A new EU Directive gives temporary employees the same rights as permanent employees. Jo Plumstead explains

Temps are, if IT isn't too much of a contradiction in terms, a fixture in organisations of all sizes and in all sectors. And the insurance industry is a big customer. The perceived advantages of using temps include flexibility - the ability to hire and fire with relative ease - and the low risk of tribunal litigation. These assumptions should now be challenged, in the light of developments in the law.

There has already been a move to extend employment rights to non-permanent employees in a number of fields.

Discrimination law has always applied to self-employed workers and more recent legislation, including the Working Time Regulations, covers a wide group. However, two new European-inspired provisions on their way to the statute book will affect two types of temp workers - those on fixed term contracts and agency workers.

Draft Fixed Term Employees Regulations are due to become law this summer. A fixed term employee is someone who is taken on for a fixed time, someone who has to complete a particular project or someone who is taken on for the duration of a particular event. These types of temporary employee will gain two sets of rights. The first is not to be treated less favourably than a comparable permanent employee in terms of pay or conditions.

Overall package
There are some important limitations to this right. First, it is limited to fixed term employees, and does not cover self-employed individuals. Next, if there are no comparable permanent employees within the organisation, there is no complaint that the fixed term worker can make. Last, where a comparison can be made, it will be permissible to compare the overall package offered to the fixed term worker with that enjoyed by the permanent worker. So if the fixed term worker complains that he or she is not entitled to join the pension scheme, for example, the employer could use as a defence the fact that the temporary employee has a higher basic rate.

The second area of change in the law is aimed at preventing the abuse of fixed term contracts as a form of employment. Fixed term contracts, or successive fixed term contracts continuing for more than four years, will be automatically converted to permanent contracts, unless the employer can show a good reason why the contract should not become permanent. Given that it is no longer possible to give a fixed term contract as a means to contract out of unfair dismissal proceedings, fixed term contracts are not especially useful as a way of avoiding unfair dismissal liability in the longer term. To be of use, breaks in employment have to be built into the arrangement. This practice is likely to succeed in avoiding liability under the successive contracts provisions in the fixed term regulations.

The agency workers provisions are at a much earlier stage in their gestation. Negotiations on a draft directive failed last year, but a common position has at last been agreed, which will form the basis of a draft directive due out soon.

Agency work is already very highly regulated by legislation or collective agreement elsewhere in Europe. The sorts of measures set out in the joint declaration seem likely to eventually become law. The main features of the directive, when it emerges, will include:

  • An extension of the principle of equal treatment to agency workers, giving them rights to the same or equivalent pay and conditions
  • A requirement that they have a direct employment relationship with the agency which places them, and corresponding employment protection rights
  • Provisions giving agency workers access to training and development opportunities
  • A ban on the use of agency workers to replace strikers
  • Rules preventing the downgrading of permanent employee terms and conditions to avoid having to improve agency workers' conditions.

    If the agency workers legislation takes a similar form to the fixed term workers directive, the use of agency workers will be a less attractive proposition. Agency rates could go up if agencies had to budget for redundancy payments when they couldn't find their workers a job, for example.

    The impact on risks of claims by employees will be limited by the extent to which the existing law already gives them protection. Employment tribunals have already ruled that some agency workers are actually the employees of the company where they have been placed by an agency, if their integration into the organisation was sufficient. Further, there is evidence that there are more women among agency or fixed term workers in some sectors, so they could use the discrimination law to challenge less favourable pay or conditions.

    Jo Plumstead is a solicitor at Kennedys