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The Government has agreed a deal between unions and employers that will see temporary and agency workers in the UK receive equal treatment to full-time members of staff after 12 weeks of employment.

The CBI and TUC have made a joint declaration with the Government, which believes the deal can pave the way to reaching agreement in Europe on an Agency Workers Directive that secures this flexibility for the UK.

Equal treatment is defined as the basic working and employment conditions that would apply to workers if they had been recruited directly to occupy the same job. It will not cover occupational social security schemes.

Business secretary John Hutton said: 鈥淭his is the right deal for Britain. Today鈥檚 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.鈥�

The Forum of Private Business (FPB), however, has warned that the new benefits for temporary workers could make many small firms uncompetitive and lead to greater unemployment.

Chief executive Phil Orford is concerned that the flexible labour market could be seriously undermined. 鈥淭he initiative was originally intended to protect the rights of temporary workers at the hands of rogue employers. However, yet again, it is the law-abiding small business owner who will suffer from additional regulation.

鈥淚ncreased costs and bureaucracy is an unwelcome burden for our members at a time of financial uncertainty, and we fail to see how these measures fit in with the Government's plans to reduce red tape for small firms by 25% by 2010,鈥� said Orford.

Using agency staff to cover absences because of maternity leave, for example, is likely to become far less attractive for smaller firms. The added costs involved in employing temporary workers could leave many with serious staffing problems.

The Government will now engage with its European partners to seek agreement on the terms of the Agency Workers Directive that will enable the deal to be brought into legal effect in the UK.

It has voiced hopes that EU agreement will be obtained in time for the necessary UK implementing legislation to be introduced during the next Parliamentary session.