Although the proposed Temporary Agency Workers Directive promises to improve working conditions for agency staff, in reality it may restrict the employment market for UK temps. Don Searle explains
18 February 2005
The debate over the Temporary Agency Workers Directive (Tawd) and the effect it will have on agencies, clients, temporary workers and the economy continues to rumble along, much as it has for the past five years. The main requirement of the proposal is that an agency worker should not be given less favourable basic working and employment conditions than they would have received if they had been recruited directly to the host organisation to do the same job. Basic working and employment conditions are those relating to working time, overtime, work breaks, rest periods, night work, paid holidays and public holidays and pay.
The specific aims of the proposal are twofold: to ensure the protection of temporary agency workers and to improve the quality of temporary agency work by ensuring that the principle of non-discrimination is applied to temporary agency workers and recognising temporary agencies as employers; and to establish a framework for temporary agency work to contribute to the labour market.
The Department of Trade and Industry (DTI) estimates that around 600,000 people are working as temporary agency workers at any one time in the UK. It claims that the proposed directive would result in better pay and working time conditions for agency workers, depending on their individual circumstances. "More people would enter the labour market as agency workers due to improved employment conditions, but user enterprises could decrease their demand for agency workers if agencies pass some of their higher costs onto user enterprises in the form of higher fees, reducing choice for workers."
Some firms make a choice to use temporary agency workers to maintain flexibility, and this may reduce the decrease in demand despite the higher cost of agency workers, according to the DTI. It says that it is difficult to estimate the effects on the labour market for agency workers.
The current Dutch presidency of the European Union was known to want to push for finalisation of the Tawd during its reign, but it now appears that agreement is as far away as ever unless the Council of Ministers can sign up to a much-diluted version of what was a fiercely stringent original proposal. Under it, temporary staff would be entitled to the same benefits as comparable permanent employees, have the same redundancy rights and unfair dismissal protection and those rights would kick in possibly from day one, or at least from week six.
The Confederation of British Industry (CBI) condemned MEPs for backing the proposed directive, arguing that the legislation would cause particular harm in the UK because this country has by far the highest number of agency workers - some 770,000, or 3.1 per cent of the workforce - of any EU member state. The CBI estimates that "as many as 160,000 employment opportunities will be destroyed -- opportunities that are often vital routes into work for the unemployed, ex-offenders and working mums".
Naturally, the TUC has been generally supportive of the proposed directive and has also lobbied and prepared briefings for MEPs, with the aim of ensuring that the directive is not watered down during the legislative process. A key objective for the TUC has been the removal of the six-week threshold for the right to equal treatment for agency workers on pay.
However, it appears likely that the UK government will insist that the threshold is at least six months. It is also likely that limited company contractors and workers genuinely in business on their own account will not fall within the protection of the Tawd.
From an agency perspective, the Tawd is perceived to be based on the assumption that permanent full time work is what everyone wants, but that is not the case. People do agency work because it gives them choice, develops transferable skills and enhances work/life balance. I believe that the directive could limit UK productivity by making it more bureaucratic and costly to use flexible staffing solutions.
Employers will be far less able to vary their workforce to meet changes in their business. The British Chambers of Commerce (BCC) has consistently argued that the proposed directive could backfire against those it is intended to help by reducing temporary employment, and that it will have a significant and particular impact on the UK. The UK's labour market has different characteristics from other EU member states, meaning the directive's provisions would have a very different effect in this country.
The BCC's principal objections have been that equal treatment regarding pay and working conditions for temporary workers would also put substantial additional administrative burdens on user enterprises (particularly small businesses) and that small firms with no dedicated human resource expertise would be concerned that if they get it wrong on equal treatment for temporary workers they could be taken to tribunal. This would further discourage user firms from recruiting temporary labour and reduce employment opportunities for temporary workers which could, in the long term, lead to permanent work.
Whatever form the directive finally takes, it will not come into force until at least 2007 and even then issues of comparability will further muddy the waters. In summary, there is little to concern suppliers and users of temporary staff at present as regards the directive. But other issues of temps' rights will be of more concern over the next couple of years.
Don Searle is manager of projects and contracts at recruitment firm Catch 22