IS IT THE END OF YOUR "FLEXIBLE FRIEND"?

Agency Workers Set To Benefit From Improved Employment Rights - But What Is The Effect on Small Businesses?

A recent deal reached in May 2008 between the Government, employers’ groups and the unions may spell the end of flexible temporary labour for small businesses.

The value of temporary agency workers to small and medium sized business is widely acknowledged.  They offer businesses the flexibility to take on extra staff and dismiss them to cope with peaks and troughs in business, and to cover for absences. A flexible labour market is also going to be vital to provide cover as the recently introduced right to request flexible working becomes more popular.

On the other hand there has been concern for some time from agency workers themselves, and from the government and EU about the lack of employment rights available to agency workers.  They are often paid less than permanent staff for doing the same job, they do not have the same rights, for example to holiday pay, and because they are not strictly classed as employees, as a general rule (with exceptions*) they can be hired and fired at will without the risk for the employer of having a tribunal claim brought against them.

The ball started rolling in 2002 when an EU Draft Directive on Working Conditions for Temporary Workers was put forward.  The Directive proposed that after just 6 weeks in a job the agency worker would be entitled to equal treatment with other workers. The UK Government has been under pressure for some time from Brussels and from the Unions to bring in UK Legislation which implements the directive.

On 20^th May the Government, the TUC and the CBI agreed the deal, which was for agency workers to acquire rights to equal treatment after 12 weeks in a job.  “Equal treatment” is at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that business to occupy the same job.

The deal that was finally reached does not go as far as the EU Directive. The Government, recognising to some extent the importance of a flexible labour market to smaller businesses, hopes now, on the strength of the domestic agreement, to reach an agreement in Europe on the draft directive which achieves some flexibility for the UK. 

There was mixed reaction to the deal among the business community.  The TUC naturally welcomed the deal, as they have been campaigning for many years for improved workers’ rights.  The CBI commented on the risk of “damaging legislation coming from Brussels”, and was lukewarm about the deal, calling it “the least worst option”.  David Frost, director-general of the British Chambers of Commerce was not satisfied that proper consultation with smaller business had been carried out, and accused the government of going back to the “corporatism of the 1970s” when industrial policy was decided as a result of cosy chats between large unions, large employers and ministers.

Closer to home, the Chair of the Federation of Small Business shared concerns that the deal had been brokered without the acceptance of a large percentage of the business community.  He is quoted as saying

“It is sad that we appear to have gone back to the bad old days of beer and sandwiches at number 10…small and medium-sized business make up over 99 per cent of businesses in the UK and they are the ones that will be hit hardest by the loss of flexibility and the extra administration that will come with these changes”

On a more positive note, the CBI Employment trends survey 2007 found that 58% of agency assignments last less than the proposed 12 weeks, so will be unaffected. 

The deal has not yet become law, so small business should make the most of agency workers while they are still able to do so without ties, whilst keeping a careful eye on developments. 

*some agency workers can acquire employment rights due to their length of service and other factors, so you should be careful to seek expert legal advice before dismissing, particularly if the worker has 12 months service or more.

If you need advice on this or any other employment matter contact Sarah Coates-Madden or Stephen Dixon at Sandersons Solicitors.

Sandersons Solicitors

17-19 Parliament Street

Hull

HU1 2BH 

Tel:       01482 324662

Fax:      01482 223110

e-mail:  enquiries@sandersonssolicitors.co.uk

 Source: Federation of Small Businesses, June 2008