Briefing - Update
10 May 2011
Agency Workers
Regulations 2010:
Are Agency Costs on
the Rise?
In our last Briefing issued in March 2011, we considered the impact of the Agency Workers Regulations
2010 (“AWR”) on the cost of agency staff in the NHS. Subsequently, the Department of Business
Innovation & Skills (“BIS”) released the Agency Workers Regulations Guidance in April 2011, and a
revised guidance in May 2011 (“The Guidance”). We hoped that The Guidance would clarify some points
of ambiguity in the regulations. In some respects it has, however some unanswered questions remain.
Background
As a reminder, the AWR will come into force on
1st October 2011 and places obligations on
temporary work agencies and hirers to ensure
agency workers are subject to the same
employment conditions as comparable
employees of the hirer after a 12-week qualifying
period. In addition, hirers must afford all agency
workers rights as at ‘day one’ of an assignment,
including the right to shared facilities (i.e.
canteens, car parks) and the right to be informed
of job vacancies that would be available to
comparable employees of the hirer.
Case
experienceinin
CaseStudy:
Study:Our
Our experience
controlling
temporary
spend
controlling temporarystaffing
staffing spend
£m
40
35
30
25
Copyright © 2011 Bolt Partners LLP
9% drop in
bank*
Bank
£18.6m
15
5
On some technical points we queried in our
Briefing, The Guidance has provided an
indication as to how the AWR should work in
practice. A summary is provided below.
Bank
£20.5m
20
10
Update
Bolt Partners
appointed April 2010
45
Agency
£18.2m
31% drop
in agency*
Agency
£12.6m
0
09/10
10/11
*These savings were achieved in addition to a £1.8m reduction in
spend on substantive posts.
For more information on this case study, including an overview of
some of the techniques we used to achieve these savings, please
refer to page 4, or contact Laura Chung: lchung@boltpartners.com
www.boltpartners.com
1
Query
Commentary
• To establish whether the AWR will apply, there must be a tripartite relationship between an
individual, an agency and a hirer. The definition of agency worker excludes those who are in
“business on their own account” (a true business-to-business relationship), however it includes
individuals working through an umbrella company
Scope of “agency worker”:
will it include contractors?
• All agency workers that are employees of an agency are already entitled to the statutory
minimum paid holiday of 28 days per year (including bank holidays) which is paid by the agency
(and costs rolled up into the rates charged to the hirer). Contractors that are self employed are
not currently entitled to any holiday pay from the agency, yet if the tripartite relationship is
present, they may be considered “agency workers” in the AWR and be entitled to holiday pay
• Under the AWR, qualifying agency workers are entitled to the leave entitlement that forms
part of the “basic working and employment conditions” of comparable employees of the hirer
(i.e. includes leave entitlements that are in excess of the statutory minimum). Where the cost of
this entitlement is not already priced into the pay rate of the agency worker, we can expect to
see a rise in the cost of agency workers
What is the impact of salary
banding and pay scales?
To calculate annual leave
entitlement: is the
‘comparable employee’
assumed to be in the first
year of NHS service or do you
take into account the agency
worker’s continuous NHS
service?
The relevant pay rate is “the annual salary an agency worker would have received if recruited
directly”. The hirer must conduct the assessment of the relevant pay grade the agency worker
would fall into based upon comparable employees, having regard to the skill and experience of
the agency worker, and provide this information to the agency for application
• The annual leave entitlement for NHS workers is based upon years of NHS service, and follow
the worker from Trust to Trust. The range is from 27 days to 33 days annual leave (plus 9 bank
holidays in 2011 and 2012) [note this is up to 14 days more than the statutory minimum of 28
days (which includes bank holidays)]
• The Guidance states that equal treatment is applied by providing “the treatment you would
have given that person if recruiting them directly to that job...i.e. what pay and holidays would
he/she be entitled to, given a particular role and his/her particular skill and qualifications”
• Since the higher annual leave entitlement is based upon the individual’s years of service
(rather than skills or qualifications), there remains some ambiguity as to what the relevant
entitlement should be
• However this may be an irrelevant distinction if the current rate of pay already covers the
‘payment in lieu’ of the higher leave entitlement, so an initial comparison of pay rates to the
higher leave entitlement is advised
Can workers accrue AWR
rights for multiple hirers
concurrently?
Yes. The Guidance states that agency workers can have qualifying periods running at different
hirers at the same time. For large organisations, such as the NHS, the worker will have to
complete the qualifying period at each hiring entity (i.e. each Trust) whereas Supply Teachers
(for community schools) are employed by the Local Authority (“LA”) and any work conducted for
that LA (even if at different schools) will count towards the qualification period.
Does the qualifying period
accumulate if booked through
different agencies for the
same hirer?
Yes. The Guidance suggests that agencies request a full work history from the agency worker so
that they can properly monitor the qualifying period. In this respect, the AWR places some of
the responsibility on the agency worker to co-operate, and any failure of the agency worker to
provide work history information will be taken into account in assessing an agency and/or hirer’s
liability for a breach of the AWR.
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www.boltpartners.com
2
Implementation
The practical implementation considerations for hirers that we iterated in our initial Briefing remain the same:
What can hirers do now to prepare?
1.
Conduct high level reviews of agency workers’ current pay and conditions versus comparable employees, and
consider the duration of agency workers’ assignments to estimate the cost implications for the organisation of
implementing the AWR
2.
For NHS hirers, increase bank resources by incentivising staff to work on the Trust bank rather than do agency
shifts elsewhere
3.
Revise policies, procedures and systems to ensure that by 1st October 2011, all agency workers have access
to collective facilities (e.g. canteen, childcare, transport) and are informed about permanent employment
opportunities and internal training resources as a matter of course
4.
Prepare information packs to provide to agencies that set out the working and employment conditions of
employed staff for roles that agency workers may fill
5.
Review information systems and conduct spot checks to see whether existing systems can accurately track an
agency worker’s service in the hirer’s organisation
6.
Set up discussions with agency suppliers to agree an implementation timetable
Conclusion
As a significant employer of agency workers, NHS organisations can expect that implementing the AWR will
have a cost impact:
 At a minimum, the costs will be internal and will relate to collating and disseminating information, and
conducting assessments of posts and agency workers to determine relevant comparable employment
and working conditions;
 Higher external costs can be expected if the existing pay rates of agency workers do not accommodate
holiday pay (or agencies choose to pass through their administration costs) which results in increased
rates for agency staff.
Costs of implementation can be minimised by ensuring organisations have standard information/induction
packs, templates are prepared to respond to agency or agency worker queries, and processes are set up to
standardise the analysis of agency workers to comparable employees.
Whilst our Briefings have provided an overview of some of the issues involved, it is recommended that
organisations read both the AWR and The Guidance documents to provide a complete picture of the relevant
rights and obligations in the legislation.
References
• The Agency Workers Regulations 2010
• Agency Workers Regulations Guidance, Department for
Business Innovation & Skills (April 2011) (reissued May 2011)
Emily Montgomery
emontgomery@boltpartners.com
Copyright © 2011 Bolt Partners LLP
www.boltpartners.com
Laura Chung
lchung@boltpartners.com
3
About Us
Bolt Partners LLP is a leading turnaround and performance consulting boutique specialising in
healthcare, consumer goods and services, and professional and industrial services. We work with
organisations in distressed situations, either as interim executive management (Chief Executive
Officer, Chief Financial Officer, Chief Restructuring Officer) or on an advisory basis.
Temporary Staffing Controls is an area we specialise in and have proven success in the
delivery of significant savings within healthcare organisations and other staff intensive businesses in
the United Kingdom. A sample of our credentials is provided below.
Case Study 1, 2006
Case Study 2, 2010-11
Background:
Background:
•
The Trust was facing annual temporary staffing spend
in nursing of £12m and 300 WTE per annum
immediately prior to our engagement
•
Prior to our involvement, temporary staffing spend
was out of control, escalating to c.£40m in FY09/10
•
•
Controls and processes were weak with ownership
and accountability lacking
With 3 separate bank offices, controls were limited on
all aspects of temporary staffing, from authorisation
stage through to invoice payments
Actions: Appointed January 2006
Actions: Appointed April 2010
•
Consolidated the ordering of temporary staff and
introduced robust controls resulting in reduction in
usage by 100 WTE
•
Merger of bank offices across 3 sites to centralise
internal and external bookings
•
•
Weekly review of spend and usage with firm
challenges of expenditure at ward level
Introduced weekly reporting and subsequent
challenge
•
•
Developed in-house training and toolkit; encouraged
planning and sharing of resources across Divisions
Increased authorisation levels for all bookings. More
stringent controls over long term bookings and
additional sessions
•
Supplier rationalisation and renegotiation
•
•
Implemented robust checks and balances on invoices
to ensure compliance with new controls
Ban on agency usage within certain staff groups and
elimination of usage of non PASA agencies, use only
by exception
•
Renegotiation with preferred suppliers on rates and
worked closer with agencies to ensure compliance
with new procedures
•
Greater scrutiny of invoices prior to payment
Results:
•
£5.0m reduction in nursing agency, from £12m to
£7m and 100 WTE reduction (delivered recurrent
FYE)
•
Reduced vacancy rate
•
Decline in reported clinical incidents
Results:
•
£7.5m reduction in bank and agency, from £38.7m in
FY09/10 to £31.2m in FY10/11
•
Additional saving of £1.8m in substantive posts in
FY11/12 (Total annual pay related savings of £9.3m)
•
Consolidated invoicing on preferred suppliers to one
weekly invoice, saving £7 per invoice
Contact
For more information please contact Laura Chung, lchung@boltpartners.com or Emily Montgomery,
emontgomery@boltpartners.com
Copyright © 2011 Bolt Partners LLP
www.boltpartners.com
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