The survey, commissioned by the Association of Professional Staffing Companies (APSCo), found that around a third of UK businesses are likely to terminate temporary workers contracts due to the EU's new Agency Workers Regulations (AWR).
Under the AWR regulations, temporary workers are able to qualify for full equal rights within the workplace after 12 weeks. However the recruiters polled by APSCo have warned that many companies will dismiss agency staff before the 12-week qualifying period.
The AWR was introduced on the 1 October 2011 and the initial 12 week period concluded at the end of December, which means January could see thousands of staff "jettisoned" into the job market, APSCo said.
Ann Swain, Chief Executive at APSCo comments: "The AWR is clearly having an impact...Contractors and temps in areas such as IT or banking usually earn more than permanent staff, but this is not true for all roles, particularly at the entry level, where the AWR may lead to increased costs.
Though the regulations were initially agreed by the former Labour government, Liberal Democrat ministers announced the rules would still be implemented. Ministers have blamed pressure from trade unions such as Unite and GMB for "tieing their hands" over implementing the AWR.
Both unions have threatened industrial action against companies such as Argos, BMW and Jaguar in recent months for offering agency workers new contracts under the Swedish Derogation, which challenges the responsibility of the employer to equal pay rights for temporary staff between assignments. This model is being seen as an alternative to the AWR, but union bosses have branded it a 'loophole'.