Regulations that stipulate the same employment and working conditions for agency workers as permanent staff are costly, time consuming and prevent job creation, the Confederation of British Industry (CBI) has said.
The introduction of the Agency Workers Regulations (AWR) in October last year entitles agency workers to the same working rights from day one of employment, and the same pay and working conditions after a 12 week qualifying period.
However, analysing the impact of the AWR over the year, the CBI has said the Government needs to simplify the regulations.
The CBI's director of employment & skills Neil Carberry said: "Agency jobs are a crucial way into employment both for people looking for flexible work, and for those seeking experience and a way into the workforce."
"But one year on from the introduction of the regulations, the business verdict is that they are a drag on job creation in this vital sector."
According to the CBI, the regulations have cost businesses more than £1.5 billion in its first year, while temporary workers have failed to see the benefits.
"Instead, the vast majority of this cost has paid for paper-pushing to ensure compliance. This has in turn led to a reduction in temps hired in eight out of nine months in 2012, despite a rise in permanent staff being hired," Carberry said.
Research found that 57 per cent of firms that use temporary agency staff have reduced their use as a result of the regulations, while eight per cent have stopped using them all together. The same report also found that before the AWR, agency staff received on average 96 per cent of the pay of comparable employees.
The CBI also accused the AWR of incentivising the lodging of 'opportunistic tribunal claims.'
It now wants the Government to take measures to simplify the regulation including:
Streamlining the definition of pay for easier comparison
Simplifying the 12 week qualification period to include those on short-term assignments
Removing unnecessary legislation that goes beyond the directive