Many British companies that win European contracts by undercutting on labour costs, by paying British rates to their employees stationed abroad, will be prohibited from doing so under the new law - putting those jobs in danger. Self-employed workers will also be affected.
The new law is aimed at stopping the practice of ``social dumping'' whereby employment agencies hire workers from lower-wage countries to undercut local employees.
Under the directive, which could be adopted as early as December, it will be illegal for a foreign worker to be given a job at less than the going rate of pay and conditions negotiated by collective bargaining in the host country.
Companies wishing to send employees to work abroad will have to register with a liaison office in London. They will be told the exact terms and conditions - including working hours, rest periods, minimum paid holidays, minimum pay rates, overtime and other perks - to which they must adhere.
Britain has been fighting what it believed was a successful battle over the ``Posting of Workers'' directive since it was first proposed by the European Commission in 1991. However, during its EU presidency, Germany came up with a tough revised version of the legislation and announced plans to get outline agreement before the end of the year.
Rather than just affecting construction workers who move from country to country, the latest draft of the directive, a copy of which has been obtained by the Independent, now includes all employees posted abroad.
``This directive is vital if we are to have industrial peace in the single market,'' said a senior German source. ``You cannot have low-wage workers coming into countries upsetting the balance and not expect consequences.''
The Department of Employment recently warned employers at a symposium that the directive was likely to be adopted despite strong opposition from Britain and Portugal. ``We consider it unwelcome,'' an official told the employers. ``It will impose unacceptable costs on employers and interfere with flexibility in the market place, and it does not take sufficient account of the differences between individual countries.'' A spokesman said the new text had increased concerns about its impact on British employers. ``This government sees it in a negative light.''
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