The effect of the Agency Worker Directive is bound to be an increase in costs of Agency Workers. A differential in rights, including pay rates, between an Agency worker and your own employees is no longer going to be sustainable – at least for any you wish to employ for over 12 weeks.
Where the Agency is employing at the National Minimum Wage and you pay your own employees at a higher rate then it is hard to see an Agency being able to “absorb” the necessary increase within their margins.
In addition, as an employer, you will need to provide the same facilities to Agency workers as those you provide to your own employees. Canteen facilities, annual leave and work clothes may pose little problem (and minimal cost) but for other fringe benefits, such as childcare, it could be different.
Will it mean the end of Agency employment?
It seems hardly likely. In the first place Agency workers are frequently hired for short term contracts. While facilities such as the Canteen will need to be available to Agency workers, equal pay rates will apply only after 12 weeks. Where the hires are shorter than this the Agency worker still has an especially important role to play.
The flexibility of Agency workers, the reality that employment rights are still limited both for the Agency and the end-employer and the ability to expand the workforce without direct recruitment costs will be continue to be genuine benefits.
The downside is going to be the need for increases in rates. It will be interesting to see if, given greater equality for Agency workers, their increased status, increased pay, and hence commitment will not offset costs for the end-employer.