An agreement was sealed yesterday with the government, employers and unions agreeing that temporary British workers will be given the same employments rights as permanent staff after 12 weeks in the job.

The move will no doubt spark protest from the IT staffing industry, who claim the move will hamstring smaller firms.

The government’s decision represents its attempt to offer a compromise on European-wide plans for equal pay and conditions for agency employees.

The new deal will bring around 1.4 million UK agency workers on to a level playing field with permanent staff over equal pay and holiday entitlement. However, Pension payments and sick pay are not covered, and temporary staff will be required to work the same length of time as full-time workers to benefit from paid maternity leave.

Business secretary John Hutton said “the agreement achieves our twin objectives of flexibility for British employers and fairness for workers. It will give people a fair deal at work without putting their jobs at risk or cutting off a valuable route into employment.”

The government will also be hoping that other European nations will allow Britain to opt-out from EU rules that restrict the working week to 48 hours following yesterday’s agreement, ahead of next months EU summit.

Ann Swain, chief executive of IT recruitment trade body - the Association of Technology Staffing Companies (ATSCo) - recently slammed the prospect of the UK adopting the EU directive on agency workers, who have a heavy presence in the tech industry.

“Highly-skilled temporary IT contractors want and need flexibility to work on short, cutting-edge projects which are vital to the development of European companies.”

Tina Sommer at the Federation of Small Businesses (FSB) offered a more direct attack on the proposals. “This is a disastrous deal for small businesses which rely on the flexibility provided by agency workers,” she said.

“Agency fees and high hourly rates mean temporary workers, far from being seen as cheap labour, are already a costly but useful way of responding to fluctuations in demand. If that flexibility is lost, many small businesses will stop using temporary employees.”

Martin Temple, chairman of the Engineering Employers Federation said yesterday was “a bad day for business and represents yet another brick in the wall of labour market rigidity in the UK.

“At a time when business needs all the tools at its disposal to work flexibly and be quick on its feet, it is very unhelpful to add further constraints on the use of agency workers.”

However, the British government has no sway over “implementing” legislation based on the new agreement until after Brussels passes a directive on agency workers’ rights.

“The Government will now engage with its European partners to seek agreement on the terms of the Agency Workers Directive that will enable this agreement to be brought into legal effect in the United Kingdom,” said the Department of Business, Enterprise and Regulatory Reform.

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