Open
letter to those who responded to the consultation
(390Kb)
exercise on revised regulations on the conduct of employment
agencies
16
March 2000
TEMP
TO PERM PROPOSALS
You
will be aware from the announcement
made on 21 February of the Government's intention to seek
views on a revised proposal to address the concerns it has about
the effect of temp to perm clauses on work-seekers and hirers.
It indicated then its intention to ensure, where an employment
bureau wished to include a "temp to perm" clause in a contract
with a hirer, that the bureau also offered the hirer an alternative
of a hiring extension followed by transfer of the worker without
further payment. This proposal seeks to build on existing best
practice in the industry where these charges may either be waived
either altogether or after a certain period of hire has occurred.
Enclosed
with this letter is a draft
regulation that seeks to facilitate the proposal. The regulation
also covers "temp to temp" and "temp to third party" situations.
The Department would welcome views in writing or by email
by 14 April.
Overview
The
proposal seeks to ensure that hirers have, as an alternative to
a transfer fee, where they wish to employ a temporary worker permanently,
an entitlement, on notification of their intention to the bureau,
to extend the hire period of the temporary worker. After the hiring
extension period the hirer will be able to employ the worker direct
without being liable to make further payment to the bureau.
In
this letter the length of this period is called the "notice period".
The
purpose of the notice period is to give bureaux, if they wish,
some certainty that a worker will not be transferred away from
them without either a transfer fee being payable or a certain
number of weeks of further hire having first taken place.
Most
bureaux, where their contracts contain temp to perm fee terms,
provide that fees are also payable for a period of time, sometimes
6 months or longer, after a hiring has occurred if a hirer re-employs
the temporary worker other than through the bureau. Such provisions
have the effect of putting temps into "quarantine" because hirers
know that if they employ the worker they may be liable for a substantial
fee. Clearly quarantine periods have the potential to act against
workers' and hirers' interest by preventing them from dealing
with each other except either through the bureau or at increased
cost.
Bureaux
have made clear in their representations on the earlier consultation
that they are not able to commit to engage even a proportion of
their workers on the basis of providing them with paid work. In
such circumstances there is substantial risk of workers finding
themselves unemployed even though there may be an employer prepared
to take them on were it not for the fee liability imposed by the
bureau. Such restrictions run directly counter to labour market
flexibility which the Government wishes to promote.
The
Government recognises however that, in some circumstances, a hirer
might seek to end a hiring and take a worker on direct without
first giving a bureau notice. If bureaux did not have some protection
from such action it is probable that they would be less likely
to offer temporary work opportunities. This would not be in the
interest of work-seekers or hirers. It seems reasonable that bureaux
should be able to protect themselves from such action for a limited
time after a hiring has ceased by means of providing for a transfer
fee to be payable in the event of a hirer employing that worker
within the stipulated time.
In
this letter the length of this period is called the "quarantine
period".
The
Government believes therefore that quarantine periods must be
kept to the absolute minimum period necessary to limit the potential
for adverse effects on work-seekers and hirers.
The
length of the notice period need not necessarily be the same as
the length of the quarantine but it is clear that there is some
inter-action between the two. Options include specifying both
periods, one or the other. The Government does not believe that
specifying neither is an option as it would be possible for bureaux
to effect terms which discouraged hirers from taking on temporary
workers permanently.
Detail
The
diversity of the industry means that it is difficult to establish
a standard notice period which would suit all sectors.
However,
provided the quarantine period is kept short, it would appear
possible to leave the notice period to free negotiation between
the parties. In such circumstances if bureaux demanded excessive
fees or unreasonable hiring extension periods, hirers and workers
would be protected by means of a limitation on the length of quarantine.
In
general however, it will still be possible for bureaux to agree
notice periods substantially longer than the quarantine period,
perhaps three or four times longer, because if a hirer wishes
to employ a worker permanently, it will be substantially more
attractive to the hirer to either give notice or pay the transfer
fee rather than managing without the worker for the length of
the quarantine. A hirer is unlikely to want to recruit by means
of ceasing to hire the worker for a period because of the possibility
of the worker finding more attractive work elsewhere in the meantime.
The
attached draft regulation is prepared on the basis of allowing
bureaux and hirers freedom to negotiate the length of notice periods.
In order however to limit the potential for abuse and for workers
to find themselves without work, the Government is minded to set
the quarantine period at a low figure of the order of 4 weeks.
It appears to the Government that any quarantine period longer
than this would necessitate specifying an explicit maximum length
for the notice period.
The
Government would welcome views on the length of quarantine and
whether, if a period longer than four weeks was permitted what
maximum notice period should be established.
Respondents
should note that the notice period, if set, would most probably
run from the date the hirer gives notice to the bureau of his
intention to take on the worker. An indication should therefore
be given as to the assumptions made with regard to the average
length of time hirers will take to assess temporary workers before
giving notice of the intention to take them on permanently.
Attached
to this letter is a draft
of the regulation (also available in pdf
format -14Kb) together with a short explanation
of how the provision works. Also enclosed is a diagram
indicating in logical form whether or not, in each set of circumstances,
a transfer fee would be payable. The draft regulation is intended
as a working draft for the purpose of this consultation. It is
not therefore to be considered as being in its final form.
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