Britain’s largest labour union Unite has warned BMW it could face industrial action in the new year unless plans to close its pension scheme to new starters are reversed and the automaker ends what the union claims are legal loopholes to deny agency staff equal pay.

BMW has met with senior officials from Unite to inform them they intended to close its final salary pension scheme to new starters, with the union maintaining it would also use a legal loop hole known as the ‘Swedish derogation’ to deny agency staff equal pay with employees after 12 weeks of employment.

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Unite warned the carmaker, which produces the Mini in Oxford and also has pressings and engine plants in England, that, unless the plan is overturned, it faces “a new year of unrest.”

The union believes triggering such loopholes to affect the rights of agency workers is immoral. It added: “We will not stand idly by and watch our members being short-changed because of a legal loophole.”

Unite is planning to meet all shop stewards at BMW early in 2012 to organise a campaign of resistance and will ballot for industrial action if necessary.

However, BMW insists any future pension arrangements must be settled on a cost basis it can “afford and predict”, while pointing out around 80% of all private sector companies have taken similar steps.

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The automaker also cited what it refers to as ‘The Agency Workers Regulations’ which define two options for employers to meet the new legislation.

“One of these, called Regulation 10, is specified and is a common approach being taken by many major UK companies,” said the automaker in a statement emailed to just-auto.

“In the future, agency employees will benefit from the increased security of a permanent contract with their agency, including the right to redundancy pay, a guarantee of payment between assignments and increased holiday entitlement. They will also benefit from the Plant Oxford team bonus.”

Additional reporting: Simon Warburton