The Agency Workers Directive may not apply to limited company contractors, according to payroll and accounting firm Giant.

If the directive’s wording stays the same, it will not apply to contractors, who often find work through agencies, the firm claims.

The directive proposes that temps receive equal pay and benefits to permanent workers. But if it is applied to contractors, it is feared they would become less attractive to employers.

This could have a knock-on effect for the recruitment agencies finding work for them.

The exact wording of the document claims the directive only applies to workers with a contract of employment or a relationship with a temporary agency.

Giant claims the wording will exclude contractors if they do not enter a contractual relationship.

William Downing, employment partner at City law firm Trowers and Hamlins, said: “The directive will only apply where a contract of employment or an employment relationship exists between a contractor and an agency.”

But contractors would need to give notice that they wished to opt out of the regulations, he said.