Temporary Agency Workers Directive

The European deadline for national implementation of the Temporary Agency Workers Directive is 5 December 2011. The Agency Workers Directive is a relevant consideration both for employment agencies and for businesses that engage agency workers. The purpose of the Directive is to achieve equality between temporary agency workers and direct employees in relation to basic working and employment conditions. Once implemented in the Republic of Ireland, it will have significant effects on the manner in which agency workers can be relied upon as a source of labour for private enterprise and in the public sector and in particular, the costs associated with same.

The Directive provides for a degree of discretion on the part of Member States in the manner in which certain aspects of the Directive are transposed nationally. In particular, Article 5 (4) of the Directive permits a derogation from the principle of equal treatment if an agreement can be reached between a state's social partners, usually the main trade bodies and unions (see below at Derogations and Qualifying Periods).

In the absence of draft domestic legislation, the manner in which the Directive is to be implemented in Northern Ireland, by means of the Agency Workers Regulations 2010 (the "NI Regulations"), may be instructive.

We discuss below the application and effects of the Directive, by reference to the NI Regulations and we outline some situations in which the Directive, once implemented in Ireland, might not be applicable.

Atypical Workers – a context

The Directive contains several parallels with both the Protection of Employees (Part- Time Work) Act 2001 (the "Part- Time Work Act") and the Protection of Employees (Fixed - Term Work) Act 2003 (the "Fixed-Term Work Act"), which sought to ensure that part time and fixed term employees would not be treated in a less favourable manner than their full time and permanent counterparts. The focus of the Directive relates to a third category of atypical worker, the temporary agency worker. Supplied to a business (or end-user) by an employment agency, the use of temporary agency workers is motivated by a number of factors including:

• The fact that a business can arrange for the speedy supply of agency workers without the need for a recruitment process, thereby making the use of agency workers an ideal solution in relation to urgent projects or emergency situations.
• The fact that the use of agency workers is often cost-effective.
• The fact that the business retains flexibility, as under most (but not all) employment legislation, the employment agency is viewed as the agency worker's employer.

While it is impossible to be certain, the likely effects of the Directive as implemented in Ireland will be more similar to the protection afforded to part-time workers than to fixed-term workers, in the sense that the focus will be rights-based and equality driven.

Atypical workers – Post December 2011

The Directive – Basic Principles

The purpose of the Directive is to ensure that basic working and employment conditions applicable to temporary agency workers are equal to those which apply to such workers if they were recruited by the user undertaking to occupy the same job.

Who is an agency worker?

The Directive defines "temporary agency worker" as a worker with a contract of employment or an employment relationship with a temporary work agency with a view to being assigned to a user undertaking to work temporarily under its (the user's) supervision and direction. It therefore appears that where an employee is assigned to a third party by his employer but where the worker remains under the supervision and direction of his/her employer, the provisions of the Directive may not apply to that employee. How this is enacted in Ireland remains to be seen. The Directive also provides that Member States may provide for an exemption to the principle of equal treatment in respect of individuals employed on a permanent basis by employment agencies, in circumstances where the agency continues to pay the employee between assignments. It remains to be seen whether our national legalisation will provide for this type of an exemption.

What is protected?

The Directive provides for equality in respect of the following "basic working conditions":

• Duration of working time, overtime, breaks, rest periods, night work, holidays and public holiday; and
• Pay.

Included in the concept of "pay" is likely to be basic hourly rate, overtime and shift allowances.

However, issues such as occupational pension schemes, sick pay, maternity pay and redundancy packages may be excluded from this concept.

The comparison in terms of equal treatment is between the basic working conditions of an agency worker and those which would apply if the worker had been recruited directly by the end user. Of relevance in this regard will be the contractual arrangements which apply to employees recruited directly by the end user and the conditions which are applied to agency workers.

Derogations and Qualifying Periods

Article 5(4) of the Directive provides that member states may, after consulting social partners at national level, and on the basis of an agreement concluded by them, establish arrangements concerning the basic working and employment conditions for agency workers which derogate from the principle of equal treatment.

Paragraph 4 provides that such arrangements may include a "qualifying period" for equal treatment. The Regulations and the equivalent UK regulations provide for a 12 week qualifying period. The effect of this is that the principle of equal treatment will not apply unless the agency worker works in the same role with the same end-user for a period of 12 weeks, which can be divided into one or more assignments. The NI Regulations provide for a qualifying period which states that the principle of equal treatment does not apply unless the agency worker has completed the qualifying period by working in the same role with the same hirer (end user) for 12 continuous calendar weeks, during one or more assignments. As we do not yet have draft legislation in place, we cannot yet advise as to the duration of the qualifying period.

Absent agreement on this point, agencies and end users should plan for the default position which is immediate application.

The Department of Jobs, Enterprise and Innovation has sought the views of interested parties so as to inform the approach in developing the necessary Bill to give effect to the Directive. In particular, the Minister for Jobs, Enterprise and Innovation, Richard Bruton, has commenced a discussion with the social partners in relation to the inclusion of a derogation. This has been met with a proposal from IBEC that the qualifying period should be set at 12 months. The Irish Congress of Trade Unions and SIPTU do not appear to support the inclusion of a derogation.

Direct Supervision/Direction of the Agency

A further matter of note is that Article 1 (1) of the Directive which deals with the scope of the Directive states as follows:

This provision has been transposed in NI by Regulation 4(1) which defines "temporary work agency" as a person engaged in the economic activity, public or private, whether or not operating for profit, and whether or not carrying on such activity in conjunction with others, of supplying individuals to work temporarily for and under the supervision and direction of hirers.

By virtue of this provision, the question of supervision and direction is of critical importance in cases where a manager/supervisor is employed on a permanent basis by the employment agency and is deployed to supervise and direct agency workers supplied by the employment agency, such an arrangement could bring workers outside the scope of the Directive.

Employment by the Agency on a Direct and Permanent Basis

Article 5(2) of the Directive provides as follows:

In NI, this Article has been transposed to provide that Regulation 5 (dealing with rights of agency workers in relation to the basic working and employment conditions) does not have effect in relation to an agency worker who has a permanent contract of employment with a temporary work agency if certain conditions are fulfilled. These conditions include the following:

• The contract of employment was entered into before the beginning of the first assignment under that contract and includes certain specified terms and conditions in writing;
• During any period under the contract in which the agency worker is not working temporarily for and under the supervision and direction of a hirer (end user), but is available to do so:
• • agency must take reasonable steps to seek certain suitable work for the agency worker;
  • if suitable work is available, the agency must offer the agency worker to be proposed to a hirer who is offering such work; and
  • the agency is required to pay the agency worker a minimum amount of remuneration in respect of that period ("the minimum amount"); and

• The agency must not terminate the contract of employment with the worker until it has complied with its obligations (i) – (iii) above for an aggregate of not less than four calendar weeks during the contract.
• Regulation 11 provides for a certain minimum standards in calculating the "minimum amount" of pay.

If a similar mechanism were implemented in ROI, this would necessitate the payment by the employment agency of salaries (currently envisaged to be not less than 50% of normal salary) in between assignments.

Conclusion

The Directive will undoubtedly affect the manner in which agency workers are engaged and will require both employment agencies and end-users to consider carefully the model that works for them. Of particular importance will be whether a qualifying period is provided for and, if so, its duration.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.