IT contractor organisations have reacted furiously to reports of a deal that could see the government backing the EU's Agency Workers Directive.
The organisations claim that the directive, which compels employers to give temporary workers the same pay and benefits as permanent staff, would be disastrous for the sector.
Matthew Brown, managing director of contract recruitment specialist Giant, said: "It is difficult to see who's going to be in favour of this.
"I can understand the logic of it when it comes to ensuring that lower-paid temporary workers are not exploited. But contractors earn higher rates of pay than permanent staff precisely because they forgo the usual benefits.
"If businesses are forced to provide them with the same terms of employment, they're either going to have to reduce rates or employ fewer contractors."
The Agency Workers Directive was shelved by the EU over a year ago after member states failed to reach agreement on its implementation.
But the Dutch, who have recently taken over the EU presidency, are trying to revive the legislation.
"You wonder whether they actually think the UK is too competitive and they want to cut our legs off to bring us down to the average of the other Europeans," said Brown.
He added that this time round it may also be harder for opponents to block the Directive.
"It could receive backing from the new EU states and, if recent reports are accurate, our own government," said Brown.
Last week the Transport and General Workers Union claimed that Labour's National Policy Forum had agreed to back the Directive as part of a raft of measures aimed at securing the union's support at the next election.
Ann Swain, chief executive of the Association of Technology Staffing Companies, said: "If this is true then British business is being used as a sacrificial lamb to appease the unions.
"It would be very disappointing if the government were to destroy its reputation in the business community in exchange for election funding."
Brown added that contractor organisations will be lobbying hard for an opt-out if the legislation goes forward.
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