Recruiters were no doubt watching last week’s general election with interest. But domestic politics may be a distraction from events in Europe that could have a far greater impact on the industry.

In common with all employers in the UK, recruitment companies face a raft of employment regulations, many of them introduced to comply with European directives.

As highlighted in our last issue (‘Euro negotiations on hold’, 6 June p4), a draft directive currently under discussion in Brussels will be aimed specifically at regulating the recruitment industry.

The European Commission is to begin drafting the temporary agency work directive after talks between the Union of Industrial and Employers' Confederations of Europe (UNICE) and the European Trades Union Congress (ETUC) failed to produce an agreement on the policies that should be implemented. The directive will be the third in a series on atypical work – the previous two covered part-time and fixed-term work.

UNICE, the European equivalent of the CBI, and the ETUC, a conglomerate of European trade unions, could not agree on underlying legal technicalities.

The ETUC wants to introduce measures that would mean temporary workers’ wages would have to be comparable with pay for the employer’s permanent staff. It also wants national collective bargaining for temporary workers’ pay, which could drive up costs for recruiters in the UK.

UNICE, backed by the CBI, wants to cut back on these measures to preserve labour market flexibility.

Statements from both sides revealed that the parties resorted to brinkmanship in the discussions, with each accusing the other of inflexibility.

Christine Little, who negotiated on behalf of the REC in the talks, said it was uncertain which side would prevail. Other sources report that the ETUC believes the European Commission will be sympathetic towards its claims.

Little said: ‘Because there is no legislation in this country of this kind, collective bargaining will be of no help whatsoever in the UK. The ETUC will also be asking for equality for all conditions including working time and health and safety. Collective bargaining is something that we just do not have – it would be incompatible with the UK employment market.’

Diane Sinclair, policy adviser at the CIPD, said recruiters should look to the part-time work and fixed-term work directives to gauge the content of the future legislation. She said: ‘The principles there are for equal treatment regardless of the type of contract, with equal terms and conditions. If the thinking is the same as in the fixed-term and part-time directives, temporary agency workers would have the same terms and conditions of employment as other people working in the organisation.’

Sinclair expects the completed legislation to make provisions against ‘abuse’ of temporary workers – although what would constitute ‘abuse’ remains unclear. Under the fixed-term worker regulations, refusing to offer a full contract to someone who has had several consecutive fixed-term contracts constitutes ‘abuse’.

Susan Anderson, director of HR policy at the CBI, said the regulations could mean recruiters would face issues about confidentiality and increased costs: ‘The hiring company would have to reveal details about how they are paying their staff, which is something many would not be prepared to do. Also, the ETUC’s proposals would create a significant increase in cost, both for the hiring company and the agency.’

But Sarah Veale, senior employment rights officer at the TUC, dismissed the CBI’s confidentiality argument as ‘spurious’. She said: ‘I find it hard to believe that every single person will be on an individual contract – there are often standard T&Cs for a job. Many companies are transparent in their pay schemes anyway.’

Veale said larger recruitment companies such as Adecco, Manpower and Reed would not find this a problem because many of their temporary staff earn more than permanent staff: ‘A lot of agencies get their business by undercutting what other companies are offering and they will find this hard to deal with. But from our point of view we find it unacceptable that a group of workers are systematically underpaid.’

Recruiters will know within the next year whether the commission will cave in to the demands of the unions – it seems unlikely the ETUC will give up.