11 January 2012 #Employment
The new EU Agency Worker directive dictates that after 12 weeks, employers will be required to give temporary staff the same rights and pay as permanent staff. However, a recent survey has revealed that in order to avoid this requirement becoming a reality, a third of employers will terminate the employment of temporary staff prior to the completion of 12-week trial periods. The new rules came into force in October 2011 and the first round of job losses are expected to hit workers this month.
The Association of Professional Staffing Companies conducted a survey of 42 recruitment agencies, which indicated that 29 per cent intended to terminate short-term contracts before the 12-week period expired. Ann Swain, chief executive of Apsco, said `tens of thousands` of workers would be affected.
Interestingly, the law comes into force despite a pledge by George Osborne, the Chancellor, to boost the UK economy by removing obstacles that would stand in the way of growth.
Historically, the directive was first introduced by the Labour government, and then it was reassessed by the Department for Business, Innovation and Skills (BIS) after the election. The Government has admitted that it was forced by trade unions to introduce the `disappointing` regulations.
Since the decision the economic situation has suffered significantly and senior Conservatives are understood to disapprove of the regulations. An analysis of the new laws by BIS revealed that it will cost firms more than £1.8billion a year, leading to warnings from big employers that they will have to cut jobs.
Research has shown that a typical small business will have to pay an extra £2,493 a year, increasing to £73,188 for larger firms. Public sector employers, meanwhile, will have to pay an additional £259million a year, although the Treasury expects that it will generate up to £332million in taxes paid by workers earning more.
Analysts believe that had the Government refused to implement the new regulations, they would have been likely to face legal challenges from agency workers.