'EU directive must exclude IT contractors'

Contractors wary about an EU directive designed to put temporary agency workers on equal terms to employees have won an unlikely ally in a British MP.

Despite writing his own bill to give UK 'temps' equal rights, Andrew Miller MP wants the directive to bypass temporary staff who use umbrella or personal service companies.

Speaking last week on the eve of a vote by MEPs, which brought the directive closer to the UK, he said such workers must be exempt from both his and the EU proposals.

In principle, contractors embraced the pledge from Mr Miller – chairman of the regulatory reform committee, which ensures new rules are appropriately introduced in the UK.

But the Professional Contractors Group, the UK's trade group for freelance contractors, last night said it was "not convinced" that Mr Miller's desired exemptions were viable.

Excluding freelancers from the directive was vital but "building exemptions around certain structures - say, limited companies and umbrella companies – is [not] the right way to go."

John Kell, the PCG's policy officer, added that bypassing the two structures was "potentially inflexible, and risks creating loopholes for unscrupulous employers to exploit."

His protest partly stems from 'personal service company' having no basis in law - a term he said that "artificially distinguishes between freelancers and other small businesses."

Rather than exempt staff for the structures they adopt, the PCG said the directive should be more "tightly" framed by using the Employment Rights Act's definition of 'worker'.

A 'worker' is someone working for a person "whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual."

If the term 'worker' – spelt out in the 1996 act – was incorporated into the directive, freelance contractors would be excluded, as their clients are customers of their 'business undertaking'.

Yet Mark Hammerton, partner at law firm Eversheds, said there would be a "fundamental difficulty" with a proposal to "carve out" certain categories of staff from the directive, which remains in the hands of MEPs.

"This well-intended flexibility may well founder on an EU rather than a UK level," he said, when asked about Mr Miller's wish to remove personal service and umbrella company users from the scope of the directive.

"Many other EU countries would not be in favour of such an exception. Those negotiating the passage of the draft directive would no doubt confirm that in certain jurisdictions, agency work is regarded with suspicion so persuading those countries that there are categories of people who don't need such protection would be
difficult."

Hinting that any call from an MP, particularly an influential one, for temporary professionals not to have employment rights foistered on them was welcome, IT recruiters endorsed Mr Miller's remarks.

"We are not out of the woods yet, but this is a huge step forward," said Ann Swain, chief executive of the Association of Technology Staffing Companies (ATSCo).

"It is deeply satisfying to get such an endorsement from one of the key legislators who will be working on the UK legislation."

ATSCo said it had made "significant inroads" into separating professional staff from the rest of the temporary worker industry, whose vulnerable members it said deserved protecting.

"But there was a danger that the distinction between the highly skilled and highly paid workers…and the kind of workers exploited by gangmasters, was not understood by EU and UK lawmakers."

The group also said Mr Miller's wish to exempt PSC/umbrella users from the Agency Workers Directive was evidence employment legislators now realise that "the 'one size fits all' approach to regulation is not appropriate."

Mr Hammerton hinted the approach seemed even more inappropriate because of the "contrasting perceptions of what temporary or agency work represents" to each member state.

Though he warned these conflicting experiences of temporary work could dog the future passage of the directive, which the MEPs will table amendments to and vote on around October 20th.

"Policy-makers will be alive to the risk that if they create a more relaxed regime for the 'genuine' professionals, it will be exploited by the more dubious end of the market," he said. "Unions in particular- who have been very proactive in this area - will not hesitate to remind the government of this risk."

Wednesday 15th October 2008