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PUBLIC
CONSULTATION ON COMMISSION PROPOSAL FOR A DIRECTIVE ON THE WORKING CONDITIONS OF
TEMPORARY (AGENCY) WORKERS
Following the break down
of social partner negotiations on a framework agreement on temporary agency work
(TAW) in May 2001, the European Commission had been working on a proposal for a
directive on TAW. The Commission published its proposal on 20 March 2002. It has the broad aim of improving the quality of TAW by requiring that
temporary agency workers be treated no less favourably than comparable permanent
workers in the user enterprise to which the temporary worker is assigned. It
also aims to establish a European framework for the use of TAW.
The purpose of this
document is to give interested parties an opportunity to comment on the
Commission proposal. The proposal is now being considered by the Council of
Ministers (of which the UK, like all other EU member states, is a member) and
the European Parliament. In particular the government is interested in what
temporary work agencies, employers and agency workers and those representing
them believe the impact of the proposal will be on temporary agency work in the
UK. This information can contribute to an assessment of the likely effects of
the proposal on the UK labour market.
A brief summary of the
main requirements of the Commission proposal and a summary of the Regulatory
Impact Assessment (RIA) on the draft proposal are contained in this document.
You may wish to study the proposal itself or read the Explanatory Memorandum
 (16Kb)
and
full RIA
(102Kb)
on the proposal.
The
proposal is subject to the co-decision procedure – that is, it must be agreed
by the Council of Ministers and the European Parliament if it is to become law.
If the proposal is accepted as a directive, then a transposition date will be
set which would give member states, including the UK, a certain period of time
(usually at least 2 years) to pass appropriate legislation.
Your
response to this consultation document may be made publicly available in whole
or in part at the Department's discretion. If you do not wish any of your
response (including your identity) to be made public, you must state in the
response which parts you wish us to keep confidential. Where confidentiality is
not requested, responses may be made available to any enquirer or published by
any means.
A
Welsh language version of this consultation paper is available and we can
provide large print and taped versions too – please contact Anita Thomas if
you need these.
Comments
on the Commission proposal should be sent as soon as possible and no later
than 18 October 2002 to:
Anita
Thomas
E-mail: Anita.Thomas@dti.gsi.gov.uk
Department
of Trade and Industry
UG82,
Europe and Flexibility Branch
Employment
Relations Directorate
1
Victoria Street
London
SW1H 0ET
The
Commission proposal
The
proposal takes a similar approach to existing directives, negotiated by the EU
Social Partners, on Part-Time Work and Fixed-Term Work.
The stated aims of the proposal are to improve the quality of temporary
agency work by applying an equal treatment principle to temporary agency workers
and to establish a suitable framework for the use of temporary agency work in
the EU. It applies to workers employed by temporary work agencies and posted to
client companies to work under the supervision of those client companies.
The main
requirements of the proposal are that:
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An
agency worker assigned to work under the control of a client company should
not be given less favourable basic employment conditions than a similar
permanent worker in that client company, unless this is objectively
justified.
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The
basic employment conditions set out in the directive are: the duration of
working time, rest periods, night work, paid holidays and public holidays;
pay;
work done by pregnant women and nursing mothers, children and young people;
and action taken to combat discrimination on the grounds of sex, race or
ethnic origin, religion or beliefs, disabilities, age or sexual orientation.
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Member
states can chose not to apply this equal treatment requirement where
temporary agency workers are employed on permanent contracts (these would be
where temporary agency workers are paid by the agency in between
assignments), where temporary agency workers are covered by collective
agreements, or where temporary agency workers’ assignments can be
accomplished in six weeks or less.
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Member
states should periodically review restrictions on the use of temporary
agency workers and take specified measures to make it easier for them to
find permanent jobs.
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User
companies should give agency workers access to ‘social services’
provided to permanent workers.
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Agency
workers should be informed of permanent vacancies in the user company.
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Clauses
banning or having the effect of preventing the conclusion of contracts
between an agency worker and a user company at the end of the worker’s
assignment should be null and void.
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Companies
using agency workers would need to provide information on the use of TAW
when providing information on the employment situation in the company to
worker information and consultation bodies.
Agency
Work in the UK
In the
UK there are estimated to be 700 000 agency workers on temporary assignments at
any given time, i.e. around 2.8% of the workforce.
Agency work has been in existence since the beginning of the last century
and is regulated by the Employment Agencies Act 1973 and the Conduct of
Employment Agencies and Employment Businesses Regulations 1976 (which are
currently under review). These are
enforced by the DTI’s Employment Agency Standards Inspectorate.
In addition, certain basic employment rights such as the national minimum
wage, working time regulations and health and safety legislation have been
specifically applied to agency workers and other statutory rights may apply,
depending on the nature of the relationship between the agency and the worker.
The
Commission proposal would require significant changes to the current UK
legislation, principally to incorporate the non-discrimination obligation.
At present the pay and conditions of agency workers are set by the agency
according to market principles or collective agreements, generally without
reference to conditions in the enterprise to which they are temporarily
assigned.
The
Commission argues that the directive would improve the working conditions of
agency workers and therefore increase the supply of agency workers.
The Government is concerned that the directive should not cause a
decrease in demand for agency workers, with negative consequences both for
agency workers and user enterprises in terms of employment opportunities and
flexibility in the labour market. Agency
work can provide a useful way into the labour market, particularly permanent
jobs, for workers. It can increase labour market flexibility in ways which
benefit both business and workers. It can also offer workers who want to control
or vary their patterns of work greater choice than permanent work.
The present UK regulatory framework offers a balance between flexibility
and protection for agency workers, which the Government would wish to ensure the
proposed directive is broadly compatible with.
We are
therefore seeking views, particularly from temporary agency workers, agencies,
employers and associations representing employers and workers on the impact the
proposals might have on the use and availability of temporary agency work in the
UK. When giving us your views, please indicate whether you represent agency
workers, agencies, employers or others. In particular, we would welcome:
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Views
on and evidence of the impact of the proposals on the UK labour market as a
whole;
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Evidence
of the likely impact of the proposals on employment rates, opportunities for
work seekers and the working conditions of agency workers;
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Views
on and evidence of their impact on current UK practice, including examples
or case studies if possible.
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Any
evidence of problems with temporary agency work in the UK
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Views
on whether there are any alternatives to regulation that would
satisfactorily meet the objectives of the directive or any other perceived
problems with temporary agency work.
Employment
Relations Directorate
Europe
and Flexibility Branch
DTI
Proposal
for a Directive of the European Parliament and of the Council on the Working Conditions for
Temporary (Agency) Workers — Regulatory Impact Assessment (RIA).
Summary
Issue
The economic impact of the proposed EU Directive on working
conditions for temporary agency workers.
Objectives
The Commission’s proposal is motivated by a concern that temporary
agency workers may be less favourably treated than their permanent or fixed-term
comparators.
The specific aims
of the proposal are twofold:
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to improve the quality of temporary agency work by applying the principle
of non discrimination.
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to establish a suitable framework for the use of temporary agency work to
contribute to the smooth functioning of the labour market.
Numbers
Affected
We estimate that about 700,000 people are working as temporary agency
workers at any particular time in the UK.
Potential
Labour Market Effects of the Directive
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The proposed Directive may result in better pay and other employment
conditions for agency workers, depending on their individual circumstances and
the precise terms of the Directive.
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Therefore, more people may enter the labour market as agency workers, due
to improved employment conditions.
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But user enterprises could decrease their demand for agency workers, if
agencies pass some of their higher costs onto user enterprises in the form of
higher fees.
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However, some user enterprises make an active choice to use temporary
agency workers to maintain workplace flexibility, which may dampen the decrease
in demand despite the higher cost of agency workers.
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These demand and supply side effects may have flexibility implications.
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We cannot quantify these effects and therefore cannot predict the overall
effect on the labour market for agency workers. We would welcome further
evidence of the likely effects.
BenefitsWe estimate that between 210,000 and 290,000 agency workers
could benefit from the Directive through the following:
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Non-discrimination in pay could benefit agency workers by between £164m
and £226m per year.
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The financial benefit to agency workers of improved access to training is
estimated to be between £21m and £29m per year.
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Likewise, it is estimated that training could lead to improved
productivity for user enterprises at a value of between £98m and £272m
per year.
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It is estimated that 335 user enterprises could make savings of about £2.8m
per year in total through improvements in vacancy filling.
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It is estimated that agencies may receive between £21m and £45m
per year in revenue from improved vacancy filling, if the proposed Directive
were to increase the attractiveness of temporary agency work.
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There are benefits to the taxpayer of between £41m and £57m
per year from higher tax incomes and national insurance contributions on higher
agency worker pay.
There may be
other benefits, such as greater job security for agency workers and an increase
in the attractiveness of agency work, that are difficult to quantify.
Costs
We estimate the total costs of the Directive as follows:
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Non-discrimination in pay would cost agencies between £43m and £118m
per year.
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The estimated increase in training costs to agencies might be between £2m
and £6m per year, and to user enterprises of between £11m and £15m
per year.
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Losses in temp-to-perm transfer fee revenue is estimated to be between £35m
and £70m per year, or 1%-3% of annual industry turnover.
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It is estimated that user enterprises would face higher fees due to cost
pass-on from agencies of between £239m and £387m per year.
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Employers would face a total of £0.8m from additional Employment
Tribunal applications.
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The Employment Tribunal Service would face an additional £0.2m from
applications.
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Agencies would face a one-off administrative cost of between £1.4m
and £3.2m.
There may be
other costs that are difficult to quantify, such as an increased turnover of
agency workers, the crowding-out of permanent job opportunities, and greater job
insecurity for permanent workers who work alongside agency workers.
Small
businesses
The
private employment agency industry in the UK is made up predominantly of small
firms, therefore it is possible that the Directive may affect smaller agencies
to a relatively greater extent than larger agencies. However, small agencies
only make up about 1.5 % of small firms in the UK, therefore the effect on the
small business sector as a whole will not be large. The users of agencies are
disproportionately larger firms, therefore small firms would be affected to a
relatively lesser extent by any cost increases.
The UK Government takes the view that, due to the exclusion in article
137(6) of the Treaty, the proposal cannot cover pay, due to its legal
base. See the Government’s explanatory memorandum on the proposal.
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