Freelancers could be outside Agency Directive

The Agency Workers Directive (AWD), which received the firm backing of the Prime Minister at the TUC conference in September, may not apply to limited company contractors, according to contractor specialist giant group plc.

The strong possibility that the Directive will not apply to contractors, says giant, should come as welcome relief. It is feared that the Directive, which proposes equalising temporary and permanent workers' pay and benefits, could make contracting less attractive to workers and increase the cost to companies of using contractors.

Blair told TUC delegates: "You know our concerns on agency workers to maintain necessary labour market flexibility. But whilst we must meet those concerns, we will support the EU Directive on Agency Workers."

Struck a deal

The UK originally opposed the Directive and it was thought it had been removed from the agenda. However, the unions continued to push for its implementation and it was reported that the Government struck a deal to support their calls in return for the unions' support at the forthcoming general election.

Since then there has been concern and conflicting views as to whether limited companies would be 'in' or 'out' of the measure which is primarily intended to protect vulnerable members of the workforce who are forced into agency contracts in order to circumnavigate employment rights.

This has led to concerns in the freelancing community that they could be given protection neither they nor their clients want.

However, giant now claims to have examined in detail the exact wording of the current draft of the Directive and believes there is a case for limited companies to fall outside its provisions.

Giant pointed to the section of the Directive which states: 'This Directive applies to workers with a contract of employment or employment relationship with a temporary agency who are posted to user undertakings to work temporarily under their supervision.'

Optimistic

Matthew Brown, Managing Director, giant group, said: "From what the Prime Minister said it now appears certain that this Directive will become law in the UK, but there is good reason to be optimistic.

"I think Blair's comments about the importance of maintaining labour market flexibility could mean that the UK will try to implement the Directive in a diluted form. That hopefully means that the current wording, which potentially excludes most contractors, will be retained."

William Downing, Employment Partner, at City law firm Trowers & Hamlins, said: "The Directive will only apply where a contract of employment or employment relationship exists between a contractor and an agency. To help ensure that no form of employment relationship exists between the contractor and the agency it will be necessary for the contractor to give notice that he or she wishes to opt out of the Employment Agency Regulations."