Charles Price explores the ins and outs of the upcoming agency workers’ rights reforms, and argues that it won’t be one-size-fits-all.

As we all know, agency workers work through an agency which finds them jobs. The firm who’s hiring the worker pays a fee to the agency, and the agency pays the worker’s wages. The government has recently announced that it plans to give them the same rights as employees but was this merely a tactic to pacify the disgruntled unions or would there be any substance and meaning behind the changes?

Business Secretary John Hutton will bring forward legislation “subject to an agreement between employers and employees and in Europe”, he said.

This would “for the first time ensure new rules for fair treatment of agency workers here in Britain”. The unions have accused the government of blocking European legislation on the issue. But TUC general secretary Brendan Barber said he welcomed Mr Brown’s “clear recognition that agency workers get a raw deal and that there is a need to make life fairer for agency workers”.

“Unions will now step up their campaign to secure proper protection and a fair deal for agency workers,” he said. The announcement is a u-turn by the government, which has, for years, resisted pressure from unions and the European Union to back the Agency Workers Directive. It follows extensive media coverage of a private member’s bill on the issue.

But agency workers do enjoy vital employment law protection. Agency workers are covered by the National Minimum Wage, working time legislation and health and safety and social security provisions. Further, all workers are covered by all types of discrimination legislation. Recently, it was decided that rolled up holiday pay was unlawful, or pay which allowed an agent to purport to raise an hourly rate on the basis that they were taking holiday as part of the pay. However, flexibility for both worker and employer is one of the features of agency work – and this means that, just as agency workers have the flexibility to take up and leave jobs at short notice, employers also have the flexibility to finish temporary work without being liable for unfair dismissal or redundancy pay.

So the new legislation would involve guarantees of harmony of pay, some provisions of notice and guaranteed holiday pay.

Billy Hayes, general secretary of the Communications Workers Union, said he was pleased to hear “such a positive statement” coming from Mr Brown.

“There remains a lot of detail to be agreed but this is a positive step in bringing equality of rights to over a million of the most vulnerable workers and their families,” he said.

But the very reason for having agency workers is for their flexibility. Usually, it could be argued that agency workers may want to leave with little notice and employers need someone to, for example, cover an absent employee at short notice. Chris Hannant, head of policy at the British Chambers of Commerce, in an interview with the BBC, opposed the move. “The UK labour market’s flexibility has been one of the major reasons the economy has performed strongly and created so many jobs over the last decade,” he said. “Proposals that undermine the advantages of this flexibility will not only damage employers, but will reduce job opportunities for those people that the proposals seek to protect.”

Alan Tyrrell, employment chairman of the Federation of Small Businesses, summed up the counter argument for new legislation in clearer terms;

“The measures proposed would put firms ‘in an impossible position’. You can’t have an extension of flexible working and at the same time clamp down on the means by which many small businesses cope with it, which is often through temporary workers.”

Although employers will be expected to provide a similar employment package for these workers as for their permanent staff, individual benefits, such as pensions and sick pay, are excluded.

The government plans to give agency and temporary workers the same rights as full-time employees after 12 weeks’ service with an organisation. This would be of use to those agency workers who have in everything but name become permanent and employers are using the arrangement to avoid providing contractual benefits afforded to usual employees.
Although the new legislation is expected to be announced in the Queen’s speech this autumn, Hammerton suggests it could be as late as 2011 before it comes into effect.

Charles Price is a barrister at No5 Chambers
www.charlesprice.net