Revival of Agency Workers Directive would be a 'serious threat' to contractors

Suggestions that the Government will support a European Union Directive giving temporary workers the same pay and benefits as permanent employees from day one will make contracting less attractive to IT professionals and increase the cost to companies of using contractors warns contractor specialist giant group plc.

The EU last debated the Agency Workers Directive over a year ago when disagreement among member states blocked its progress into law. The Dutch government, however, is said to be trying to revive the legislation and push it through during its six-month EU Presidency, which began on July 1.

The UK government is alleged to have given a commitment to the trade unions last weekend that it will drop its opposition to the Directive in exchange for their support at the forthcoming general election.

Matthew Brown, Managing Director, of giant comments: "The whole point of contracting is that you don't want to be an employee but an independent business."

"People choose to contract because they want the freedom to decide how to manage their own affairs. They don't want end-users being forced to provide them with the same working and employment conditions, ranging from benefits such as pensions to control over rest and holiday period, as permanent employees. This Directive will undermine that flexibility."

According to giant, equalising the pay of temporary and permanent workers will benefit few, if any, contractors. This is because contractors frequently receive higher hourly rates of pay than equivalent permanent members of staff.

In fact, if end-users are obliged to offer contractors benefits like holiday cover or sick and maternity leave, they could look to offset the additional costs by actually reducing contractors' hourly rates.

"If employers have to provide contractors with the same benefits as their permanent staff the cost of using contractors will rise. Employers may try to offset that cost by offering contractors lower hourly rates or simply by cutting back on the number of contractors they hire," says Matthew Brown.

The revival of the Directive is particularly disappointing, says giant, as it undermines the EU's targets on economic deregulation and workforce flexibility set down in the Lisbon Agenda of 2000.

The CBI and ATSCo are lobbying for contractors to be excluded from the regulations.