The latest deal for temporary workers has been seen by some as the least worst option for British business.  So what are the implications for recruiters?

Question marks remain over the controversial government announcement to give temporary agency workers the same rights as permanent staff after 12 weeks, following an agreement between business leaders and trade unions.

Following a lengthy dispute between the Confederation of British Industry (CBI), which argued that offering equal rights to agency workers before six months would cost thousands of jobs and damage the UK's flexible labour market, and the Trades Union Congress (TUC), which wanted equal rights after day one, a compromise was reached last week.

John Hutton, business secretary, said the deal would achieve the government's twin objectives of "flexibility for British employers and fairness for workers without putting their jobs at risk or cutting off a valuable route into employment".

Under the proposals, after three months in work, temporary agency workers will qualify for the same pro-rata pay and conditions as permanent staff, but the government has said this will not include other occupational benefits, like sick pay and pensions.

The two sides have also agreed that there should be "appropriate anti-avoidance measures" to stop employers evading the regulations — for example, by changing an employee's job description before the deadline elapses.

There will be further consultation on how the new rules should be implemented, including the creation of a mechanism for resolving disputes.

The announcement comes just a week after Prime Minister Gordon Brown said new rules would be included in the next Queen's Speech to give agency workers "fair treatment".

But questions remain over when the new rules will be implemented, given that Brown, who is under intense pressure to come to a speedy resolution with Brussels over the blocked European Agency Workers' Directive, will be hoping that the EU Employment Council, which meets next month, will agree the deal.

The EU has proposed a derogation period (the length of time staff should work before the equal treatment measures kick in) of six weeks, so the government will have to convince MEPs that 12 weeks is a better deal.

There has also been no confirmation over how the comparator will be worked out and by whom, leaving a lot of uncertainty about the definition of any proposed legislation.

Reaction has been mixed, but several recruitment agencies have told Recruiter that the proposed legislation will improve standards in the industry and will be beneficial to candidates, employers and employees.

Andy Hogarth, the managing director of industrial staffing firm Staffline Recruitment, told Recruiter: "We welcome the enhancement of opportunities for temp workers. It means those who work long term will no longer be treated as second class citizens, which must be good for the industry and for the worker."

Hogarth has been preparing for the new rules for some time and has plans in place to ensure a smooth transition.

"I don't think it will lead to employers taking on fewer temps. They need a flexible labour market and this seems like a reasonable compromise," he added.

The government has made it clear that it is no longer in favour of a low pay commission-style forum to decide how equal treatment will be decided, instead opting for negotiations with Europe followed by domestic legislation.

It also looks almost certain that Andrew Miller's Private Member's Bill will now be scrapped.

Meanwhile, Stuart Neilson, partner in employment and pensions at legal practice McGrigors, told Recruiter that there were still many holes in the proposed legislation, and that it could be more than two years before it is agreed on a European level and then passed into domestic law.

Neilson said the new rules did not make it clear how to compare an individual's terms and conditions.

"Do you look at the whole package and benefits? Or do you look at an hourly rate?" he asked.

"The government will have to think long and hard about how this will be enforced and how to work out who the comparator is."

He said problems could occur if all agency staff were employed, with no permanent staff to compare to, and questioned whether an employer would be able to retrospectively compare a job role.

Neilson also warned that the new rules might have an adverse impact on permanent employees, who might lose out in terms of pay and conditions when companies look at their bottom line.

"It might lead to some employers changing their staffing models to permanent employees and scrapping agency workers altogether," he said.

However, Aidan Anglin, managing director of professional services at IT recruiter Spring Group, said it certainly wasn't a clear cut issue and it was crucial that a dialogue must be maintained with industry trade bodies and the government as well as agencies and their clients and candidates to gauge their views.

He told Recruiter: "We acknowledge that contractors are going to have greater rights. But there is a significant difference between high-level IT finance directors and low-skilled work. It is dangerous to use legislation across a broad range of skills." John Cridland, deputy director-general of the CBI, said the deal was "the least worst option available for British business", adding that half of agency assignments will be unaffected as they last less than 12 weeks.

Cridland said it would enable the European Directive to be put to bed and "should" allow the retention of the working hours opt-out from the working time directive, which is "equally vital to the future of the British economy".

However, the Chartered Institute of Personnel and Development (CIPD) criticised the announcement saying it would upset employers and cost jobs.

Mike Emmott, employee relations adviser at the CIPD, said: "At a time of economic uncertainty, and with the government committed to ambitious targets for getting more people back into work, the timing could hardly have been worse."

John Kell, policy director at Professional Contractors Group, told Recruiter that the key issue is whether the scope of the Directive will include limited company contractors, which deal exclusively with professional candidates.

"We have heard that domestic legislation will exclude them and concentrate on 'vulnerable' low-skilled workers, but there has been no final decision," he said.

There is a "fairly good chance", following negotiations with the government, that some details on pay and conditions would work out in the recruitment industry's favour, according to Tom Hadley, director of external relations for the Recruitment and Employment Confederation (REC).

He told Recruiter: "Of course there are concerns that any new regulations will impact on the viability of temp and contract work in the UK, especially at such a delicate time in the UK labour market.

"It is also a frustration for recruiters that the debate on agency work regulation has not been based on real evidence but through a political debate," Hadley added, estimating that the new rules would not be implemented "until April 2010 at the earliest".

Hadley said it was important to define the scope and detail of equal treatment and how agency workers' pay is negotiated and established, which he argues "enhances" rather than limits the "vital contribution of agency work in the UK and across Europe".

"There is a possibility that the EU will block this proposal or suggest an alternative so it is important that the industry does not concede any further ground when the Directive is discussed in Brussels," he added.

An initial overview will be provided at the REC's 'Agency Summit' in London on 2 June.