HR · 6 December 2016

Agency workers earn less for the same role than permanent employees

Agency workers
The Resolution Foundation predicts that there will be over a million agency workers in Britain by the end of the decade

Workers employed through a third-party agency earn £430 less in a year than fully contracted counterparts performing an identical role, according to a new study.

The “Secret Agents” report, published by the Resolution Foundation think tank, shone a light on the world of agency work in Britain and the conditions of such workers.

The report also predicted that there will be over a million agency workers in the UK by 2020, growing from the 865,000 currently active.

The industry most heavily reliant on agency workers was found to be the manufacturing sector, with 4.1 per cent of the entire workforce contracted from outside the company that they worked for.

In a statement, Lindsay Judge, senior policy analyst at the Resolution Foundation, confirmed that people valued the “flexibility, variety and absence of bureaucracy” that contracted work offered.

“But when agency work has an average pay penalty of £430 a year, many are likely to be working in this way out of necessity rather than choice,” she added, citing the need for government to conduct a “serious examination” of agency workers.

Aside from lower pay, the report highlighted other disadvantages, particularly the lack of workplace benefits such as sick pay or dismissal rights.

It also appeared to debunk the stereotype of agency work filling temporary roles, finding that half of all contracted workers considered themselves permanent employees.

The case of “zero-hour” contracts – employees brought into a workplace without specified hours – has been the most high-profile debate surrounding casual employment, after instances where workers were seen to be exploited.

In 2015 retail giant Sports Direct was found to be employing workers without contracted hours and on hourly rates of £6.50 – below the legal National Minimum Wage (NMW).

Sports Direct has since pledged to guarantee all casual staff specified hours, but the Resolution Foundation claims that zero-hour contracts remain a growing trend. It suggested that one in seven agency workers were employed on such terms over the last 18 months.

Many employers have found zero-hour agreements as beneficial to their business, with workers also enjoying the flexibility of the model.

Research undertaken by Chartered Institute for Personnel and Development (CIPD) in 2015 revealed that employees on zero-hour contracts were equally fulfilled in their work/life balance as full-time employees.

Judge suggested that while zero-hour contracts had been subject to public scrutiny, typical agency workers needed to be brought into the debate on working conditions and represented the “forgotten face” of the British workforce.

“We need to do a better job of understanding who this group of soon-to-be a million agency workers is.

“This fast growing group is not just made up of young people looking for temporary employment as some have suggested, but instead includes many older full-time, permanent workers,” Judge concluded.

The benefits of a flexible employment strategy

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ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

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