FREELANCE ENGINEERS working for Railtrack and London Underground face an 8% wage cut from next week, NCE has learned.
The reduction in rates will follow the 1 October introduction of the Brussels-driven Working Time Regulations. The directive guarantees all workers three weeks paid annual leave (rising to four weeks in November 1999) and limits the number of hours they can be required to work to 48 per week.
But employers, including London Underground and Railtrack, are refusing to pay freelancers to take holidays. They argue that agency workers already receive premium rates that cover holidays.
Railtrack head of employee relations Paul Radley told NCE: 'Holiday arrangements are down to the agencies that employ the individual. The worry is that the agencies could try and pass the cost on to us. Our procurement people are alive to this possibility and would resist any attempt to change the terms under which we use temporary staff.'
NCE also understands that London Underground has written a letter to all the recruitment agencies it uses explaining in detail why it will not bear the extra costs.
The expense will then be forced back on to the recruitment agencies, which appear to recognise that they have lost the argument - at least for the time being.
'Some of our major clients say they will not entertain an increase in rates,' said Anders Glaser Wills, managing director Phil Anders.
'They understood freelance rates already included holiday pay. Client resistance to increased rates means that either ourselves or the workers will have to absorb the cost increase'.
AGW claimed that it would not decrease its rates as a result of the directive. But NCE understands that some other agencies have sent letters to engineers informing them that freelance contracts will be rewritten, lowering pay rates by nearly 8%. These agencies argue that their margins cannot take the extra cost.
Another recruitment firm, Hays Montrose, claims that, according to the Federation of Recruitment & Employment Services, reducing temporaries' pay rates is illegal under the Wages Act. Hays is increasing its charge rates by 3% and bearing the rest of the extra cost itself.
However, introduction of the new regulations does mean that companies will have to bear the cost of systems to administrate and record hours worked.
The new regulations limit the number of hours a worker can be asked to work to 48 per week. But employees can opt out of this limit if they do so in writing.
'The regulations will impact on any company in terms of setting up administration and recording systems,' said Association of Consulting Engineers business affairs director Mindy Wilson. 'The start- up costs will depend on the systems already in place.'
There also remain questions over who is covered by the legislation. The directive does not apply to 'managing executives [or those] with autonomous decision making powers'.
On this point Wilson advises employers to err on the side of caution. 'This is a grey area at the moment so it is important for all to assume they are covered by monitoring,' she said.
These are unlikely to be the only issues arising from the legislation. 'It is inevitably complex, ' said Civil Engineering Contractors Association director Rosemary Beales.
'I will not be surprised if there are a fair number of questions. We will monitor the effect on the industry and if we get the impression that there are problems we will act.'