The European agency workers directive still threatens hundreds of thousands of jobs in the UK, according to the recruitment industry's trade body.

Fiona Coombe, head of legal services at the Recruitment and Employment Confederation, said the directive could put 320,000 people out of work at a conference.

The directive, which calls for equal pay and rights for temps, has been shelved after it failed to make it through the legislative maze in Brussels.

But there are fears the directive, originally proposed by Greek commissioner Anna Diamantopoulou , could resurface.

The REC's main concern is the red tape associated with ensuring that a worker is receiving comparable benefits to a permanent worker, when 80% of small businesses do not have published pay scales.

Coombe told a Institute of Directors employment law seminar: "The REC supports legislation to protect vulnerable workers, however this has to be balanced with avoiding excessive red tape that will prevent job opportunities."