from those very good days," he says. "Despite being able to haggle slightly, I'm earning about the same as – or just a little bit more than – a permanent employee."
Clarke thinks if firms have to pay equal rates to agency staff, plus an agency fee on top, there could be a real swing against employers using people like him. "Now, if I was offered a good role, as a permanent member of staff, I think I'd just take it. Just for the holiday entitlement and extra perks that being employed bring."
Under the terms of the AWD, jobs must last at least 12 weeks for temporary workers to qualify for equal pay. Most of Clarke's jobs fulfil this criteria, with some even lasting more than a year. Even so, research by law firm Allen & Overy suggests a third of employers plan to test the rules by deliberately employing staff for only 11 weeks, despite the legal threat of a £5,000 fine for doing so.
Overall, it is estimated that the additional annual cost to business of hiring these same temps under the AWD terms will be £4.5bn, with some predicting 20% fewer agency staff will be used, or even worse.
"My guess is that agency use will be halved," says Robin Chater, secretary-general of the Federation of European Employers. "Until now, employers could pay temps 10%-15% less and an agency handling fee that was cheaper than hiring a permanent member of staff. These new rules could destroy the use of temps. It's the straw that could break the camel's back.
"In addition, employers won't want to expose themselves to the risk of a tribunal when they can switch to permanent staff. There's suddenly less advantage to hiring temps."
Few business groups disagree with the principle of equal pay, but Chater says: "Firms are angry because many temps are often not doing the same jobs [as permanent workers]. They're not really doing the full job but firms are expected to pay as if they were."
Many temps, including 51-year-old Jan Aldred, who works in social care for the likes of the National Autistic Society and Mencap, thinks the AWD has been thrust on her despite she, and many of her contemporaries, not actually wanting it. "I understand fair pay but I, like lots of temps who choose this life, accept that a lower day rate is a good price to pay for the flexibility we get back," she says.
Aldred moved into temping 14 months ago after a 30-year career in retail and HR ended when she was made redundant. But, given the childcare duties she now provides for her young grandchildren, she says she loves the flexibility temping brings.
"I can choose to work as little as 10 hours a week or as much as 35 with just two weeks' notice to my agency," she says. "My life is in control and I can help my children focus on their careers at the same time."
Her worry is that the extra cost to employers will put them off hiring temporary workers, even if many do not reach the 12-week limit: "I'm extremely worried AWD will harm my prospects," she says. "I don't work with a single client long enough to get equal pay, but despite this, I think it will put employers off using agency staff. I just can't see how companies would want to pay a day rate to an agency on top of paying the same wage as a permanent employee."
While Aldred and Clarke can negotiate their day rates, the same is not true for temporary professionals working in teaching, which has very specific pay bands (ranging from M1 for a newly qualified teacher up to the highest M6 bracket). Some groups, like the London Teaching Pool, which supplies hundreds of agency teachers to all 32 London boroughs, think the regulations are long overdue.
"Some less scrupulous agencies have been profiteering from temps for years," says its managing director, Darryl Mydat. "They earn up to £100 per day from employers, while pressuring temps to take a lower wage by telling them there's no work. We're delighted with this because agencies will have to be transparent about how much of the cake they eat."
Schools employing agency teachers beyond the 12-weeks will have to pay an extra £25-£30 a day to bring them up to the comparable permanent rate.
For extensive users of temps, such as Bob Parker, HR director at logistics company Nightfreight – which uses 250 every day – it will add up to a six-figure sum every year.
"Temporary workers are very valuable to us, especially around Christmas and Easter," he says. "In this respect, we will still need agency staff. But I think the AWD will force us, and other employers, to get sharper about just how many agency staff we need. We have no problem with the moral case for equal pay; for us it's more a case of working out what roles go over the 12-week period."
Waste recycling company Viridor, which employs large numbers of sorting staff and drivers on flexible terms, is also in the same boat, but says it won't see a big rise in salary costs. "You can't leave waste lying around, so temping has long been built into the business," says its HR director, Lesley Davison. "As such, we've long paid the same rates anyway. We still think temps offer flexibility and we use agency staff for what we need, not as a form of cheap labour."
One piece of good news is that long-term agency workers may actually be converted into permanent employees. Call centre Conduit, which handles Vodafone, NHS Direct and Sky customers, has a 70:30 permanent-temporary split and uses 1,000 temps a year. One of them, 24-year-old Stuart Kirkpatrick, will be going permanent at its Cardiff centre after temping for just under three months, during which time he made a strong impression.
"My pay will rise by 50p a hour," he says, "but for me the main reason to go permanent is the long-term bonus structures I wouldn't get jobbing as a temp. I will also have ongoing training and a more structured career path."
Conduit's European HR director, Alison Tanikie, says: "Call centres have quite high employee turnover rates, so we're always looking to hire temps permanently."
Tanikie believes companies might now use temps as part of a more "try-before-you-buy" approach to hiring permanent staff. She says greater pay transparency may even stop the practice of temps switching agencies to get better day rates.
Agency Meridian places 5,000 temps a week, and its chief executive, Mark Mitchell, says the law will ultimately shake out the agency bad apples.
He adds: "Agencies still save firms the sorts of search and selection fees that they'd spend hiring for themselves, and businesses know it's still difficult to find good staff. It's just a new way of working that will develop."
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