EU Agency Workers Directive Damaging for Contractors as well as Recruitment Industry in Current Form
Date: June 03, 2009
Formed in 2009, Hove based Association of Recruitment Consultancies (ARC)announced further opposition to the European Unions' Agency Workers Directive that gives temporary staff, contractors and freelancers the same rights as permanent staff after 12 weeks in employment.
Equal employment rights for contract staff has been held off by the UK government for many years however last year made a u-turn by announcing full support for the directive following an agreement made between the CBI (The UK’s premier lobbyist for UK business) and the Trades Union Congress (TUC).
ARC are clearly seeking to protect the current position of recruitment companies including its backer which recruits legal staff, as many of the intended changes in legislation would affect the cost of employing temporary staff as well as the efficiency of the country having a large temporary, flexible work force, fearing that employers will get bogged down by contractor rights.
OrangeGenie find the EU Agency Workers Directive extremely damaging in its current form for a number of reasons.
Firstly, it is the responsibility of umbrella organisations to provide employment rights to their staff, and as an umbrella company acting on behalf of thousands of contractors, OrangeGenie already provide full employment rights to their contractors without the need for intervention or legislation by this EU directive. The directive will add further costs to business and damage the flexibility of the labour force at a time when the economy can least afford it.
Secondly the Directive is rightly aimed at protecting the rights of vulnerable workers (low pay, quick turnaround as well as language barriers etc) however over 60% of OrangeGenie’s contractors earn over 3x times the UK national minimum wage which does not in OrangeGenie’s opinion make them vulnerable workers.
Furthermore left in its current form the Directive will be damaging due to the increased risk for end users of employing contractors. Holiday pay, sick pay and pension contributions will be caught up in a legal host of legal wrangles during and post employment, increasing cost to business and increasing risk of claims for employment rights. This will clearly disincentivise employers from taking on contractors. In reality many contractors themselves do not want this type of protection, professional contractors recognise that they don't have the same rights as normal workers and are angry that this directive will damage their chances of finding contract work by diminishing the role of a freelancer, consultant or contract worker within an end user organisation.
OrangeGenie feel this is another case of the left arm not knowing what the right arm is doing within BERR and HMRC as the cost to tax payers for implementing this Directive will far outweigh any benefits for the UK economy.
OrangeGenie also sees the unintended consequence of the directive as it grants an opt-out to contractors who run their own limited company. HMRC have recently completed their own consultation on contractors' expenses and signaled their approval of umbrella companies as a cost-effective means of tax collection. With 100,000 more limited companies the cost of collection will rocket, hardly a great demonstration of joined up government?
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