New agency worker rules could 'hamper' job creation

25 January 2010

New regulations that will entitle temporary workers to many of the same employment rights as permanent staff have gone before Parliament.

However, the CBI criticised the legislation as likely to hinder job creation and as going further in its reach than is required by EU rules.

The legislation is designed to implement the EU’s Agency Workers’ Directive.

Under the changes, for the first time agency workers will be entitled to equal treatment on basic working and employment conditions, including pay and holidays, as if they had been recruited directly by the hirer. The entitlement comes into effect after 12 weeks in a given job.

The rights on pay will apply not just to the basic hourly rate but to all pay for work done, including bonuses that are directly related to the performance of the agency worker personally.

However, they will not extend to some of the wider benefits that permanent staff can enjoy such as occupational pensions and sick pay.

To combat avoidance of the new rules, the regulations include provisions that will deal with repeat assignments designed to prevent workers acquiring equal treatment rights.

Agencies and hirers will face the prospect of having to pay out up to £5,000 to the worker if an Employment Tribunal finds that these specific anti-avoidance rules have been breached.

Other benefits will apply from the first day of an assignment. These include the right to information about internal vacancies, giving temporary workers the same opportunity as other workers to find permanent employment, and equal access to on-site facilities such as child care and transport services.

Business Minister, Pat McFadden said: “This change in the law is aimed at ensuring fairness for agency workers in relation to the permanent employees they work alongside.

“They are being implemented in line with the TUC/CBI agreement which sought to ensure fairness while maintaining flexibility for the UK labour market – a very important factor in our ability to create jobs.”

Laying the regulations now means that the government will have the rules on the statute book before the end of this Parliament.

The CBI, however, expressed concerns.

John Cridland, the CBI’s deputy director general, said: “These regulations are bad news for the economy as they will hamper job creation. Employment agencies help over a million people find work and these proposals will make it more expensive for companies to use agency temps by increasing bureaucracy.”

Mr Cridland added that the government has gone further than it needed to under EU rules by forcing employers to include temps in performance appraisals designed to set pay for employees.

He continued: “This extra bureaucracy will only discourage firms from taking on temporary workers when they’re unable to create permanent jobs.

“Agency temps’ employment relationship is with the employment agency, not the agency’s client, and the law should recognise this. The economy would benefit from a much simpler definition of pay, giving agency workers equal treatment without the substantial burdens in the government’s approach.”

The employers’ group, however, did welcome the decision to delay introducing the regulations until the end of next year, and the government’s rejection of union demands for a much more heavy-handed approach to imposing the new rules.