Agency Workers Directive Delayed
The EU Agency Workers Directive, which has been hanging over the contracting industry for some time, is to be delayed. Business Minister Pat McFadden announced on 16th October that the new law will be put off until the latest allowed date of October 2011. The action is apparently intended to help businesses as they struggle with the recession and it is hoped that conditions will be improved by the time the law finally takes effect.
As with many directives from the EU, the aims are admirable but the consequences might not always be as intended. The Agency Workers Directive sets out to protect ‘vulnerable’ temporary workers by granting them the same rights as full-time employees after they have worked for a company for twelve weeks. These rights include equal pay and holidays.
Doubts have been expressed as to whether IT contractors are vulnerable and need this level of protection, particularly since their pay rates generally exceed those of full-time employees. More importantly, there are real fears that the legislation will seriously damage job prospects, particularly if it is rushed through. If so, it is likely to hit Britain harder than most since it has more agency workers than any other European country.
The announcement of a delay is at odds with a promise given by Prime Minister Gordon Brown. He told the TUC only a month previously and reaffirmed at the Labour Party Conference that the directive would be law “in the coming few months”. In addition to the delay, changes will result in the owners of limited companies, self-employed people and managed service workers being excluded from the provisions. However, those using umbrella companies or who are considered not to be genuinely self-employed will be covered. Reactions have been predictable, with employers and contractors’ representatives generally welcoming the delay but trades unions regretting that vulnerable employees will remain open to exploitation by unscrupulous employers.
The decision followed an earlier announcement by the Conservatives at their party conference that a Tory government would delay adoption of the directive until the latest possible date. They estimate it will cost £40 billion over ten years and destroy thousands of jobs.