After years of deliberation, frustration and negotiation, the Agency Workers Regulations finally came into force in the UK on Saturday. Staffing companies have spent months in planning for the change in regulations by upgrading software and processes, re-training staff and educating their clients.

Any employers unprepared for the new law and without the right systems in place could leave themselves vulnerable to employment tribunal claims and financial penalties.

Employers generally regard the new regulations as unwelcome.  Katja Hall, the chief policy director, for the Confederation of British Industry (CBI) described the regulatory changes as "counter-productive”. She went on to say “A hard-won 12-week qualification period for each temp to be in a firm before the rules are applied should help control costs and minimise administrative burdens. But the new rules will still act as a brake on jobs. The Government must take the first opportunity to remove unnecessary gold-plating or reform the directive.

In a final statement before the regulations became effective, Chief Executive of the Recruitment & Employment Confederation, Kevin Green said “We always believed that these Regulations were the equivalent of using ‘a sledgehammer to crack a nut, however, the main effect of them will be to add more red tape and complexity to recruitment businesses rather than businesses in general”.

By a rather unfortunate coincidence, on the same day that the AWR came into force, new higher rates for the minimum wage also took effect adding to the general gloom of employers. The minimum wage has risen by 2.5% from 5.93 Pounds per hour to 6.08 Pounds an hour for adults aged over 21. In addition, the following new rates will also apply to younger workers and apprentices; the rate for 18-20 year olds will increase by 6 Pence to 4.98 Pounds an hour; the rate for 16-17 year olds will increase by 4 Pence to 3.68 Pounds an hour; and the rate for apprentices will increase by 10 Pence to 2.60 Pounds an hour.

Government Business Secretary Vince Cable said “More than 890,000 of Britain’s lowest-paid workers will gain from these changes. They are appropriate – reflecting the current economic uncertainty while at the same time protecting the UK’s lowest-paid workers.

The British Chambers of Commerce expressed concern that the increase will stifle jobs growth and hit younger workers in particular. Adam Marshall, Director of Policy at the BCC said that there should be a freeze in the minimum wage for younger workers, followed by a consultation about a gradual reduction in the rate. He said "The concern is that the current rate is discouraging some employees from taking on young people and giving them a chance to get into the workplace. Some companies are finding the rate is a real problem."

For some, however, the increase wasn’t enough. General secretary of the Trades Union Congress (TUC), Dave Prentis, said "More than 10 years on, the minimum wage has become a valuable safety net for millions of workers. It is a lasting legacy of the trade union and labour movement. The rise to 6.08 Pounds is a welcome cushion, but with the price of everyday essentials such as food, gas and electricity going up massively, it won't lift enough working people out of the poverty trap. We want a more substantial figure and a decent living wage for all - a fair day's pay for a fair day's work, regardless of age. Good employers should be looking at the mounting pressures on their workforce and paying them more than the absolute minimum.”

The TUC also estimated that the 2.5% increase in the minimum wage would benefit public finances by 230 million Pounds as tax and national insurance rates rise and social benefits fall.

Staffing companies will now be watching eagerly to see how demand for temporary workers will be affected given the increase in costs and administration faced by their clients. However, while the increase in minimum pay kicks in immediately, given the 12 week derogation period before equal pay for agency temporary workers is applied under the AWR, no workers will be able to claim these rights until Christmas 2011.