“Don’t panic” is the message to UK contractors and freelancers from Professional Contractors Group (PCG) Policy Director John Kell following the UK’s adoption of the EU Agency Workers Directive on 9th June. As he points out, the new rules won’t, in fact, become a formal EU Directive until the statutory process has been completed, and there is still time for amendments to be introduced.
Adopting the directive into UK law
In an interview with ContractorCalculator, Kell outlined the process of how the agency workers directive could take more than two years to become law in the UK:
- The proposed directive has been agreed by the Council of Ministers at their meeting in Luxembourg this week
- Next, the directive will go to the European Parliament for a second reading in Autumn 2008
- The directive returns to the Council of Ministers for a second round of approvals, probably in Spring 2009, when it becomes EU law
- Individual countries then ratify the directive, creating legislation to implement its requirements
- Depending on the level of debate in the UK, the Agency Workers Directive could become law in the UK from October 2009.
Consultation
The key period for any amendments to be introduced is when the government ratifies the directive into UK law. According to Kell, it is during this phase “when the UK can influence the fine details and stakeholders have the opportunity to give their input during any government consultation about the legislation.”
Adrian Marlowe from Lawspeed, which specialises in providing legal and business services to the recruitment sector, emphasised to ContractorCalculator the importance of the detail: “It is essential that the legislation is correctly formulated and contractors are not put into a detrimental position through a goodwill gesture that might be offered by legislators to other groups of workers. But it is crucial that this legislation is pitched at vulnerable agency workers.”
It is the consultation stage that could lead to significant delays in adopting the directive. “Optimistically, we could see the agency workers directive in force by October 2009,” continues Kell, “but if, for example, the unions take umbrage at a fine detail in an amendment, the process could drag out until conceivably October 2010.”
Scope of the Directive
A major cause of concern to highly skilled contractors and freelancers has been whether their way of working will fall within the scope of the directive. Kell is not so sure and observes that “the definition of an agency worker in the text of the directive is unsophisticated and we are hopeful that limited companies will be excluded.”
In addition, there will be ample opportunity during the government’s consultation process to examine the EU’s definition of an agency worker and how it should be applied in a UK context. As Lawspeed’s Marlowe says: “The new directive could affect contractors, but whether it does or not of course depends on the detail.”
Mandate for negotiation
The agreement to adopt the Agency Workers Directive has been years in coming. In the past, differences between major employee and business groups in the UK over when a worker should qualify for benefits under the directive have forced the government to block the directive at the highest European level.
However, in a landmark joint declaration, the Confederation of British Industry (CBI) and the Trades Union Congress (TUC) both agreed to a 12-week qualifying period for agency workers to be given equal treatment, and that allowed the government to do a deal.
“The agreement between the CBI and the TUC gave the government a mandate to play ball, rather than blocking the legislation as it has done in the past,” says Kell. “This resulted in lots of political will from other European countries to come to an agreement.”
“Least worst option“
Attempts have been made by various EU presidencies to find a solution to increase the rights of the estimated eight million temps across Europe since the first proposals by the European Commission in 2002.
Kell’s view is that: “The government has been quite supportive of labour market flexibility and has done well to negotiate the least worst outcome.”
Vladimir Spidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities was somewhat more effusive about the agreement: "This is a major step forward for European workers and it strengthens social dialogue.
“It shows once again that flexicurity can be put into practice: We have created more security and better conditions for workers and temporary agency workers while maintaining the flexibility that industry needs and workers want when reconciling family life and working life.."
If any contractor or freelancer is told by their agency that they are covered by the directive during the next 18 months, then the agency is wrong
John Kell, Professional Contractors Group (PCG)
Advice for contractors and freelancers
The advice to contractors from the PCG’s Kell is “don’t panic”, particularly as the legislation will take time to implement. “If any contractor or freelancer is told by their agency that they are covered by the directive during the next 18 months,” says Kell, “then the agency is wrong.”
Poorly drafted legislation has caused misery for contractors and freelance workers, with IR35 and the MSC Legislation, so it is important that the consultation process starts early and is pursued by interest groups representing all stakeholder groups with vigour.
ContractorCalculator will be returning to the implications of the Agency Workers Directive with a more detailed analysis.
Published: Wednesday, June 11, 2008
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