Tuesday 20th May saw the government, employers and unions reaching an agreement which will see temporary workers becoming subject to the same employment rights as permanent staff after just 12 weeks. The news brought mixed responses from the various sectors affected by this new draft.

John Hutton, Business Secretary was pleased with the result, commenting “Today’s agreement achieves our twin objectives of flexibility for British employers and fairness for workers. It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment." Trade Union’s involved in the discussion were equally happy with the proposals put forward. Unite joint leader Tony Woodley said: "This is a landmark deal for 1.4 million agency workers currently working in the UK. The Government has listened, acted and paved the way to equal treatment in the workplace."

Unfortunately, those supporting the interests of employers are not so pleased. Tina Sommer, the EU and International affairs chairman for the Federation of Small Businesses', said: "This is a disastrous deal for small businesses, which rely on the flexibility provided by agency workers." Martin Temple, chairman of the Engineering Employers Federation echoed Sommer’s sentiments stating that it was "a bad day for business and represents yet another brick in the wall of labour market rigidity in the UK.”

Perhaps it is no surprise that Union’s and Employer Representatives are not seeing eye to eye on this matter. There seem to be two different issues at stake and a need to define these before implementing any new employment laws. There are two distinct groups within the term ‘Temporary worker’. Firstly there are those who work on a temporary basis out of necessity, who are generally unskilled and are potentially vulnerable to lower wages. Secondly, there are those who choose to work on a temporary basis and are paid significantly higher wages for their skills and knowledge. The latter tend to work within engineering and technology, where the industry relies heavily on their flexibility to deliver short term, progressive, projects. As the Association of Technology Staffing Companies’ (ATSCo) CEO Ann Swain commented, “Highly-skilled temporary IT contractors want and need flexibility to work on short, cutting-edge projects which are vital to the development of European companies.”

However, it must be noted that those contractors working through their own Ltd companies, who are outside of IR35, will escape the directive as they are neither deemed employees of the client or agency, nor are they subject to PAYE. Unfortunately, there are still a significant number of contractors who work on a PAYE basis and fall into this second category, and it is this group who will be negatively effected by the proposed changes.

The EU Agency Workers Directive, the debate from which the British plans arise from, will be discussed in Luxembourg next week. The UK agreement is seen as a political maneuver to fend off the far more draconian measures which the EU are proposing. Everyone will have to wait to see if this move has paid off. If not, those who oppose the new UK agreement may see far worse legislation heading their way.