Morgan Denton Jones

Legal update – Agency workers 29th May 2008 – are the chances of employers being able to take on agency-workers reducing?

Few employers will have failed to notice the “chatter” about protecting agency workers hotting up again in recent months, not least because a private Member’s Bill was going through Parliament supported by 1/3 of MPs (this has now been withdrawn following a recent Government announcement – the withdrawal of the Bill took place on 21st May 2008 after the announcement on 20th May 2008).

Proposals for a Temporary Workers Directive (the Directive) were first tabled by the European Commission in March 2002 and have been under consideration ever since. The debate has been over the extent to which agency workers should have the same basic rights with regard to working hours, overtime, holidays, maternity and protection against less favourable treatment as other employees. At European level the proposal has always been for this to kick in after six weeks, which we in the UK have always resisted.

The Government, TUC and CBI have now reached an agreement under which they will lobby at the European Council meeting in June, that agency workers should be entitled to equal treatment with comparable permanent employees after 12 weeks' employment. The UK is pushing for a new law to be in place by next year.

So what does this proposal mean? After 12 weeks in a job the agency worker will be entitled to at least the basic working and employment conditions to which they would have been entitled if they had been recruited directly by the end user organisation. This is at present relatively undefined but is likely to affect:-
• Pay and overtime rates – to ensure the agency worker has the same rate of pay as the workers engaged by the end-user, the end user is likely to have to pay more for agency staff (to include the fees the agency charge for providing the worker).
• Holiday - employers who offer more holiday to their staff than is the statutory minimum (at present) of 24 days per annum, will have to provide the agency staff with the greater amount of holidays.
• If the employer allows all staff with 3 months service to take up particular benefits (after probation) then it would have to offer those benefits to the temps also. However, the proposals do not cover enhanced sick pay or pension.
• Enhances Maternity or paternity benefits the end user pays to staff over and above the statutory rates. The agency worker would still need to have 26 weeks service at the 15th week before the expected week before confinement to qualify for

At it’s most broad, in a redundancy situation, it could become unacceptable to simply end the contracts of agency workers first as a means to avoid affecting your own staff, in a similar way that it is unlawful to get rid of those on part-time and fixed-term contracts first.This would build on the rights the agency workers already have not to be discriminated against on the grounds of race, sex, age, disability, religion, belief and sexual orientation.

However this will not mean that agency workers suddenly get unfair dismissal rights or the right to claim a redundancy payment – these rights only accrue to your employees. The recent case of James v Greenwhich Borough Council put to bed the idea that agency workers suddenly become your employees by virtue of time served alone.

Similarly you would not have to deal with disciplinary matters or grievances from agency workers – that is rightly the domain of the agency. Instead the Government has said it will consult on “mechanisms for resolving disputes regarding the definition of equal treatment and compliance with the new rules that avoid undue delays for workers and unnecessary administrative burdens for business”. This is likely to mean a claim to the Employment Tribunal but possibly with the option for ACAS to resolve the dispute.

What will the effect be on the use of agency workers?

The CBI said half of agency placements lasted fewer than 12 weeks, meaning that firms would be protected while trying to fill short-term vacancies at busy periods. Whilst the protection after 12 weeks will undoubtedly benefit many agency workers who are on longer-term placements, it is bound to affect whether employers continue to value agency workers as being “easy” to manage and cost-effective and encourage them to only use agency workers for genuinely temporary cover for a few weeks at a time.

For the agencies that supply the worker, who typically pay them and are responsible for organising their hours, holidays etc, the complexity of different workers at different organisations who are on different terms and conditions or even having temps at the same host organisation on differing arrangements because one has been there for 12 weeks and one hasn’t, is likely to be an administrative nightmare. They may actually decide to require employers to pay a “temp to perm” fee at the 12 week cut-off point and seek to off –load the temp to the employer at that stage rather than get involved in the complexity?

A note of caution

Just days after the Government’s announcement commentators are already pointing out that this is by no means a “done-deal”. The plan to legislate this autumn depends on a similar EU directive being passed before then. EU members still have to debate the issue and key aspects remain undecided. The UK is likely to face a massive challenge convincing ministers of the 12 week limit. Only when Brussels passes a directive will the UK government be able to put forward "implementing" legislation of its own, unless of course it decide to legislate anyway, facing the risk of having to change it when the EU made up its mind.

Anna Denton, Partner

Morgan Denton Jones LLP