Legislation from Europe and the UK threatens to burden smaller recruitment companies with costly red tape and skew the market in favour of big companies, the REC has claimed.

The European directive on temporary work that threatens to make wages for temporary staff comparable to permanent staff pay in user companies could be drafted as early as September.

Tim Nicholson, chief executive of the REC, told Professional Recruiter that the Confederation has already been in talks with European ministers to represent the viewpoint of UK temporary agencies. He said: ‘This is an opportunity for other countries to look at the UK labour market model and see why it functions so well. We will be hoping the regulations will preserve the flexibility of the labour market, and that we can reach an agreement that will fuel growth.’ Countries like Germany and Italy have strict regulations on temporary workers, who are only allowed to work in certain sectors or companies.

The REC is lobbying to prevent the European Commission adopting the viewpoint of the European Trades Union Congress, which last month walked out of talks with the Union of Industrial and Employers’ Confederations of Europe to establish a draft document. The REC believes that over-regulation of the temporary agency sector would damage the competitiveness of the UK economy.

The Employment Agencies Act will also open up a legal loophole that could skew market conditions in favour of the big employment companies. REC director of external communications Marcia Roberts said larger recruitment companies could avoid quarantine regulations by treating each post as a ‘project’, and hiring sub-contracted staff to complete it.

This would mean the sub-contracted staff would not be seen as agency temporary workers, but as full employees of the recruitment agency.

Roberts said: ‘The agencies would hire the staff, but they would remain within control of the agency, rather than the user company. This is likely to stack the market in favour of the larger consultancies, because smaller companies would not have the resources to do this.’

The Organisation for Economic Cooperation and Development has reported a direct correlation between strict employment legislation and groups such as young people and the long-term unemployed being unable to find work. The REC believes that if the directive makes the market more flexible, it would create 6.5 million new jobs across Europe.