Agency workers could soon be given the same rights as permanent workers amid signs that the Government is giving in to union demands for greater rights for temporary staff.

The Department for Business and Enterprise has been sounding out business groups on the impact of potential new legislation. It is thought that Britain will press ahead with improving the rights of agency workers without waiting for legislation to come from Europe.

A European agency workers directive has been debated for several years, but it looks unlikely that the current Portuguese presidency will be able to push it through before its term ends in December.

It is believed that action on agency workers was promised to the unions in the preelection fervour of a few weeks ago. Although there are now no plans for an election, unions believe that ministers cannot duck out of their recent commitment.

Labour had also made a pledge on agency workers in its last election manifesto after the Warwick agreement with unions, which guaranteed them a raft of new rights in return for the support of the unions for the last election. Although many of the Warwick pledges have moved into law, unions have been angered by the lack of action on temporary workers.

The unions want temporary workers to have the same rights as the permanent staff they work alongside, such as the same pay, pensions, entitlements to holiday and sick leave. They say that the increased use of agency staff by companies is creating a two-tier workforce in which some people have very few rights. They have also campaigned strongly on rogue employment agencies that charge vulnerable workers, particularly migrant workers, excessive costs for finding them work, for accommodation, transport and other services that the employees do not necessarily want.

Business is adamant that it needs the flexibility of agency workers and that it would be too costly to give them all the same rights as permanent staff.

It is thought that the Government will try to square the circle by establishing a qualifying period after which temporary employees get the same rights. The CBI has said that it could live with giving temporary workers the same rights after a year’s continuous employment at one organisation because after that time workers are effectively permanent. Unions would like no qualifying period or a much shorter one. The CBI and the EEF manufacturers’ organisations have been approached by officials from the Department for Business about their views on potential new legislation.

John Hutton, the Business Secretary, announced a crackdown on rogue employment agencies at the TUC conference last month – soon companies will face unlimited fines if they force workers to accept and pay for accommodation and other services – but at that time ministers were still hoping that legislation could be agreed in Europe.

The CBI has said that giving temporary workers the same rights as permanent ones could cost 250,000 temporary positions.

The employers’ organisation said that companies would not take on more permanent staff but instead would tend to ask their existing employees to work more overtime during busy periods.

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