Agency and temporary workers are set to receive the same rights to base pay and holiday entitlement as permanent staff under new legislation. The prime minister has unveiled plans for legislation in the next parliamentary session that will "ensure new rules for fair treatment of agency workers".

The announcement is a u-turn by the government, which has, for years, resisted pressure from unions and the European Union to back the Agency Workers Directive. It follows extensive media coverage of a private member's bill on the issue.

Agency and temporary workers placed in an organisation are to be given rights to the same terms and conditions as the firm's permanent employees in relation to base pay and holiday entitlement.

Although employers will be expected to provide a similar employment package for these workers as for their permanent staff, individual benefits, such as pensions and sick pay, are excluded.

The government plans to give agency and temporary workers the same rights as full-time employees after 12 weeks' service with an organisation.

But Mark Hammerton, employment law partner at Eversheds, said: "Many agency staff work for agencies because they like the flexibility that this brings and some of them might be unhappy about losing some of this flexibility under the proposed legislation."

Although the new legislation is expected to be announced in the Queen's speech this autumn, Hammerton suggests it could be as late as 2011 before it comes into effect.

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Case Study: Emergency leave

Month off to care for children 'too long'

A company fined for sacking an employee because he took a month off work in an emergency to look after his family, has won its appeal against an Employment Tribunal decision.

Cortest, a materials testing firm, had been fined £7,243 by the Employment Tribunal after it found that Mr K O'Toole had been unfairly dismissed for claiming emergency leave to look after dependants under the Employment Rights Act 1996.

O'Toole had claimed that he had no choice but to take emergency time away from his job to care for his children himself because he could not make alternative childcare arrangements, due to a lack of necessary finances.
At the time of O'Toole's request for emergency leave, his employer informed him that he should resign from his position in order to take the time off and be reinstated when the situation improved.

This led to a conflict over whether O'Toole was in fact being dismissed and led to the Employment Tribunal hearing and its decision in favour of O'Toole.

Following an appeal by Cortest, the Employment Appeals Tribunal ruled that a period as long as a month to care for dependants would not fall under the Employment Rights Act 1996.

Kathleen Healey, employment partner at Freshfields Bruckhaus Deringer, said: "The time off that the employee took, claiming it to be an emergency, was too long. It should not have been more than a week."

Healey explained that O'Toole could have taken up to 13 weeks' unpaid parental leave instead. She added: "In most cases, the employee should serve the employer 21 weeks' notice prior to taking parental leave.

"However, a fair employer could waive the right to such notice and allow staff unpaid leave rather than asking them to resign."