Defeat of EU Temporary Workers Directive - UK Gives off Contradictory Messages

The postponement of a vote on the proposed EU Directive on Temporary Workers Rights, while very good news, should be used by the UK Government to sort out its muddled approach to contractors and agencies, according to Barry Roback, Chief Executive of JSA, the UKís number one specialist accountants for IT contractors.

While he welcomes the fact that the British government has managed to kick the controversial Agency Workers Directive into touch for the time being, he believes that it is too early to assume that the legislation is permanently dead in the water.

The proposed legislation, which was first floated in 2002, would have given temporary workers the right to the same pay, holiday cover, sick and maternity leave and other benefits enjoyed by permanent employees.

ìWhile it is most welcome that our Government has become the champion of the self-employedî says Barry Roback, ì the fact remains that many of its policies over the last few years have been poorly thought out and contradictory. While there is no doubt that there has been serious abuse of the tax system in recent years by a relatively small number of contractors and their agents, and that the Treasury was right to take action, the fact is that much of the subsequent legislation has been poorly drafted and executed, making conditions for temporary and contract workers increasingly difficult.î

Roback is unconvinced that despite its protestations in the European Union, the UK Government has a much better understanding of a genuinely free labour market than its fellow EU members. ì While the origins of IR35, transfer of debt provisions and the Managed Service Companies legislation were based on a genuine attempt to close some serious tax loopholes, the fact remains that the legislative results have conspired to complicate life for contractors, agencies and end-users. The newly-created Department for Business, Enterprise and Regulatory Reform (BERR) must try and persuade The Treasury that a genuinely flexible labour market needs less rather than more legislation. On past experience, the omens donít look too good. î

Roback commends John Hutton, Secretary of State for Secretary of State for Business, Enterprise and Regulatory Reform, for putting up a fight but says that there are several European Union members lingering in the background that would still welcome the legislation. Furthermore, the notoriously bureaucratic French will hold the Presidential seat from July next year, even though French President Nicolas Sarkozy is supposedly dedicated to breaking down restrictive French labour laws.

Roback adds:î While the British Government has consistently opposed the legislation since it first appeared in 2002 and John Hutton has done well to persuade fellow EU ministers to put off a vote for the time being, it does seem that the Chancellor of the Exchequer, Alistair Darling, should start to sing off the same hymn sheet as John Hutton. The UKís fight against the directive would be much more effective in the long-term if it could illustrate with more conviction that it genuinely supported those UK contractors and temps, particularly at the professional end of the market, who choose to work for themselves for a wide variety of positive reasons.î

Roback concludes that Britain would be a more powerful member of the EU if it led by example rather than by constant tactical manoeuvring.

ìWhile lobbyists such as the CBI, ATSCo and the Recruitment & Employment Confederation have worked tirelessly and successfully to put the British case across in Europe, it is by no means certain that the directive will not re- emerge. Threats by Gordon Brown to wreck the EU Treaty if the UK didnít get its way on this Directive, might have delivered the goods for the time being but it has hardly been the principled fight, which it should have been. We should be educating the rest of the EU by example, about the genuine advantages to all parties of contract and temporary work because it is unfamiliar territory for many member countries, particularly those from the former Eastern Bloc.î