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June 2009

New temp rights law should have little impact on professional level temporary staff

By Ann Swain, Chief Executive, Association of Professional Staffing Companies

The Temporary Agency Worker Directive (TAWD), which was first proposed in 1998, will become law in the UK sometime before 2011. The law will give agency workers some of the same rights as permanent employees.

The TAWD will entitle agency workers who have worked on assignment with the same end user for at least 12 weeks to at least ‘equal treatment’ as permanent workers. The meaning of ‘equal treatment’ has yet to be precisely defined, but it will definitely include equal pay, and is likely to encompass basic working conditions, such as sickness pay, holiday pay, access to training, amenities, notice of termination, and so on.

The Association of Professional Staffing Companies (APSCo) has been lobbying to ensure the impact of this law on the end users of temporary workers is minimised. Both the CBI and the TUC, as a result of APSCo lobbying, have agreed in principle that the intention of the law is not to catch the professional level workers placed by APSCo members and that both will support APSCo’s campaign to exclude professional level workers from the legislation.

First of all, the legislation is likely to completely exclude temporary workers who operate through their own personal service company – which many temporary workers in the IT and engineering sectors do.

The consultation document does suggest, however, that temporary workers operating through umbrella companies will be within the scope of the legislation - though the details of how this will work in practice are far from clear at this stage. Umbrella company workers are of course employed by the umbrella companies, so they are already entitled to the same rights as permanent employees. The law could simply mean that umbrella companies have to pay their contractors in some form between assignments, which is not the norm currently.

APSCo is currently formulating a submission to the consultation process, the aim of which will be to win blanket exclusion for temporary workers whose earnings are above a certain threshold. The Liberal Democrats have thrown their support behind this solution and are including a letter with the APSCo submission.

APSCo is currently looking at a threshold level of earnings of three times national minimum wage (£17.40 per hour) above which temporary workers would be outside this legislation regardless of the legal structure through which they operate. The Government has indicated a readiness to seriously consider blanket exclusion for professional level temporary workers as a simple and workable solution.

With the CBI and the TUC both agreeing that the TAWD should not impact professional level temporary workers it will be very difficult for the Government to ignore this proposal. Whatever the outcome, it is quite clear from the consultation process underway that significant swathes of the temporary worker market will be outside this legislation and that there will be plenty of scope for end users to minimise the impact this legislation has on their flexible staffing costs.