Agency Workers Directive only intended to apply to firms using formalised pay structures

The Agency Workers Directive (AWD) is intended only to apply to those companies that use formalised pay scales, excluding about 90% of temporary workers in the private sector, the Institute of Directors (IoD) has claimed.

Just days before the consultation on the new legislation to protect agency workers ends, the business group has revealed it received advice from the European Commission explaining that the law should apply only to contracts where pay is based on official pay structures.

According to the IoD, this would exclude nine in 10 of temporary and agency workers in the private sector from the legislation, as most small and medium-sized firms worked out pay on an informal, one-to-one basis.

However, the UK interpretation of the directive aims to give temporary staff and vulnerable workers the same pay and conditions as permanent staff after just 12 weeks in a job, regardless of how their pay is worked out.

Alistair Tebbit, head of European Union and employment policy at the IoD, warned that the government had gone “over the top” in implementing the directive in the UK without inviting proper debate.

He told Personnel Today: “The government is using the directive as an opportunity to incorporate additional provisions and widen the scope of the law to appease unions and people within its own party.”

He added: “The vast majority of small and medium-sized firms in the UK could be exempt from the AWD, according to the commission, so if the government wants to have a serious debate about whether all agency workers need protection after just 12 weeks in a job, they should legislate domestically, not in a surreptitious way.”

There are estimated to be about 1.4 million agency workers in the UK, of which about 900,000 are employed by small businesses.

In a letter to Tebbit, reported in the Financial Times, Armindo Silva, head of the European Commission’s employment, social affairs and equal opportunities unit, said there should be absolute pay parity between temporary and full-time staff where “pay scales are in force”.

But “discretionary individual pay arrangements used in the user undertaking would be outside the scope of the principle of equal treatment”, the letter said.

The directive has attracted controversy from UK business groups who are concerned the law will damage the temping industry, as the very essence of agency work relies on hiring staff according to peak and trough demands. Employers have also argued the directive would be hard to implement because it is hard to define a temporary worker’s role or compare them with permanent employees.

The Department of Business, Innovation and Skills said it could not comment on the commission’s letter before the consultation had ended, but invited business groups to voice concerns as part of the consultation.

The AWD is due to become British law by December 2011. The consultation ends on 31 July.

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