January 22, 2010 2:00 am

Ministers push bill for agency workers

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New rights for 1.3m temporary workers threaten to hinder job creation in a recovery, employers warned yesterday, as the government began a push to get the controversial agency workers' directive into law before the election.

Business groups were relieved ministers had resisted trade union pressure to bring forward implementation from October next year, but worried the directive would undermine the UK's flexible labour market by increasing the cost and bureaucracy of hiring temps.

In spite of efforts to assuage employers' concerns in legislation put before parliament yesterday, business groups said certain rules went further than the European Union directive required - notably the inclusion of some bonuses in the definition of pay.

The changes will give agency workers the same pay, holidays and other basic working conditions as employees after 12 weeks in a job.

Details of how to implement it have been fiercely contested, in spite of an outline agreement two years ago by the CBI employers' group and the Trades Union Congress.

The rights on pay will apply not just to the basic hourly rate, but to all pay for work done, including bonuses directly related to an agency worker's personal performance. They will not include other benefits such as occupational pensions and sick pay.

Pat McFadden, business minister, said it was a "sensible and balanced package" that would ensure fairness for agency workers while retaining labour flexibility. But the Conservatives claimed it would cost the economy £40bn over 10 years, citing government figures.

Jonathan Djanogly, shadow business minister, said it was "not the time" to rush the bill through and said a Tory government would implement the directive in a way that was fair to employees and employers.

Brendan Barber, TUC general secretary, said the rights were "good news" for agency workers but he was disappointed they would not start earlier.

Kevin Green, chief executive of the Recruitment and Employment Confederation, representing jobs agencies, said confusion would be caused by including temps in companies' appraisal-based performance pay systems. There would be more red tape in hiring temps for ad hoc shifts, such as drivers, supply teachers and care workers.

David Frost, director-general of the British Chambers of Commerce, said the rules would reduce flexibility and damage recovery.

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