The Czech Ministry of Labor and Social Affairs ("MLSA") recently submitted for interdepartmental comment a proposal act that will significantly reduce the usage of (so-called) "agency employees". According to the MLSA proposal, the numerous reasons for the bill include "changes in the job placement services provided by the employment agencies resulting from the need to respond to current developments in this area and on the labor market in general"1. MLSA proposes several changes in response to these developments, including that the proportion of temporarily assigned employees must not exceed 15% of an employer's workforce2. The MLSA justifies the need for this new provision on the basis of the widespread violation of existing legal obligations, such as the obligation to ensure that the working and wage conditions of temporarily assigned employees are not or would not be worse than the conditions of a comparable employee employed by the respective employer. Another factor in play is the ongoing efforts of employers to replace permanent employees with agency employees (through supplier relationships), although a defining element of such assigning is its temporary nature. According to the MLSA, if this alteration is not adopted soon, the number of vacancies filled by the temporarily assigned employees rather than by permanent employees will continue to increase. At the same time, in its the Explanatory memorandum, the MLSA recognizes the irreplaceable role of employment agencies in lowering the level of unemployment in the Czech Republic3.
Indeed, agency employment offers many advantages that were not
sufficiently mentioned in the MSLA's Explanatory memorandum and
Explanatory report. Agency employment is most popular for its
flexibility, especially in relation to those activities for which
the number of employees varies on account of fluctuations in
consumer demand (e.g. manual occupations). Agency employment is
advantageous not only for employers, but also for employees as it
provides the latter with a means of meeting their need to quickly
find work (e.g. students). Further, it should not be ignored that
agency employment is very often a precursor in obtaining a
permanent job with the respective employer and helps reduce the
so-called grey economy.
A deformation in the market of leased workforce is to be expected as a result of the tightening of current legislation and the introduction of the aforementioned quotas. Employment agencies and employers will not be able to legally exceed the statutory quotas. Instead of obeying the law, they will likely choose a form of employment relationship in which they factually assign an employee to a respective employer; however, the contract will not be based on a supply of labor work, but rather on the delivery of work, services or other forms of performance. Employment agencies will (again) take the legal stance that they are not providing respective employers with a labor workforce, but rather with services (to this end, they will also have relevant entries in the official register, e.g. the hospitality, trade or construction works as a scope of business). If this happens, the employment agencies" could provide their employees with a wage in the amount according to their own rules, thus significantly below what they would have paid in case of agency employment.
Instead of introducing such a limitation, it would be more appropriate to broaden the MLSA's competencies to withdraw employment agencies' permits to arrange employment or – under certain circumstances – to consider so-called outsourcing as the assignment of employees.
1 Cf. MLSA's Explanatory report.
2 Cf. § 66a of the proposal act.
3 Cf. MSLA's Explanatory report.
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