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The Agency Workers Directive: do temporary staff need a better deal?

New European legislation designed to give temporary workers the same rights as permanent staff may do nothing to improve their pay and conditions. It could even make it harder for them find employment, recruitment consultants and businesses fear.

What started as a UK private members bill to protect unskilled, casual labour has since been picked up by the European Council of Employment and turned into the Agency Workers Directive, also known as the Temporary Workers Directive, which the UK government adopted on June 9.

Although its progress through the European Commission is not yet complete, the directive should become law by next spring 2009 after which it will be incorporated into UK legislation.

As the directive stands, it will give Britain’s 1.4 million temporary workers broadly the same pay, terms and conditions as permanent staff, after a qualifying period of 12 weeks.

UK business secretary John Hutton said the proposals, which have been agreed by the Trades Union Congress and employers’ organisation the CBI, would “give a fair deal for agency workers and prevent unfair undercutting of permanent staff while retaining vital flexibility”. 

But travel industry recruitment consultant Julia Feuell, also managing director of New Frontiers, said the new law would do nothing to help skilled temps.

“People have put this law together thinking that temporary workers are slave labour but, in fact, the vast majority are paid more than permanent staff,” she said. Far from exploiting temporary workers, many travel businesses use them for special projects for which they need skilled staff at short notice.

Her views are backed by the Recruitment and Employment Confederation, which also found in a survey that 80% of temporary staff were happy with their assignment.

C&M Travel Recruitment team manager temporary division Bianca Foldi said temporary workers often appreciate the flexibility, hourly or weekly rates of pay and the variety offered by short-term contracts.

The CBI, which had pushed for a qualifying period of one year for casual workers to get parity with permanent staff, claimed the legislation would cause companies to take on fewer short-term workers and that firms would ask permanent staff to work longer hours to cope with peak periods instead.

Business travel agencies will be especially hard hit by the new legislation, said Feuell, as they rely heavily on temporary workers so they can quickly recruit more staff when they win new accounts and lay people off when they lose them.

The new law won’t prevent companies hiring temps, but the increased paperwork it will generate for each employee on the payroll for more than 12 weeks will pile on costs. The REC estimates the recruitment industry could be landed with a £10 million-a-week bill to establish the correct pay for temporary workers.

In an attempt to ensure the directive does not have a negative impact on UK industries, the REC has set up an Agency Workers Commission and is inviting input from stakeholders such as the TUC, CBI and HR professionals.

REC chief executive Kevin Green said: “The REC is taking the lead in ensuring that the details of equal treatment provisions are workable and that the final text agreed by the European Parliament maintains provisions for flexible implementation in the UK. The aim is to ensure the EU directive does not suffocate our jobs market, affecting flexibility and opportunities.”

A way round the legislation could be for the self-employed to set up limited companies as these may not be covered by the law. But, as Feuell said, such a move can be costly and current tax rules do not make incorporation an attractive option.

The Agency Workers Directive may yet turn out to be nothing more than “a storm in a teacup”, said Feuell. It has still to go through a second reading in the European Parliament this autumn after which it must be approved by the European Council next spring. The earliest it could become law in the UK would be October 2009.

“When any government realises that this is going to cost them more to employ public sector workers, they will realise they can’t afford it,” Feuell added.

Agency nurses, for example, earn more than permanent nurses and if the legislation leads to staff on the payroll demanding the same as temporary workers, the extra wage bill could be enormous. “It could all backfire,” she said.

Agency workers directive: key facts

  • Temporary workers will get the same pay, maternity and sick leave after a qualifying period of 12 weeks.
  • Temporary workers must be informed about permanent job opportunities at firms where they are working on temporary contracts.
  • They must have equal access to collective facilities, such as the canteen, childcare and transport services.
  • Member States have to improve temporary workers’ access to training and childcare facilities in between their assignments to increase their employability.
  • Member States have to impose penalties for non-compliance.

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