Regulations protecting pay and pension rights for fixed-term employees could be extended to temporary workers under legislation being considered by the government.

Under proposals in the employment bill, which is about to pass through parliament, fixed-term workers could receive the same pay and pension rights as permanent staff. The government must implement the measures to comply with the European fixed-term workers directive.

Temporary workers are currently excluded from the regulations because they are classified as ‘workers’, not ‘employees’, under European legislation.

But the government will next year issue a consultation document that will consider extending the legislation to cover temporary workers. The document will examine whether temps should be reclassified as ‘employees’ - meaning they are protected by the fixed-term legislation.

The move has angered recruitment organisations, which believe reclassifying temporary workers will drive up costs for clients and agencies.

Director of external communications for the REC, Marcia Roberts said there was uncertainty about what the government’s plans were, although there may be no change after the review.

She hoped the government would not bow to pressure from unions and extend the scope of the directive.

She said: ‘They are reviewing the status of workers, and we are not sure what the outcome will be, although we believe [the government] is not minded to change it.’

The TUC said the regulations could make employers opt for cheaper agency staff, rather than contract workers. It denies that extending employment rights for temporary workers will damage the recruitment industry.

‘People doing the same job should receive the same pay,’ said a spokesman. ‘In the long run it is better for Britain and our productivity if we treat our employees fairly.

‘There will be some limited cost - but employers made the same argument about the minimum wage and they were proved wrong. There will be no damage to the economy whatsoever.’

This is the latest in a long line of possible legislation that temporary recruiters have had to deal with, including the recent change to the working time directive.