Government signs agency workers deal – but it may be counter-productive

The deal, agreed between the Government, the Trades Union Congress (TUC) and the Confederation of British Industry (CBI), gives agency workers the right to the same treatment as permanent staff after 12 weeks of working for a company.

Though the term 'equal treatment' remains relatively undefined it will not include pension rights.

"Equal treatment will be defined to mean at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that undertaking to occupy the same job," said a Government statement.

The Government said that it would "consult the social partners" about how to resolve disputes about what exactly equal treatment will mean.

But employment law expert Michael Ryley, a partner with Pinsent Masons, the law firm behind OUT-LAW.COM, said that the new agreement could act against the interests of agency workers.

"The risk is here that the agency market is going to be damaged by this because the employer will have to pay the agency worker at a higher rate and pay the commission to the agency," he said. "It may be that it all gets too expensive and damages the market by creating an unwelcome degree of inflexibility."

The European Commission is considering creating an EU Directive more strictly regulating the use of agency workers to stamp out employers' use of agencies to avoid giving workers full employee benefits.

The UK Government has said that it wants to retain the labour market flexibility that agencies bring, and it said that it hoped that the current agreement preserves that.

"[The] agreement achieves our twin objectives of flexibility for British employers and fairness for workers," said business secretary John Hutton. "It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment."

Ryley, though, said that he feared that the deal would restrict the flexibility that the Government wants to protect.

"The concern about this is that by and large the legislation barks slightly up the wrong tree because agency workers mean different things in different countries in the EU," said Ryley.

"In this country agency workers have never really been seen to be a problem, they have been a necessary part of the flexibility of a labour market, and have not generally been used as a way of exploiting people – most people who are agency workers are that for a reason."

A study by the universities of Bradford, Leeds and Kent found that there are 250,000 agency workers in the UK, at 1% of the workforce a smaller number than had previously been estimated. They earn on average 32% less than permanently employed people, while just one in five agency workers is in a managerial or professional occupation.

Ryley said that the new deal will not be warmly welcomed by employers which use agencies.

"It's going to be very irritating for employers because it reduces their freedom of choice, their flexibility," said Ryley.

"One wonders if the benefits for workers is cosmetic. Parity of remuneration has a big black hole in it if it doesn't include pensions, and agency workers aren't calling for it. It is not in their interests if has a negative impact on the market for agency work."