Recruiters packed the Millennium Gloucester Hotel in London on 27 November seeking answers on how they should prepare for the imminent legislation which will give agency workers equal pay and treatment to full time equivalent staff after 12 weeks in a job.

Some of the questions being asked were: Who defines equal pay and treatment, and will it include benefits enjoyed by permanent employees? Should recruiters and employers be equally liable? Will it mean a rise in tribunal claims? How will a comparator be calculated for equal pay? Will Limited Company Contractors or other sectors be exempt? The panel of experts called upon to answer such questions included Mike Emmott, employee relations advisor at the Chartered Institute of Personnel and Development; John Kell, policy and external relations manager at the Professional Contractors Group; and Alison Treliving, partner at employment lawyers Hammonds.

There weren’t many definitive answers for the nearly 300 recruiters in the audience, but one thing was made clear: imposing this legislation in a downturn, which is likely to increase costs for employers and recruiters, would delay any economic recovery.

“We must call for delaying any implementation until 2011 at the earliest,” said Kevin Green, chief executive of the Recruitment and Employment Confederation. “Businesses need to start lobbying their MPs, the national and local press — we need to influence the agenda. The time to act is now, don’t miss this opportunity.”

But Kevin Barrow, partner at employment lawyers Blake Lapthorn, who told Recruiter that Labour had tabled the legislation for the Parliamentary session in autumn 2009, said agencies need more information before taking action.

He said: “Doing nothing in the face of such significant change may seem counter-intuitive. But until the UK [government] implementing legislation is clearer, our advice is to hold off making any significant changes to your operations, other than to be a careful about entering into long-term supply contracts without good ‘change of legislation’ provisions, which give you a ‘get out’ if you have to change rates so that they match those of ‘comparable perms’.”

However, staffing companies will have to start thinking about their options and consider what they can do to reassure clients and remain competitive, added Barrow.

However, Andy Hogarth, chief executive of industrial recruiter Staffline, welcomed a parity of pay with temporary and permanent staff and said it was “not worth wasting time and energy acting on subjective conjecture” because “we simply do not know” how TAWD will be tabled.

“We need to push the government to come forward with a more coherent draft that the recruitment industry can respond to,” he added.

Hogarth warned that statutory limitations could make recruiters liable for equal pay legal challenges being backdated by six years.

Meanwhile, Jason Perry, managing director of ASL Recruitment, warned if the detail of the directive was not resolved quickly, it could have an irreversible affect on the temporary staffing market.

“What we are seeing is the further erosion of a flexible workforce. Whether it is socially attractive or not, it will come to a point where the cost becomes unattractive to employers and you will not have a flexible workforce in this country. We have a government that doesn’t seem to understand that the cost burden of all of these legislative changes needs to be passed on by the employer” he told Recruiter.

Perry said he expects to see “creative avoidance schemes” and umbrella-type companies being used as an attempt to get around the legislation.

Catherine Johnstone, of Catherine Johnstone Recruitment, told Recruiter the directive will probably lead to another disruptive and potentially damaging review of staffing in the public sector. “The public sector is ready for a shakedown,” she said.

She added that at the moment there was a “very reasonable approach” with fair market rates that take into account the profile of the individual company and market conditions.

But she added: “We have seen neutral vendors negotiating guaranteed income by cutting costs. How they cut costs cascades with the right of the worker. It is about efficiencies. The bottom line is that they squeezed the rates of the intermediary supplier to margins of between £20-25 a week for a temp. Temp wages will go down and recruiters’ margins will be squeezed further.”

The REC will now debate six draft recommendations along with concerns raised from recruiters during the summit before final recommendations are tabled with the government in January as part of an official consultation process (see box).

So final answers to recruiters’ questions will have to wait until after January — at the very earliest.