A Temporary Solution....
There is just over a year before the controversial Temporary Agency Workers Directive ("the Directive") must be implemented into Irish law (it must be transposed by all member states by December 2011). However the long lead in time should not make employers who rely on agency worker arrangements complacent as there is much in the Directive to get to grips with.
The Directive is designed to ensure that workers employed through an employment agency are given the same terms and conditions as comparable permanent employees doing the same or similar work in the end-user company. Joanne Hyde, Head of Employment Law at Eversheds O'Donnell Sweeney considers how this will work in practice and whether it will destroy the value to employers of using agency workers.
Current Status
There is a lack of legislative clarity on the status of agency workers. The traditional view has been that they are neither employees of the employment agency nor of the end-user company but they are instead engaged under a contract sui generis, a unique kind of contract.
Several employment statutes tried to compensate for this position by specifically including within the definition of a "contract of employment" contracts between an agency and an agency worker. The "employer" is defined as the party liable to pay the wages of the agency worker, i.e. the agency. The agency is therefore responsible (and liable) for the protection of the agency worker's rights under the following legislation:
- Terms of Employment (Information) Acts 1994-2001
- Payment of Wages Act, 1991
- Organisation of Working Time Act, 1997
- Maternity Protection Acts, 1994-2004
- Adoptive Leave Acts, 1995-2005
- Carer's Leave Act 2001
- Protection of Young Persons (Employment) Act, 1996
- National Minimum Wage Act, 2000
- Parental Leave Acts, 1998-2006
- Employment Equality Acts, 1998-2008
- Protection of Workers (Part-Time Work) Act, 2001
- Redundancy Payments Acts 1967-2007
- EC (Protection of Employees on Transfer of Undertakings) Regulations, 2003
The Unfair Dismissals Acts 1997-2007 treats the agency worker differently as under these Acts, the employer is the person for whom the employee actually works (i.e. the end-user company) rather than the agency. Compliance with health and safety requirements is also the responsibility of the organisation for whom the agency worker is actually working.
However, whilst temporary agency workers have some legal protection from the legislation outlined above, this is a far cry from having a guaranteed right to equal treatment with the directly employed workforce, whose pay and conditions may be significantly above the legal minimum.
This development could have a significant impact on employers, many of which rely on agency workers to keep their business afloat. Temporary agency workers are a vital business resource for covering sickness absence, maternity leave, filling gaps in recruitment and a variety of other absences. They are an expedient way to deal with temporary employment needs and provide the labour market with essential flexibility.
Social Partnership Impasse
The Directive provides for equal treatment for agency workers with direct employees from day one. This is the default position under the Directive unless there is a national agreement, agreed after consulting with the social partners (Government, unions and employer bodies) to establish different arrangements. This provided the context for discussions on this issue in the social partnership discussions in 2008. However, with the recent collapse in pay negotiations with the social partners, the impetus for reaching agreement on derogations in the Directive has diminished and there has been no progress with regard to any transposing legislation at this point.
The Default Position
In its current form, the Directive could have a significant impact upon agency recruitment as it will require temporary agency workers to be given the same "basic working and employment conditions" as comparable, permanent workers of the end-user from day one.
The Directive widely defines "basic working and employment conditions" as working and employment conditions laid down by legislation, regulations, administrative provisions, collective agreements and/or other binding general provisions in force in the user company relating to:
- The duration of working time, overtime, breaks, rest periods, night work, holidays and public holidays; and
- Pay
Pay is not defined in the Directive. Therefore, the default position could potentially mean that temporary agency workers will be entitled to the same rights as permanent employees to all pay and benefits, including:
- Basic pay
- Bonuses
- Holiday pay
- Sick Pay
- Maternity Pay
- Medical/Dental Insurance
- Pension Contributions
- Profit Share Schemes
- Other Benefits such as use of (or discounts for) gym or sports facilities, staff canteen, travel allowances, flexitime, lunch and coffee breaks and child care facilities.
This could effectively price agency workers out of the market as they will become an even more costly feature of the labour market, particularly when agency fees are factored into the equation. The default position in the Directive, if introduced, will arguably remove the flexibility that is so important to employers in hiring temporary agency workers.
Other main provisions of the Directive, include the following:-
- Temporary agency workers must be informed of permanent employment opportunities in the user enterprise
- Temporary agency workers must be given equal access to collective facilities (e.g. child care facilities, canteen or transport service) and vocational training unless the difference in treatment can be justified by objective reasons
- A requirement for Member States to ensure penalties for non-compliance by temporary agencies and enterprises.
Possible Derogation
The Directive allows for derogation from this general treatment rule where there is a pre-existing collective agreement and/or a social partnership agreement in relation to pay in each member state. This means it is up to the social partners in Ireland to agree a period for equal pay other than from day one. For example, the UK achieved agreement that equal pay is only established after 12 weeks and that the temporary agency worker must have undertaken the same role whether through one or more different assignments with the same hirer for 12 continuous weeks. Any qualifying time may be broken if the agency worker starts a new assignment with the same hirer which is substantially different from the work of the previous role.
Significantly, whilst the draft UK regulations provide that equal "pay" will apply not just to the basic hourly rate, but to all pay for work done (including bonuses that are directly related to the performance of the agency worker personally), they do not extend to some of the wider benefits that permanent staff can enjoy in the context of their longer-term relationship with their employer, such as occupational pensions and sick pay.
Conclusion
Undoubtedly, the engagement of agency workers is a difficult legal area and one which would benefit from some codification of the existing piecemeal law. However, it is unclear to date how the Directive will be implemented here and there is an increasing urgency for renewed dialogue on this topic by the social partners and other interested parties before the looming deadline of December 2011.
It is hoped by many employer organisations that when national legislation is implemented, Ireland will take the opportunity to derogate from the principle of equal treatment for agency workers from day one and provide instead for a minimum timeframe for which the agency worker would have to be in the end-user organisation before the principle of equal treatment would apply. Equally, it will be vital to clarify the definition of "pay". Employers are likely to push for the exclusion of occupational pension and sick pay from the entitlement to equal treatment and other payments in recognition of long-term employment status, such as profit share schemes
In any event, employers need to be mindful of the new rights that agency workers will soon acquire and the consequent implications for the costs and flexibility of their workforce. The imminent arrival of the national legislation should prompt employers to carry out a review of their workforce. Budgets and organisational plans need to be in place and actioned well before the Irish regulations come into operation so that employers are fully prepared for the upcoming changes.
Disclaimer
This information is for guidance purposes only. It does not constitute legal or professional advice. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. No liability is accepted by Eversheds O'Donnell Sweeney for any action taken in reliance on the information contained herein. Any and all information is subject to change. Eversheds O'Donnell Sweeney is not responsible for the contents of any other website or third party material which can be accessed through this website.
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