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Agency Workers Regulations: 51% of contractors have never heard of them – new survey

With less than a month to go before the Agency Workers Regulations (AWR) come into force on 1 October 2011, a ContractorCalculator survey reveals that 51% of contractors have never even heard of the new legislation that could impact on their contracting careers.

Considering that nearly three quarters (72%) of those surveyed found their latest contract via an agency, these figures are cause for concern. Perhaps what’s even more worrying is that 88% of contractors contracting via an agency say their agent has not talked to them about AWR, highlighting a worrying level of ignorance or carelessness.

The situation is even worse for umbrella contractors, who are automatically in the regulations’ scope. Ninety-three per cent of umbrella contractors participating in the survey contract via an agency and 89% say their agent has not broached the topic of AWR. With clients, the figure rises to 97%: only three in a hundred clients have engaged with their umbrella contractors about AWR.

Contractors divided over the benefits of AWR

In an earlier survey conducted in April 2008, ContractorCalculator found that 75% of contractors did not want the rights offered by AWR. Now only 30% of contractors don’t want the employment rights and protections offered by AWR. Also, 19% confirm they do want additional rights and protections and 52% saying they are unsure.

Limited company contractors seem more certain about where they stand with 42% stating they don’t want additional rights. When asked what action they plan to take when AWR comes into force, 40% said they would carry on as before because “AWR won’t apply to me”. However, it should be noted that under certain circumstance limited company contractors might be in-scope.

88% of contractors contracting via an agency say their agent has not talked to them about AWR

Umbrella contractors are much more uncertain about the benefits of AWR: 69% are not sure whether they want additional employment rights, but the number of umbrella company contractors rejecting AWR outright falls to 7%, compared to 30% of all respondents saying “no thanks”.

None of the umbrella company contractors said they planned to start trading as a limited company from 1 October 2011, although 67% said they weren’t sure what they planned to do and 17% hadn’t given it any thought. Worryingly, 17% of umbrella company contractors said they planned to carry on as before, because they incorrectly believe that AWR does not apply to them.

Contractors plan to find out more about AWR

Despite over half of contractors surveyed admitting that they have never even heard of AWR, 84% plan to learn more about the new regulations. Both limited company and umbrella company contractors expect to take action and there is little difference in their intentions: 81% and 86% respectively want to learn more.

It is all the more surprising considering the lack of engagement about AWR by recruiters that 23% of contractors plan to find out more from their agency. The number of umbrella company contractors expecting to ask their agency rises to 44%, but only 14% of limited company contractors will ask their recruiter about AWR.

Nearly a third (28%) of all those questioned will look at a government website and just over a third (31%) will go to the contracting media on sites such as ContractorCalculator. Interestingly, 17% of limited company contractors plan to ask their accountants about AWR. This may be as a result of the IR35 advisory services that many contractor accountants supply, in addition to accountancy services.

Are clients and recruiters deliberately keeping contractors in the dark?

That 90% of clients and 88% of recruiters have simply not talked to their contractors about AWR is telling. One contractor commented: “My client, a very large international IT company and household name, still seems completely oblivious to the implications of AWR. My agency has still not offered any guidance and told me since our contract is ‘IR35-friendly’, I don’t need to worry.”

The contractor is right to be concerned about the misinformation supplied by the agency in this case, as not only is a contractor’s IR35 status not relevant to AWR, but the recent Autoclenz ruling shows that a court can disregard contracts when determining employment status. Contractors unaware of the rights granted by AWR won’t be making any claims, so it could be in the interests of a minority of clients and agencies to keep their contractors in the dark.

To assist contractors with managing the implications of AWR when the legislation comes into force on 1 October 2011, ContractorCalculator has a dedicated Special Report area on AWR containing the latest news and guidance.

Published: 07 September 2011

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