Short-term staff receive more rights

Small- and medium-sized contractors could find themselves pushed to the wall after new working regulations providing fixed-period contract workers with the same rights as permanent workers came into effect yesterday (Tuesday).

The government's Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 aim to stop contract abuse by unscrupulous firms and mean that anyone on a fixed-term contract will now be entitled to compensation for unfair dismissal and redundancy.

Nick Hood, senior London partner of insolvency company Begbies Traynor, said that SMEs should "prepare now for much higher overheads".

A Construction Confederation spokeswoman warned that many of its members are "becoming confused" by the legislation.

Barry Stephens, the National Federation of Builders' director of policy and planning, added: "SMEs tend to employ a much higher rate of direct labour. Increased National Insurance contributions are therefore a great concern given the impact this will have on fixed costs."