The Institute of Recruiters (IOR) and insurance broker Lockton Companies (Lockton) have launched ‘AWR-React’.

AWR-React is a bespoke insurance service that helps recruitment agencies cover the cost of defending a claim brought under the new Agency Workers Regulations (AWR), which becomes law on 1 October.

AWR gives temporary agency workers legal entitlement to the same basic employment conditions as permanent employees, after 12 weeks employment. Under the regulations, the recruiters are responsible for ensuring that its temporary workers’ rights are met.

If a case is brought by a temporary worker, the agency will have to defend itself against a possible fine of £5,000 for non-compliance, and unlimited fines for AWR claims brought through Employment Tribunals. Recruiters will need to prove it took ‘reasonable steps’ to obtain the relevant information regarding employment conditions from the ‘hiring’ company.

Lindsey Bell, partner at national law firm Clarke Willmott and the IOR’s legal partner, says: “The costs of mounting a legal defence against an AWR case could be considerable”.

James Kerr, recruitment practice leader at Lockton, says this is where AWR-React assists: “It will provide financial support to the agency to pay for the required legal and professional costs to defend itself against an AWR breach claim.”

Azmat Mohammed, group president and chief executive of the IOR, adds: “Around 70% of recruitment agencies are smaller businesses, including sole traders or offices employing three to five people, and the cost of defending an AWR claim could seriously damage their business.

“So it is vital that agencies have appropriate risk management procedures in place to mitigate against the new risks created by the AWR and these plans should include AWR-React insurance protection.”