Analysis: Agency Workers Directive

Most will know the pig Napoleon’s comment from Orwell’s Animal Farm that “some animals are more equal than others”.

The same applies in the labour market, where temporary workers – or agency staff as they’re usually dubbed – lose out when it comes to some of the benefits enjoyed by permanent employees.

This has been the focus of much brow-furrowing at the European Commission and Parliament, and after six years of deliberation, they have decided that agency workers should get the same rights as permanent ones, via the Agency Workers Directive (AWD).

Employers need this now just about as much as they need an Icelandic bank account, but it will be three years or so before the directive is applied in the UK, giving firms plenty of time to discover some wriggle-room and indulge in innovative thinking.

Also, business secretary Lord Mandelson’s recent comments – later watered down – that some new workplace legislation (principally extending the scope for flexible working requests) could be delayed, raised hopes that the directive might be delayed too, although it’s unlikely.

The UK has managed to get a partial opt-out, so agency workers rights will only kick in after 12 weeks. However, some employment lawyers still take a gloomy view.

For example, Shoosmiths predicts the ruling may force many companies to stop using temporary workers, while recruitment agencies will struggle to pass on increased admin costs to employers. Its employment specialist, Katy Meves, said: “Companies must now be considering whether they carry on using agency workers.”

On the other side of the fence, London Green Party MEP Jean Lambert welcomed the directive. “I am pleased that it includes measures such as training and childcare facilities, which will give temporary workers a fair chance to improve their employability and career development. Such workers are vulnerable and can experience lower pay or poorer working conditions [than permanent colleagues].”

Predictably, some commentators seem to have forgotten that the directive will not be implemented for three years, and the economic picture may well have brightened by then. So what will happen?

It’s almost certain the directive will be adopted. The 12-week opt-out may well see contracts of that length becoming the norm in many sectors in the UK. For example in IT, contracts are typically short, followed by gaps and then renewals to get round taxation and national insurance rules. It’s likely that something similar will apply to agency workers.

As all agencies – those playing by the book, anyway – will have to provide similar benefits, it is almost certain that temp rates will rise for those working for more than 12 weeks. It’s also probable that agencies will pass on extra admin costs to employers.

But if the economy remains fragile many will have to absorb those extra costs to stay in business, and the AWD may be a damper squid than many predict.

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