Costly penalty clauses that stop some temporary workers getting permanent jobs could be removed under plans announced by Secretary of State for Trade and Industry Stephen Byers.

Companies are currently deterred from giving "temps" staff jobs because of the transfer fees charged by employment agencies, according to a Government report. But now Mr Byers says after an extended hire-period workers will be granted a "free transfer".

He said: "Temp-to-perm arrangements are useful to workers and employers, so I want to see more people able to find work in this way. Agencies have a legitimate commercial interest to protect, but excessive or 'surprise' agency transfer fees can prevent companies from taking people on permanently. In some cases, they result in temps ending up unemployed."

The new proposals would ensure that, if an agency wishes to charge a temp-to-perm fee, then companies can agree an extension of the hiring period.

But at the end of that period, the worker would be out of contract and could transfer without charge.

The DTI will shortly be consulting on the detail of this proposal, which was suggested by the industry and replaces those set out in an earlier Government consultation paper.

Mr Byers said: "One case involved a hospital having to tell an NHS-trained health care assistant she could not apply to work as a nurse unless she first spent six months working elsewhere with the agency. This bizarre state of affairs must be stopped. Our new proposal will ensure a good balance of the needs of all concerned."

Other measures include proposals to curb model and entertainment agency scams in which upfront fees are charged but where there is little prospect of work.

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