The abrupt sacking of 850 staff at BMW’s Oxford Mini car plant on Monday has focused attention on the rapid growth in the use of agency workers, with limited employment protection rights, to fill British jobs.

The UK employs more agency workers, as a proportion of its total workforce, than any other equivalent developed nation. Some 4.5 per cent, or 1.26m of the country’s workers, were employed on a temporary or agency basis in 2006, according to CIETT, an international confederation of private employment agencies.

This compared with 2.5 per cent in the Netherlands, 2.4 per cent in France, 2 per cent in the US, 1.9 per cent in Japan and only 1.3 per cent in Germany, where unions said employment protection laws were much tougher.

The contracts of the BMW agency workers, who were not entitled to statutory redundancy payments, by comparison were terminated immediately. They will also receive only one week’s pay in lieu of notice.

This contrasts with permanent staff who after two years’ service are eligible for statutory redundancy payments worth up to £10,500 ($14,943).

The manner of the BMW sackings and limited compensation have prompted renewed calls from unions for UK ministers to enact European Union rules providing greater protection for temporary workers.

The temporary and agency workers directive, agreed last June by European employment ministers, would require UK employers to pay temporary and agency workers the same basic pay as equivalent permanent staff after only 12 weeks in a job. It leaves it up to individual member states to decide whether to extend even greater protection.

Kevin Green, chief executive of the Recruitment and Employment Confederation in the UK, argued that employing agency workers allowed companies to adjust more easily to peaks and troughs in demand, protecting the jobs of valued permanent staff who otherwise might have to be fired in a downturn.

The flexibility this gave to labour markets had attracted investment and jobs to Britain that might not otherwise have come here. The way in which the sackings were announced at BMW might have been mishandled but the principle that agency staff should bear the first brunt of redundancies showed the jobs market was working in the way it was supposed to do, said Mr Green.

The UK is not the only country to use agency staff in this way. The bulk of the redundancies announced in recent months by car manufacturers in France, Germany, Japan and South Korea has involved agency or temporary staff.

But no big developed country uses temporary workers to the same extent as in the UK. The number of agency workers has climbed to 1.4m over the past two years and includes nurses, doctors, interim managers, IT contractors and investment bankers as well as car and construction workers.

The way in which ministers decide to implement the directive in the UK – they have until 2011 to do so – is crucial, said recruitment agencies and employers groups. They feared that if protections were extended too far, Britain’s flexible labour market would lose its competitive edge.

They would be worried, for example, if the concept of equal pay were to be widened to include bonuses and other benefits such as gym membership, company cars and subsidised mortgages. Mr Green questioned whether an inexperienced junior temporarily replacing a receptionist with 20 years experience should be paid the same wage.

Employers would be worried, he said, if legislation were to include self-employed workers operating as limited company contractors, such as interim managers and IT consultants, who often are paid much more than permanent staff.

The department for business plans to launch a consultation in the near future about how the UK will implement the agency workers directive setting out “additional protections for agency workers on basic working and employment conditions – such as pay, holidays and overtime”. The wording will be closely watched by employers as well as unions.

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