An agreement inked by government, employers and unions yesterday means temporary British workers will be given the same employment rights as permanent staff after 12 weeks in the job. The move will prompt howls of protest from the IT staffing industry, which claims the move will hamstring smaller firms. The UK government’s …
This'll bring a new meaning...
to the phrase "Short-Term contract"
What a fuck-up.
lose the agencies
I liked the quote:
"Agency fees and high hourly rates mean temporary workers, far from being seen as cheap labour, are already a costly but useful way of responding to fluctuations in demand. If that flexibility is lost, many small businesses will stop using temporary employees"
Well maybe employers could start bypassing the rip off agencies - as in addition to their obvious fees to the employer, they rip off the contractor who does not receive anything like the rate the agencies charge the customer.
I remember one contract where I discussed my rate with the employer - of the hourly rate the agency was charging them I received only 70% - so a huge profit for the agency over a several month contract (well over 2 grand a month for not very much).
Couple that with many agency staff being fairly clueless about IT in general and often it is more by luck than their judgement that you, as a contractor, are put forward for a suitable role then, in my view, employers are just better off advertising on some of the main IT jobs websites directly - it would save them a fortune at the expense of a bit of admin time looking at CVs.
.. And do not get me started at the problems of agencies actually paying you promptly or the correct amount, losing your timesheets (be they paper or electronic) etc., etc.
This is not wanted....
I have been a contractor for 7 years now. I have never wanted to have equal holiday, notice period, pension rights, training or pay as a permament worker. I trade these off with a higher daily wage. I would rather take care of myself and my family without employer or state interference.
I fear this decision will help to kill off the contract market in Europe at a time when the UK's economy needs to be flexible to stop a recession taking hold. The CBI, and certainly the TUC have no right to speak on my behalf, however they seem to think that all contract workers want this legislation.
What with the high tax burden, privacy issues, ludicrous Government projects and decisions, (i.e. Cannabis, ID Cards, Communications Databases, Non-Dom taxation etc) I guess it is now time to leave the UK for good. I am still amazed the idiots in power seem to make decisions like these without thinking about the long term effects sucd decisions might have.
OK, so this legislation might help a few low-paid cleaners etc. But how many more high-earning (i.e 40% plus) tax-payers will leave the country because of it? Exactly the same situation as the Non-Dom tax. It doesn't hurt the very wealthy, but makes the higher-earning professionals look abroad for a better life.
Both me and my partner pay 40%-plus tax in this country. If we and a few hundred thousand like us decide its just getting too much and leave, how damaging is it to the UK economy in both a financial and intellectual way?
High hourly rates?
I have never had a temp job where my hourly rate was anywhere near that of a salaried employee.
Who exactly do they think they kidding when they say this will be bad because people will use fewer temps? The work will still need doing so they'll have to employ a permanent staff member instead.
Where will they find these staff members? How about all the temps who have been living on a pittance all these years because these bastards would rather treat us as cheap disposable commodities than pay us for the work we do. I don't see that as a *bad* thing.
Let's be straight here, "flexibility" means "zero job security". It's just a diplomatic way of saying, "We want to be able to dump people at five minutes notice while demanding complete loyalty to ourselves."
Unions will be shooting themselves in the foot. People will be taken on for 11 weeks and them dismissed to be replaced by another bod.
Not rocket science is it?
Temps != IT contractors
Please see title.
Won't apply to typical IT contractors
As they (we) operate through limited companies as directors not employees.
This only hits temps, which of course, the agencies would prefer us to be.
@Steve on High Hourly rates
on the other side, I've never had a temp job where my hourly rate was anywhere as low as a salaried person. I tend to find that my hourly rate is 2-3 times more than my fully employed colleagues.
I think you'll find that most agencies charge 25-30% of the net client rate. It's all very well to say ditch the agencies, but without them it just makes it much harder to find contracts.
As a contractor, agencies are my life blood. They do my marketing, keep me informed on potential clients, handle pretty much all of the legal stuff that I would cost me a fortune in time and money to sort out any other way.
This 12 week rule is as welcome as a whole in the head to me. I choose to be different. I choose not to have the same rights as a normal employee.
Let's hope that this one also has an opt out option as I sure as hell WILL be ticking it.
I doubt this will last.
As a temp with full rights as full time staff.
this would mean that Dilbert cartoon that depicts treating temps like lard are over.
Life might get better in the call centres
Centrica [British Gas], for one, used to run on a basis of up to 1/3 the basic grade staff being temps. I wouldn't bet that many other major banks/telcos/utilities run any better ratio, assuming they still have a staff based in the UK. Giving those guys the same rights after 12 weeks? Including pay? This'll be interesting.
RE: I was dreading this
I agree. My wife is an Accountant, and has worked doing Temp work for the past few years. She just got fed up with the stress involved with being in a company permanantly, and dicided to Temp. She has now had to go back to perm work as she saw this coming.
I do think this is legislation aimed at cleaners etc, who to be fair, do get treated very badly, but it is messing it up for the people who are temps because they want to temp.
As for the max 48h working week, they should enforce that more, not less..
Good news for temps on long term contracts.
Been a temp for over 6 years, working in the same company. Permanent contractor pretty much. Can't complain about salaries at the moment - though I've had to in the past when my job had a 'top' wage while permanent workers doing the same job earned more.
What this will mean for me: hopefully a real contract with all the benefits when they realise using agencies is getting really costly, and if that's not happening, at least I'll get more holidays.
Good. About time.
I worked on the IBM contract for a major bank.
We were employed as "temps" through Manpower.
The basic pay for Manpower was £18k-£22k, while permanent staff got £25k-£30k, and more holidays, and benefits.
We were often lied to about being taken on (there is a hiring freeze, its not in the budget, etc), and there were no pay rises for Manpower staff.
And we were not temps, people had been there for 3-5 years.
This law is to stop companies like IBM exploiting people. Its long overdue.
There will be a way round it
For valued* contractors.
Such as 12 week contract end. Re-apply. New contract in 1 week.
Or more likely it will be unwritten but understood that if you try to claim any of the benefits they will terminate your contract. Pretty sure nothing you can do about that.
Look at IR35 Lots of shouting, much gnashing of teeth and threatening to move offshore but ultimately we are pretty much back to where we were before it changed.
12 months would have been better than 12 weeks though.
I used to work as a temp
at the very lowest levels (£5-£7/hour in 2003), in office and industrial settings.
Temps absolutely do NOT represent a 'cheap option' for the firms they actually do the work at, I remember learning at one factory (where I was being paid £5.50, and the perms £7) that the agency was being paid £9.90 for me.
It is certainly true that a great many employment agencies are owned and staffed by complete scumbags who prey on the lowest rung of employment, cheat on wages and generally disregard employment legislation, while blaming the law when temps question their practices. Some agencies are far more reputable (Kerry Collins in the midlands would be an example if you forgive my name-dropping).
Agency work provides flexibility for firms (including those who don't take the piss) and often provide golden employment opportunities for temps- a great many firms and agencies do provide a genuine temp-perm career path, which helps lots of people into employment who wouldn't have been given the chance to be taken on as perm in the first instance.
In my own experience, temping provided an excellent means of finding work before university (and shedloads of employer-impressing experience). Immediately upon finishing uni, I signed up with the agency previously mentioned and was placed into an electronics factory (as a forklift driver no less!) and was taken on as perm in a technical position within the week. My career has progressed from there.
I have nothing against the government clamping down on the many agencies and clients who take the piss, but it would be a crying shame to kill off the better aspects of the temping industry.
So where are companies going to get IT contract staff from now?
Answer is the big consultancies of course. EDS, Accenture and the rest probably can't believe their luck. After IR35 failed to kill the contract market, here is the killer blow.
I agree that the legislation was probably intended to help the low paid temps, but as always a complete lack of long-term thinking by the government is going to deliver lots of unintended consequences.
Carrying the can..
The thing that is overlooked is that someone, somewhere, gets the bill.
It's not going to be the company that is already trying to keep its costs as low as possible that absorbs this. It'll pass along the increase to its clients. Who will pass the cost on as an increase through the chain, until it comes out of the every day person's pocket.
The real cut throat savers will follow an 11 week employment stint, and then get the next disposable person in. For anything that takes longer they may hire a permanent or two, but expect firings to go up too.
If you've been in somewhere for 3 years on the promise of a contract as a temp, I'd say keep your eyes on the job market for a permanent role that fills your needs, rather than follow the carrot. That's what I used to do in my temp days (and you'd be amazed how upset the boss that's been a real PHB gets when you turn round and say "By the way, the very short notice period? I'm invoking it and going next week.". Stunning, the deals you can strike if you want to).
Temp is meant to be a filler. A holiday job, something to just pay a few bills while you look for something better. It's flexible from both sides..
This just harkens back to days of the introduction of IR35.. And as soon as that came in, I saw some of the better contractors head over to Germany and the Netherlands (and lots of other places). Net result, UK companies lost out badly.
I can see both sides of this...
I have had low-paid, undervalued, long-term temp positions in admin etc. These guys are taken on for 2 reasons: They are desparate for work, and they can be kicked into touch easily. This includes cleaners etc who are not really temps, but it makes life easier for the company. This is bending the rules, and the legislation will put a stop to that.
On the other hand, I have been a contractor in several areas (IT, telecoms, CAD... and many more) and in this case I was in it for my own reasons (most of whoch people have already mentioned)
1) Higher pay (at least twice as much as the permanent staff)
2) Variety (I get bored easily, contracting I can just move somewhere else)
3) As mentioned above, what permanent job can you take a 2 month (or even more) holiday from on 1 weeks notice?
Yes there were downsides, like they could get rid of you after a weeks notice, but the pros outweighed the cons for me. I ended up taking a staff job because of the need for financial stability, but part of me wishes I hadn't. I got used to the luxuries.
For such contractors, I am sure there will be loopholes (e.g. unberella companies, or even better setting up your own Ltd.), but this should be specificaly stated in the rules. If you dont want the rights, you can opt out.
I also agree that all they will do is make it an 11 week contract, then either rotate the temps or hire you back after a week (if they dont put rules in place to stop this). Which is NOT a good solution for the temps or employers, but is what the employers will be forced to do.
Paris because she'll now have some competition from many companies with getting through lots of people (sorry my brain just BSOD'ed, couldn't think how to word that. Answers on a postcard, I'm sure someone will think of better wording, while I perform a much needed reset...)
Good news - shame it came too late!
Whilst i do not claim to work in the IT Industry (wish i was now!) i was temping in a major banks Head office, anyway i was temping there for 10 months untill i got phone call saying that my assignment has been ended - and why - because i refused to do some overtime and that the manager didnt like me!
I was doing the same job as my colleagues, but i received no flexi-time, no paid bank hols, and about a 1/4 less pay that my colleagues were on! - We were just about able to eat in the staff canteen!!!! - If only this new legislation would have came in 4 weeks earlier!
It's typically 2-3 times the permentant rate. e.g. a contractor will get £130k whereas a perm will get £50-60k. How is this going to work...
Hello More Outsourcing
Looks like someone wants to shift more work overseas. Big Government + Business = Loss.
Who are you employed by?
This is easy. The agency is the corporation that hires you - not the end client. They should have to take ownership of your holiday pay and tax etc. If you have your own PLC, then it takes responsibility (as it should be doing already). I think this rule, if it is properly implemented, means that everybody will be an employee of some company.
This, although a generalisation, is not necessarily a bad thing. I like the idea of agencies having to take real care of their contractors rather than just putting on a beer fest once a year in December.
Re: lose the agencies
"Well maybe employers could start bypassing the rip off agencies - as in addition to their obvious fees to the employer, they rip off the contractor who does not receive anything like the rate the agencies charge the customer."
You're either a first time contractor or extremely stupid. In many respects it's irrelevant what cut the agency takes, they offered you an amount you accepted it, end of story. If you feel bitter about their cut then tough shit. When it comes time for an extension, if you think you are indispensable then get them to drop their percentage or move.
Another thing, do you have professional liability insurance? I'll bet you don't. The agency will have to cover their arses because of those contractors that don't. As previously pointed out, they do your marketing, find the work and don't forget the time honoured tradition of getting your agent to the most expensive restaurant in town and trying to blow her credit card limit.
If you really do get so uptight about being ripped off then instead of asking for an hourly rate ask for a percentage or better still go pimping for yourself and see how far you get.
As for the 5.50, 7.00 and 9.90 comparison. 9.90 to an agency is cheaper then 7.00 for an employee. The company has to pay employyess NI on that 7.00 and give four weeks or so holiday plus bank holidays. It's all the rules and regulations that companies have to follow that make paying more for externals cheaper than paying less for their own staff.
Re: lose the agencies.
A friend of mine's just had an amusing experience. Going for a contract, his agency looked at the dosh on offer and decided that they could push for more, so they quoted at a fairly hefty increase on the rate offered, to my friend's delight.
The funny part was that the employer decided that the overall cost of the contract was too high and, in an act reminiscent of the Judgement of Solomon, forced the agency to cut their commission to reduce it........:-)
Result: one delighted contractor and one extremely cheesed-off agent.
Firstly - "Temps absolutely do NOT represent a 'cheap option' for the firms they actually do the work at, I remember learning at one factory (where I was being paid £5.50, and the perms £7) that the agency was being paid £9.90 for me." Well, maybe so, but for the permanent staff at least you have to add all the extra cost - employer taxes, National insurance payments, workplace insurance, holiday and sick day allowances, etc. It's not what you or the agency have been paid, it's what the employer is paying out in total.
I agree with AC "at last" - big companies get an awful lot of benefits from not having to worry about the long term provision for their temp employees. I've met temps who've been in the same job for ten years, and won't get a pension, don't get paid sick days, etc. These people are going to benefit, and possibly it will benefit temps overall.
There is absolutely no point in getting rid of agencies. Yes, they're expensive, but they aren't as expensive as hiring a full time member of staff just to find people to work for you over a brief period of time.
Finally, with all the talk about how there aren't enough people in this country willing to do tier one jobs (accountancy and IT related jobs are all tier three I believe - there to make something unnecessary to survival easier for other people) what makes you think they aren't trying to get rid of the higher earners? Politically, getting rid of examples of high income earners would make the lower income earners less aware of what they're missing.
When I lived with Students and was on £9k a year, I easily supported myself and my boyfriend. Now we have a joined income considerably higher than that, but we've moved to an area where people are wealthier and we perceive ourselves as being worse off. Which is mathematically (and I've sat down with a calculator to double check this) ridiculous.
Couldn't agree more, companies taking on poor souls at near minimum wage for what is essentially full time work over long periods with the ability to give someone the boot has gone on far too long. Dozens of factories of companies big and small have done this.
What this means is...
1. existing long-term temps (and IT contractors?) will get dumped immediately to avoid the companies having to employ these people suddenly
2. it will be good for low-paid people who want 'rights' (oh, except pension and sick pay -- why not, I wonder?)
3. it will be bad for highly-paid people who became independent for various financial / lifestyle / control / choice reasons
Obviously there is a world of difference between the low and highly paid workers who want different things, therefore there needs to be an opt-out possibility, which the lowly paid workers would leave un-ticked, and others can tick.
One solution does not suit all, and the legislators need to get their heads round that.
One possibility might be to have direct 'business service' contracts directly between the worker and the company, hopefully bypassing this legislation.
Avoiding contract agencies would be a good thing as they are money for old rope.
The winners in this are the low-paid and exploited temp workers, and the losers are:
1. the highly-paid contractrors / consultants
2. the companies, as they will have to employ/dump every 11 weeks which means after the learning curve when the consultant becomes productive, he/she will have to leave (so IT contracting will disappear)
3. the permanent staffers, as they will have to do the work that the contractors did (!)
4. UK.gov as they will have a sudden brain-drain when all the smart people flee the place
When the companies can't get flexible workers they too will consider moving shop elsewhere perhaps.
Good luck to UK.gov !
I will watch with great interest -- I see major trouble ahead :)
Re: This is not wanted....
Both me and my partner pay 40%-plus tax in this country. If we and a few hundred thousand like us decide its just getting too much and leave, how damaging is it to the UK economy in both a financial and intellectual way?"
I'll have your 40%-plus tax job then. I'm sure there are plenty of other intelligent folk queuing up for that sort of cash as well.
nothing in IT for me anymore, I'm emigrating to....
Looks like contracts are gonna be taken to monthly rolling, some are already...
the rates are being squeezed real hard for the contract worker, even after fidling the taxes and expenses to the legal hilt.
Not good for anyone, except the agencys, who will cream even more off us slaves...
The employers will just switch contract staff more often, with the obligatory instant door policy, that most already use.
Do you see a staff shortage looming on the horizon, i do, more contract staff will tell the agencys where to go.
Moving to the EU (even with higher tax rates) and down under is looking more and more appealing.
mines the one with the green card, passport and tickets to somewhere else..... russia anyone?
IT salaries make no sense
A lot of the IT Contract market is really for permanent roles, but they can't fill them as the staff they need are working as contractors. The industry need to realise this is simple supply and demand and they need to raise salary levels a bit if they want to fill these roles.
I've been interviewed for contracts and then told they want to make the position permanent, but Salary is only ~100x the previously advertised daily rate. They are not, ever going to fill that role with the sort of staff they want at that price.
As already pointed out, IT contractors working through their own limited companies (which are the vast majority) are not affected by this new legislation.
By the way has anyone else noticed how IR35 has just been completed ignored by contractors. Is Inland Revenue even bothering to enforce it anymore?
Well that was dumb!
Now all the temps will get laid off before 12 weeks and new temps will be hired in their place. The same ruling meant to benefit the temps will effectively destroy them.
Great job. Makes me so proud of my British Heritage.
This wont hit IT much I don't think, mostly callcentres, cleaning, kitchen hands, machine operators yadda yadda.
Then I quite liked my days as a temp, employer takes the p---. I'd walk out and get another role. Real simple. I often ended up in situations better then the perms (doing domestic work for Grenada - I'd get 2x pay at weekends where as the perms never got extra pay.)
Good times, no stress, no worries, no responsibility, didn't like a job, didn't like a boss, whatever - walk out - not like you're permenant and not like you'll ever need a reference (blue arrow at the time stressing that you weren't able to use them as references anyway.)
Cheap labour ?
Perhaps this is designed to get cheap labour ?:
This might even help
IT contractors do all they can to separate themselves from permanent employee status.
As someone already pointed out - its the company that contracts, not the person as a temp worker.
If its possible to exclude yourself from the cover of this law as far as rights go (and I'm sure the appropriate clauses in the contract should make it clear) it should be another handy division and further help keeping those of us that choose to be IR35 safe
Death to the Unions.
Look forward to rolling 11-week contracts.
The TUC really are morons. We're heading in to a recession and what's their answer? More legislation. Since they only represent around 25% of the workforce, what right do they have to impose their opinion on all of us?
What's the big difference here?
I can see how this will represent a big change for minimum wage cleaning staff, getting "on-call" jobs without standby pay, no paid vacation, and so forth. For people already making more than the minimum the employer is legally allowed to pay, they can do a reverse calculation to get out of vacation pay (lower base pay + vacation = same as before), so paid vacations shouldn't be an issue. They presumably can't ask the people to work 260 days in a year, but how common is that, and do you want to work with people who haven't had more than a weekend off all year?
Why does this make any difference at all for people in the 40% tax bracket, even if they are hired directly as temps?
Let me say ....
Realistically this was geared towards the high street temping agencies offering little more than the minimum wage as opposed to reasonably paid IT contractors ....
Employers utilising temping agencies have no one to blame but themselves. Every manager / supervisor should have adequate HRM training, and irrespective of Noolabor lies wrt unemployment, would have no difficulty at securing temporary / part time or seasonal employees
IMHO Employment agencies (of any type) and so their called 'consultants' are pure and simple parasitic sales scum, devoid of common sense let alone basic industry intelligence and therefore deserve everything thats coming through this change.
Maybe people wanting IT projects will actually start to look on the net for companies offering these services directly, rather than just going through recruitment agents.
There are lots of us out here offering IT services at competitive prices (and competitive with full time hires).
Agents have their place I suppose, but we are advertising as companies - you need not think we are employees ever.
Most of us are flexible to work on site or to install encrypted links to keep your office space and equipment costs down as well.
Just google (altavista or yahoo as well) for us.
Quick job area description, and general location you are in. Getting hold of someone to do tech work is not that hard, most of use are on the web, and are just a contact form, email or telephone call away :)
Confused about the whole thing
Aren't temping staff already employees of the agency? In which case, isn't it up to their employer (ie. the agency, not the end client) to pay benefits like sickness, holidays, maternity leave, etc? If so, what's the problem, and why is any change in the law required?
Or is it the old argument about two people doing the same job, why should they be paid any different, blah blah blah. Let me see... maybe that's because they're employed by different employers? I always thought if you don't like the pay or conditions that one employer offers then presumably you're free to leave and seek a job with someone else.
BS at its worst !
what about all the Thai and Philipino women that want to come to the uk but cannot, this legislation seems to be for Polish only :(
Re: Death to the unions
More like 10 week rolling contracts, checked on ukgov jobshite, found several temp IT jobs in Leicester, all 10 week contracts.... I don't blame unions for wanting a better deal for the lowest paid, more like greedy bosses wanting something for next to nothing... I guess that you believe in workfare too, and yes all agencies are, by and large, useless parasites who take a cut, for what I consider is very little work, a bit like pimping really...
If you've been in the same job for three years, it's not a 'temp' position anymore. That's what this law is about; giving permanent workers the benefits they're supposed to have. Three months is a bit short to make the cutoff, though. Six months, maybe a year, would be better.
11 week rolling contract
nothing new, the first position I was offered after graduating was a 2 week rolling contract... terminated after 51 weeks and 4 days (I got the advantage of the weekend). A job is a job... the logical solution is to set a reasonably decent "minimum wage" for everyone, and stick to it. Then permenance is irrelevant since all employees will be of the same value.
You all seem to be ignoring the millions of agency workers working for just above minimum wage, it has held down the avarage wage for the working man for the last 5-10 years. I'm not talking about qualified 'IT temps', bu t the people who put goods in the shops and food in your supermarkets.
Hopefully this will be the final nail in coffin for the leeches that are employment agencies