The European Commission's proposed Agency Workers' Directive applies to temporary workers that provide work to companies through agencies, but could stretch to include contractors working through limited companies if it remains in its current state.
The proposal, which seeks to give 'temps' the same pay and benefits as employees, was issued by the Commission in March after negotiations to agree on a framework for temps' working conditions between European-level social partners broke down.
The proposals provoked outrage throughout the UK recruitment industry when they were leaked to the press in February, prompting responses from almost all major UK representative bodies, including: the Confederation of British Industry; the Recruitment and Employment Confederation; and the Professional Contractors Group.
Alan Johnson, Minister for Employment Relations, is responsible for the UK consultation over the proposed Directive and outlined the Government's views on it in a recent Parliamentary debate.
He said: "The Government is not opposed to the principle of a directive on agency workers. We welcome the Commission's intention to protect agency workers and promote agency work in the European Union. However, it is important that the directive works in practice."
The Minister expressed concern that the proposal would be incompatible with the UK agency market, which differs greatly from the recruitment industry set-up in other EU countries.
The proposed Directive's potential effects on the IT contracting industry were raised briefly when Dr. Stephen Ladyman, Labour MP for South Thanet, posed the following question to Mr Johnson: "Before I became an MP, I worked in IT, where temporary workers were often paid a lot more than permanent staff because they did not have security of tenure or the benefits that other staff received, but had special skills. What negotiations are taking place to protect permanent staff, who might one day find that temporary staff get all the benefits and the extra money?"
Mr Johnson replied: "From our stark and crude statistics we have seen that temporary workers earn more than permanent ones. Personal services form another category, and those categories account for 17 per cent of agency workers. There is not a direct relationship between the employee and the company - there is a third party, and people work for an agency that places them with a company, so we are concerned that the Directive could have dramatic effects [in this instance].
Dr. Ladyman continued: "Many of the temporaries whom I employed got fed up working for agencies, so they set up their own companies to employ themselves. Many of them were one-person companies whose only resource was their own services. How will they fit into this overall picture?"
Mr Johnson replied: "I had a feeling that the term IR35 would pass my Honourable Friend's lips. We are certainly considering the Directive's impact on limited company contracts."
The consultation will end on 18 October, at which point the findings will be presented to the Committee and negotiations will begin with the European Commission.
Richard Powell, © Shout99.com 2002