The coalition government has lost its standoff with the CBI and the TUC over attempts to water down legislation giving 1.3 million agency workers the same employment rights as permanent staff.
Employment relations minster Ed Davey said that the government would not proceed with any amendments to the regulations, which come into force in October next year despite “considerable sympathy” for arguments against them.
Instead it would use the next 12 months to develop the “best possible” guidance to help employers comply with their obligations, which involve introducing equal pay and holiday rights for temporary staff after 12 weeks in their post.
The Agency Workers Regulations 2010 were the result of a deal brokered between employers lobby group the CBI, trade union umbrella body the TUC and the previous government, but before the general election, the Tories said that, if elected, they would review the proposed legislation.
In a highly unusual admission to the House of Commons, however, Davey claimed that, following a four month review, the coalition government had found that its ability to act was “constrained” by a “unique legal situation”.
The regulations, which are based on a European Union Directive, were governed by a European-style “social partner” contract between the CBI and TUC, which acted as the “legal basis” of the legislation, he said.
“Any amendments proposed to the regulations touching upon the matter of the CBI and TUC agreement, which did not have the agreement of those parties, would face the risk of being set aside in the courts in the event of a legal challenge,” Davey added.
Although the government had discussed the matter with both parties on a number of occasions in order to seek agreement on changes that it believed would improve the “implementation regime”, it had not been possible “to find a way forward that would be acceptable to both parties”. Such an outcome was “clearly disappointing”, Davey said.
But John Cridland, deputy director general of the CBI, said that it was “disappointing” the government had decided not to re-open negotiations and blamed the failure to reach agreement on the unions.
“While we agree that preserving the 12-week qualifying period is essential, changes proposed by employers would have cut red tape without changing the overall effect of the regulations. We regret that the government hasn’t been able to reach agreement with the trade unions on this,” he said.