A study conducted by Reed recruitment agency reveals businesses may see their payroll bill increase by five percent per annum, which equates to £7 million each year. This study was carried out and published following the introduction of the new EU law for agency workers.

Experts estimate that there are 1.6 million agency workers in the United Kingdom, who will benefit from the new legislation. After a period of 12 weeks, an agency worker will be entitled to the same pay and other rights as a permanent member of staff. The legislation was approved in Brussels, but was initiated by the previous Labour government. It is feared by many that the new laws have arrived when businesses are already struggling to create growth and jobs in the UK.

A recent study carried out by Allen & Overy show that around 500,000 temporary workers are at risk of losing their jobs just before Christmas, as they will have served 11 weeks of their contract. According to the Department for Business, the cost of enforcing the new regulations will amount to £1.8 billion a year. The head of HR services at Reeds, Linda Marshall said:

“Many businesses are worried that the additional administrative and cost burden of these new regulations will prove a complex challenge by restricting the use of agency workers and inhibiting growth plans at a time when businesses need to be increasing, not decreasing output.”

Further research has shown that 20 percent of businesses will reduce the number of agency workers, as a direct result of the increased cost.

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Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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