From October, employers will be forced to give agency workers the same pay and holiday entitlements as regular staff after just 12 weeks in a job. At present, temps have no “equal rights”.
The UK regulations stem from lengthy negotiations over a European directive and are aimed at helping more than a million agency workers nationwide get equal treatment.
About a third of businesses in the UK are thought to pay temps less than permanent staff doing similar jobs and often refuse to grant them the same annual leave allowance.
However, a significant number of employers plan to circumvent the new rules by getting rid of agency staff before they serve 12 weeks in a role, research by Eversheds law firm showed.
A quarter of businesses will also be put off hiring temps, the survey revealed, at a time when private sector employers are being expected to create jobs to boost the economy.
A range of sectors, from retail to hospitality, use temps to cover peak periods of demand and as a way of trying out staff before taking them on permanently. The new rules could damage the UK’s temping recruitment industry for good, employers have warned.
Adam Marshall, policy director at the British Chambers of Commerce (BCC), said: “Many businesses rely on flexible labour in the form of agency workers, for example retailers during the Christmas period. That over 10pc of businesses are looking to end contracts with temporary workers at 11 weeks shows there is still a demand for flexible, low-skilled labour.”
The BCC believes the changes will cost employers £1.6bn a year. Mr Marshall added: “Some companies tell us they will be using fewer agency workers as a direct result of the regulation. However, by reducing the flexibility in our workforce, the directive could damage recovery at a time when we need it most.”
Some experts said employers were coming around to the changes – in 2008 the same Eversheds survey showed 64pc of employers planned to reduce their reliance on agency workers.
Mike Emmott, an adviser at the Chartered Institute of Personnel and Development, said: “Employers have bitten the bullet and recognised that the regulations could have been a lot worse, such as equal rights from day one.”
However, he said the “complicated” regulations still left many questions unanswered, such as whether temps were entitled to the same bonus arrangements as permanent staff.
Mark Hammerton, partner at Eversheds, warned businesses to start preparing for the new rules early. “Improving awareness of the new rights across managers and having clear procedures for hiring agency workers is likely to prove invaluable,” he said.