With the consultation period for the Temporary Agency Workers Directive (TAWD) ending on 31 July, the final shape of this much discussed and, in some quarters, feared piece of legislation is still very much up in the air. Behind the scenes, the various organisations representing the recruitment industry are hard at work lobbying the government and other interested parties, such as the CBI (Confederation of British Industry) and the TUC.

While all of the trade bodies representing the industry have signed up to supporting the main aim of the directive to protect agency workers, and particularly vulnerable ones, each one argues that its proposals will best achieve this.

In its consultation document, BERR (now the Department for Business Innovation and Skills) proposes excluding those who are genuinely selfemployed, those working through their own limited company or employed on managed service contracts. BERR intends to include workers contracted to an umbrella company.

However, Kevin Barrow, a partner at law firm Blake Lapthorn, whose company has been working with the Association of Professional Staffing Companies (APSCo) on TAWD, argues that since the stated purpose of the directive is to protect vulnerable agency workers, it is incompatible for it to include workers who are highly qualified and generally paid well above minimum wage levels.

Professional workers, who operate through umbrella companies and have their own limited company, are not vulnerable workers, he argues, and clearly do not require the protection of TAWD.

Marilyn Davidson, a director of APSCo says the best W way to define who and who isn’t a vulnerable worker is on the basis of what they earn. This is why APSCo has suggested that any workers earning three or more times the national minimum wage should be excluded from the directive. APSCo estimates that this would result in around 90% of workers supplied by its members falling outside TAWD.

“This is a sensible, logical and practical way of doing it,” she says. And she clams the TUC, the CBI and the Institute of Directors all “see the logic of our solution”. “It’s very important that there’s a clear exemption that’s not based on whether someone is self-employed or not, which is complicated, but on a simple test based on what is paid,” adds Barrow.

Davidson argues that the government’s proposal to exempt limited company contractors, won’t have the desired effect of protecting vulnerable workers. In fact, she argues it could make things worse.

“We believe there’s a danger that employers or unethical agencies could force people who should never be running a business on their own account, such as cleaners, into becoming limited company contractors against their will,” she says. One reason for agencies pressurising workers into this is because they would rather not have the responsibility of having them on the payroll and would find it far simpler for contractors to invoice them. “This doesn’t really solve the problem,” adds Davidson.

However, Adrian Marlowe, managing director of recruitment industry legal consultancy Lawspeed, says that excluding workers on basis of their earnings is simply not possible under the directive. “TAWD applies to anyone who comes under the definition of an agency worker, and there is no provision under the directive to exclude anyone on the basis of what they earn.

“It doesn’t matter what you are earning; if you are a worker who is assigned to a user undertaking to work under their direction or control, then you fall under the definition of being an agency worker.”

Marlowe, who is also chairman of the Association of Recruitment Consultancies, argues that a better solution is to have a two-tier derogation period before the directive would apply. The first derogation period of 12 weeks would be for workers earning up to 1.5 times the minimum wage.The second of 12 months would apply to workers earning more than 1.5 times the minimum wage.

Marlowe says the basis for this is that ‘lower paid workers are theoretically more vulnerable.” Marlowe says the advantage of this proposal is that it would reduce the likelihood of employers terminating temporary workers after 12 weeks to avoid granting them the additional rights (see box, below). “This takes a lot of agency workers out of the danger zone,” says Marlowe. He claims that ARC’s proposals for a longer derogation period have the support of the Institute of Directors, and the Federation of Small Businesses.

However, Tom Hadley, director of external relations at the REC (Recruitment and Employment Confederation) says that legal opinion received by the REC is that there is nothing in the directive that would allow workers to be exempted on the basis of their earnings. “It’s like saying that those people earning so much don’t have rights under anti-discrimination law,” he says.

The proposal isn’t workable, says Hadley, and further, he adds, it gives credence to the trade unions’ view that agency workers go hand in hand with a two-tier workforce.

Furthermore, he claims the proposal to exempt workers on the basis of their earnings has no support from recruiters. It has never been seriously suggested by any member of the REC or indeed employer, he says. Hadley says the only way this idea could be progressed is if the discussion on the 12-week derogation period between the UK social partners, the TUC and the CBI were to be reopened. However, he says “this is just not going to happen”.

The only two possible grounds for exemption from the directive, says Hadley, are national workplace agreements between employers and trade unions or workers’ representatives, and where temporary workers are directly employed by agencies, as these are explicitly mentioned in the text of the directive. Hadley says the REC’s view is that while the genuinely self-employed should be exempt, which would take out a lot of IT contractors and interim managers, the directive has got to work for everyone and not depend on earnings.

Davidson is also concerned that under the BERR proposals workers who work though umbrellas companies would come under the directive. “Good umbrellas companies provide a very good service to contractors. As long as they are properly administered, and the workers are properly employed, they should be excluded,” she argues.

With the draft regulations for the directive due to be completed towards the end of the summer, time is running out for the industry to influence TAWD. But it is clear that who ever wins the arguments over the next few weeks will play a key role in determining the shape of the industry for years to come.

THE AGENCY WORKERS DIRECTIVE: MAIN OBJECTIVES

The key objective of the Temporary Agency Workers Directive (TAWD) is the protection of temporary workers through ensuring they receive at least the same treatment as if they had been taken on directly by the hirer in the same job.

The main areas where equal treatment applies are:

• duration of working time
• basic pay, including overtime
• holiday entitlement

The directive only applies to temporary agency workers after they have been in a job for a 12-month qualifying period.
The earliest the directive is likely to appear on the UK’s statute books is October 2010.