An agreement inked by government, employers and unions yesterday means temporary British workers will be given the same employment rights as permanent staff after 12 weeks in the job.
The move will prompt howls of protest from the IT staffing industry, which claims the move will hamstring smaller firms.
The UK government’s decision to make the draft changes represents its attempt to offer a compromise on European-wide plans for equal pay and conditions for agency employees.
The new deal will bring an estimated 1.4 million UK agency workers onto a level playing field with permanent staff over equal pay and holiday entitlement. However, it will not cover sick pay or pension payments, and temp staff will be required to work the same length of time as full-time workers to benefit from paid maternity leave.
Business secretary John Hutton described the agreement that the government struck with the Confederation of British Industry (CBI) and the Trade Union Congress (TUC) as “the right deal for Britain”.
He said the "agreement achieves our twin objectives of flexibility for British employers and fairness for workers. It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment."
UK.gov will also be hoping, ahead of next month’s EU summit, that other European nations will allow Britain to opt out from EU rules that restrict the working week to 48 hours following yesterday’s agreement on agency staff.
Under the even more far-reaching European Union’s agency workers' directive, temp employees will be granted the same rights as permanent staff after six weeks' employment.
That’s a move that a number of IT trade organisations have criticised, arguing that such an overhaul to the system in Blighty could harm the labour market.
IT industry coughs up agency worker furball
IT recruitment trade body - the Association of Technology Staffing Companies (ATSCo) - recently slammed the prospect of the UK adopting the EU directive on agency workers, who have a heavy presence in the tech industry.
“Highly-skilled temporary IT contractors want and need flexibility to work on short, cutting-edge projects which are vital to the development of European companies,” said Ann Swain, ATSCo’s chief executive.
Tina Sommer at the Federation of Small Businesses (FSB) offered a more direct attack on the proposals. "This is a disastrous deal for small businesses which rely on the flexibility provided by agency workers," she said.
"Agency fees and high hourly rates mean temporary workers, far from being seen as cheap labour, are already a costly but useful way of responding to fluctuations in demand. If that flexibility is lost, many small businesses will stop using temporary employees."
Martin Temple, chairman of the Engineering Employers Federation said yesterday was "a bad day for business and represents yet another brick in the wall of labour market rigidity in the UK.
"At a time when business needs all the tools at its disposal to work flexibly and be quick on its feet, it is very unhelpful to add further constraints on the use of agency workers.”
The CBI, along with other employers' groups, had previously pushed for the government to give agency workers equal pay and the same holiday entitlement after a period of at least six months.
Yesterday, the CBI's Richard Lambert was forced to admit that the group U-turn after months of pressure heaped on the embattled Labour government came about because the proposed changes were better than "what the unions had asked for".
He added: "What has been so important for the economy in the last 15 years is it has a flexibility to adapt to change and agency work is an important part of that so it will have an impact."
Meanwhile the TUC, which has campaigned for the measure for years, said the agreement offered much stronger legal protection to temp workers.
However, the British government has no sway over "implementing" legislation based on the new agreement until after Brussels passes a directive on agency workers' rights.
"The Government will now engage with its European partners to seek agreement on the terms of the Agency Workers Directive that will enable this agreement to be brought into legal effect in the United Kingdom," said the Department of Business, Enterprise and Regulatory Reform. ®