UK’s reprieve on Temporary Agency Workers Directive will not last long

The UK cannot resist EU employment rights forever, so employers need to plan for the worst-case scenario.

Another chapter in the saga of the Temporary Agency Workers Directive ended, yet again, without agreement between member states on this highly divisive issue. UK businesses will breathe a sigh of relief at the breakdown of talks, but what should employers do until discussions resume?

The draft EU directive has been stuck on the starting blocks since it was first proposed in 2002, and continuing uncertainty is bad news for business planning.

The EU Council of Ministers first failed to adopt the directive in 2003, and fundamental disagreements have prevented its adoption several times since, most recently at a meeting of EU social ministers.

The UK led a minority group of countries opposed to the wording of the draft directive and there was speculation it would be passed, but then it stalled again.

Ambitiously, the Portuguese presidency had tried to link agreement on the Temporary Agency Workers Directive with agreement on amendments to the Working Time Directive – in particular to changes to the UK’s cherished ‘opt-out’ from the 48-hour working week.

Equal treatment

The key issue appears to be possible exemptions from the principle of equal treatment for temporary workers and, in particular, the maximum length of assignments to which any such exemption will apply.

The directive aims to establish a common legal framework across Europe to regulate the supply of temporary workers by agencies to end-users. This would have a significant impact on the UK labour market, where more than 3% of the workforce is estimated to be engaged temporarily.

If passed in its present form, the directive will give equal rights to agency workers (including maternity rights) and require them to be engaged on the same terms and conditions as permanent workers after a minimum period, which could be from day one. Unsurprisingly, employers argue that it should be at least six months.

UK business competitiveness is often attributed to the flexibility of its workforce. Indeed, our European neighbours sometimes argue it is too flexible, giving us an unfair advantage in the global marketplace over their own economies.

Economic impact

Despite the worthy social justice arguments in favour of passing the directive, any regulation making it more costly to employ agency workers is likely to have a negative economic impact as employers stop using them without replacing them with permanent employees. The CBI estimates that 250,000 jobs would have been in jeopardy had the directive been agreed. Another casualty would have been the agency business sector itself.

The British government looks increasingly like King Canute trying in vain to hold back the tide of agency worker employment rights, which will, inevitably, flood the UK.

So while the UK is currently enjoying a brief reprieve, it seems the writing is on the wall for employers using temporary workers and the agency businesses themselves.

And with France set to take over the EU presidency in July 2008, there is no doubt that the issue of both the temporary agency workers directive and changes to the working time directive will be back on the agenda before long.

Katy Meves, professional support lawyer, Shoosmiths

Action points for employers

Businesses should use this unexpected reprieve to:

  • Establish where and how temporary agency workers are used. Does the business use casual temps to cover busy periods, or are they doing higher value work?
  • Plan for the worst-case scenario. Calculate costs if agency workers got the same pay and benefits from day one or after only six weeks.
  • How would you cover the work required if your organisation stopped using temps? Can potential extra costs be absorbed by savings elsewhere?
  • Check whether agencies will pass on sudden cost increases, and how quickly (and at what penalty) can the contract be terminated if necessary.

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