October 26, 2011 10:19 pm

DHL to use temps get-out clause

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

DHL, the logistics and distribution company, is set to follow Tesco and Carlsberg by exploiting a get-out clause in legislation aimed at giving agency workers equal pay with permanent staff.

Trade unions say DHL, which uses thousands of temps to supply clients including retailers and manufacturers, is talking to job agencies about limiting the effect of the agency workers regulations.

The new rules for the UK’s 1.4m agency workers came into force on October 1. The aim is for those who have worked for a company for more than 12 weeks to have the same rights to pay and most benefits as if they were permanent.

But companies such as Tesco and Carlsberg are using an opt-out clause known as the “Swedish derogation model”, whereby companies can ask recruitment agencies to hire temps on to their own books – letting the ultimate employers off the hook for the improved pay.

Agencies say only a small minority are opting for this model – mostly in low-wage sectors such as logistics, food and parts of manufacturing – but unions fear it could become widespread.

Staffline, a recruiter that provides staff for a DHL operation supplying parts at Jaguar Land Rover’s Halewood plant on Merseyside, is preparing to move hundreds there on to permanent contracts.

The move has angered members of the Unite union, who claim they are being bullied into signing contracts waiving the right to up to £200 extra pay a week. But unions fear DHL’s move will go wider.

“It looks as if a number of agencies that work with DHL are going to be looking at using the Swedish derogation,” one official said. The company, part of Deutsche Post DHL, declined to comment.

Nationally, Staffline plans to move 8,000 of its 25,000 temps on to permanent contracts. Andy Hogarth, chief executive, said the derogation was “a legitimate provision of the agency workers regulation and the result of a tri-party agreement between the CBI, the TUC and the government. The model is of benefit to agency workers as it gives greater employment rights and job security as well as maintaining the benefits of having temporary staff, who otherwise would become too costly to use.”

Adecco, another recruiter, said clients employing a few hundred of the 15,000 temps in its general staffing business had so far opted for the derogation. Randstad is looking at using the model for teachers, where rigid pay scales made it hard for schools to hire experienced temps.

Carmen Watson, managing director of Pertemps, said fewer than 10 per cent of its clients had considered using the derogation.

Employers look at avoidance tactics

The “Swedish derogation model”. Companies can legitimately avoid paying equal wages to temps if they are directly employed by the job agency rather than the client.

Unions say some companies have cut starter rates for their permanent staff, thus reducing the extra they have to pay to comparable temps.

Some employers may dismiss temps just before the 12-week qualifying period ends, but if they later re-hire them, they risk a £5,000 fine for avoiding the rules.

Companies can set up their own in-house bank of temps, to whom they would not have to pay equal wages, but this is a big undertaking.

Employers can contract the work out to a managed service company, but that is a significant decision on outsourcing.

Related Topics

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

The FT’s one-stop overview of key British economic data, including GDP, inflation, unemployment, business surveys, the public finances and house prices


Sign up for email briefings to stay up to date on topics you are interested in

Enter job search