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From Accountingnet.ie Law & Regulation
The EU Temporary Agency Workers Directive (2008/104/EC) was published 19th November, 2008 and is implemented into Irish law from 5th December, 2011. This directive aims to give equal treatment to temporary agency workers regarding working conditions and employment conditions from their very first day of work. It states that “the basic working and employment conditions applicable to temporary agency workers should be at least those which would apply to such workers if they were recruited by the user undertaking to occupy the same job.” 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. What this means in practical terms is that a company can take on an agency worker on a one week contract and that worker will be entitled to the same conditions as their permanent comparatives. What was the situation before the 5th December, 2011? Prior to the 5th December, 2011, agency workers in Ireland did not have the same employment rights as comparable permanent workers. However, there was a lack of clarity in employment legislation on the status of agency workers. The traditional view has been that they were neither employees of the employment agency nor of the end-user company, but they were instead engaged under a contract sui generis, a unique kind of contract. Who was responsible for ensuring compliance with employment protection legislation - the agency or the end-user company for which the agency worker is working? This depended on which rights the agency worker was seeking to enforce. While agency workers did not have the same employment rights as regular workers, they had certain rights under employment legislation, as the “employer” is defined as the party liable to pay the wages of the agency worker, i.e. the agency. The agency was therefore responsible (and liable) for the protection of the agency worker’s rights under the following legislation:
Under the unfair dismissals legislation (Unfair Dismissals Acts, 1977-2007), the employer is the person for whom the employee actually works 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. Thus, temporary agency workers had some legal protection from the legislation outlined above, but this was quite different to the right to equal treatment with the directly employed workforce. What is an agency worker? An agency worker is a person who has an agreement with an agency to work for another end-user company. For example, a secretary may have an agreement with a secretarial agency to do work for an office while one of their employees is on leave. Nurses may be engaged by an agency to work in a hospital or nursing home. A Software developer may be employed by an agency to work in a multinational company in Ireland. What is the EU Directive on Temporary Agency Work? The Temporary Agency Workers Directive (2008/104/EC) comes into effect on 5th December, 2011. The main purpose of the Temporary Agency Worker Directive (AWD) is to ensure the protection of temporary agency workers through the application of the principle of equal treatment, which already applies to fixed-term and part-time workers, is extended to agency workers. The Temporary Agency Workers Directive is an EU Directive agreed in November 2008 which seeks to guarantee those working through employment agencies equal pay and conditions with employees in the same business who do the same work. It is the third piece of legislation in the European Union's employment law package to protect “atypical” working. The other two pieces were the Part Time Workers Directive and the Fixed Term Contractors Directive. Both of these Directives have been enacted into Irish legislation already. The original proposal for a directive was made in 2002, but was itself shelved, because the British, German, Danish and Irish governments blocked its enactment until 2008. The core of the directive is equal rights on "basic working and employment conditions" for temporary agency workers. It provides that all temporary agency workers must have equal treatment with regular workers from their first day at work in respect of:
What has been agreed in Ireland? Legislation to transpose the EU Directive on Temporary Agency Work is being finalised and a Bill to transpose this Directive into Irish legislation is to be published before the end of December, 2011 but will not in any case be enacted until 2012. As Pay is not defined in the Directive, the proposal is that it will provide for the equal treatment for temporary agency workers and will define pay for the purposes of legislation including basic pay, overtime premium and Sunday premium. This means that with effect from 5th December, 2011 all temporary agency workers (c.35,000 workers or approximately 2% of the active workforce) assigned to an end-user company are entitled to equal treatment in terms of basic working and employment conditions as if they had been directly recruited by the end-user company in the same job. The Government’s Bill, when published before Christmas, will confirm this and will define pay for the purposes of the legislation as:
Questions which arise from 5th December, 2011 Some questions arise from 5th December, 2011, which will not perhaps be answered until the Bill is published and legislation is enacted in Ireland to transpose the AWD into Irish law. The question arises about how the agency will we be expected to determine comparable pay? Who will be liable for non-compliance with the AWD?. If the worker isn't paid correctly, who is at fault - the agency who pays them or the end-user company who tells the agency what to pay? These and other questions are considered below. Who is the employer from 5th December, 2011? It should be noted that Article 2 of the Directive now designates employment agencies as the employer. IBEC has made representations to ensure that the transposing legislation provides clarity that the employment agency, not the end-user company, will be deemed to be the “employer” of the worker. The primary redress therefore for an agency worker will be against the agency which employs them, not the end-user company, provided that in the event that any fault lies with the end-user company (such as where it may have inadvertently provided incorrect details of the pay of comparators) then liability may pass to the end-user company. Equal treatment – but equal to whom? A major concern for agencies and end-user companies will be how to to determine to whom an agency worker should be compared. The Directive describes the principle of equal treatment as follows. “The basic working and employment conditions of temporary agency workers shall be, for the duration of their assignment at a user [hirer] undertaking, at least those that would apply if they had been recruited directly by that undertaking to occupy the same job.” The phrase “would apply” has been interpreted to mean that there does not need to be a “flesh and blood” comparator in order for an agency worker to acquire rights under the Directive. In some cases, a hypothetical comparison may need to be made. However, IBEC believes that if an employer can point to a “flesh and blood” comparator, that comparison should be sufficient. IBEC also believes that the legislation should not allow temporary agency workers to select comparators (real or hypothetical) other than the best available comparator in the enterprise. It may be the case that to be comparable to a direct recruit (real or hypothetical) the temporary agency worker would have to be doing the same work as the direct recruit, at the same site in the same establishment. What is the source of comparable terms? It appears likely that end-user company pay scales will be included as part of the “basic working and employment conditions” in respect of which temporary agency workers are entitled to equal treatment. However, the only arguable basis for including such matters would be where the pay scales are well established. In some case, therefore, not every temporary agency worker will be comparable with a permanent worker as rates of pay and other conditions may be negotiated on an individual basis, for example, based on skills, qualification and experience. Will all temporary agency workers be ‘in scope’? It is being argued that temporary agency workers should only be “in scope” where there is a genuine ability to assess what they would have received had they been directly recruited. Therefore, it may be the case that temporary agency workers should not be “in scope” where comparable direct recruits are not paid by reference to an applicable pay scale but are instead paid on an individually agreed basis. Also, the temporary agency worker may not be ‘”in scope” where no person would have been directly recruited to the position – either such positions have never been filled by direct recruits, or the end-user company has stopped recruiting directly to that role and only fills it with temporary agency workers. The temporary agency worker may not be ‘”in scope” where there is no comparable situation at the location at which the temporary agency workers will be working – the conditions of direct recruits at other locations would be “out of scope”. How is an employment agency to know what the applicable “basic working and employment conditions” in the end-user company are? IBEC has submitted that the communication of relevant “basic working and employment conditions” should be by way of a clear, simple notice in a specified form. The notice would be given:
It is proposed that if the agency complies by the terms of the notice, no action would lie against the agency. Could there be derogations and exclusions? The Directive permits the legislation enacted in Ireland to contain some derogations. The legislation may, for example, contain provision for the exclusion of agency workers who have permanent contracts of employment with an agency. These are called “permanent agency workers” in the Directive. The legislation may also contain provision to allow workers and employers to agree different arrangements at a workplace or sectoral level than those provided in the legislation, provided that these different arrangements include appropriate protections for agency workers. Who is not affected by the legislation? Other categories of worker, such as workers employed under managed service contracts, independent contractors and direct recruits hired on fixed-term contracts are not temporary agency workers according to the Directive and would therefore not be affected by the transposing legislation. What about access to employment, collective facilities and vocational training? The transposing legislation must provide for temporary agency workers to be treated no less favourably than comparable direct recruits as regards access to collective facilities at the site of the end-user company, subject to the proviso that these can be refused on objective grounds. It must also provide that temporary agency workers should be treated no less favourably than a direct recruit in terms of access to vocational training provided by the end-user company. It must also provide that temporary agency workers are to be informed of any vacant posts in the end-user company and given the same opportunity as other workers in that company to find permanent employment. This does not mean that temporary agency workers have a right to a direct post in any particular circumstance – only that they have a right to apply for such posts and be considered for them on an equal basis. What are the remedies and redress? The legislation will have to provide for redress for temporary agency workers who have:
The legislation will have retrospective effect Although legislation in Ireland won’t be enacted until 2012, it has been indicated that the legislation to be enacted would back-date changes in the rules applicable to agency workers to Monday, 5th December, 2011. It is proposed that all agency workers – both in the public and private sector – will be covered by the back-dated legislation. This proposal appears to be based on the principle of “direct effect” in European law. That principle means that, where a state fails to implement a Directive on time, that Directive might be held to be effective against that state and emanations of that state, such as public sector bodies. In essence, a state will not be allowed to profit from its own failure to legislate on time. Risks for agencies and end-user companies This creates major risks for those companies, especially employment agencies which may be required to pay agency workers more than those agencies themselves earn in respect of those workers who were hired before 5th December, 2011. However, end-user companies and agencies have known for a long time that the 5th December, 2011 was the deadline date. While 5th December, 2011 was set out as the date for transposition of the Directive, end-user companies and agencies have been dealing with uncertainty in this regard as they may have been counting on a derogation in terms of a qualifying period. They may also have counted on the legislation applying to all temporary agency workers hired after 5th December, 2011 (not before the date). To add further to the confusion, and, even more fundamentally, end-user companies and agencies have not known what the key definitions in the legislation would be e.g. ‘pay’. IBEC argue that this proposal is a departure from previous arrangements which were made when Ireland was slow to transpose other European Directives. For example, Ireland was more than two years late in transposing the Fixed-Term Workers Directive but the State did not attempt to impose retrospective liability on private sector employers. Additionally, employers do not know what categories of worker may be included or excluded as “temporary agency workers” and do not know how liability for any alleged failure to provide equal treatment will be apportioned between end-user companies and agencies. The simple fact is that until the legislation is signed into law by the President employers cannot know for certain what liability they may be accruing in respect of agency workers. Nevertheless it has been decided that end-user companies and agencies must accrue liability, to an extent which they cannot quantify exactly, throughout the period from 5th December, 2011 to the (unknown) date of enactment. The accrual of an unspecified liability for an unknown period will create a risk for end-user companies and – especially – agencies. End-user companies and agencies will need to consider very carefully how they proceed from Monday 5th December, 2011. What should agencies and end-user companies do from Monday 5th December, 2011? Should an agency worker expect extra pay on the 5th December, 2011? IBEC’s view is that, if a liability to make additional payment arises, it will only arise after the legislation is enacted. Thus, IBEC state that while employers may need to make accruals in respect of the period from the 5th December, 2011, to the date of enactment of the legislation, it would be inadvisable to make any payment to a temporary agency worker prior to the date of enactment. The definition of “pay” – could this change? It should be noted that the definition of “pay” as outlined above is a proposal which the Oireachtas may accept or amend. What other changes could be made? The proposal so far does not detail the other measures which were set out in the Directive and which are available to Ireland to reduce the impact of the Directive on employment. However, some or all of these measures are likely to appear in the legislation. These include: the ability to provide for a derogation for “permanent agency workers” who have job security and are therefore not temporary agency workers; and the ability to reach local or sectoral collective agreements which would apply the principle of equal treatment in a manner which is different to that set out in the Directive but which respects the overall protection of temporary agency workers. IBEC state they will continue to emphasise the necessity to ensure that the definition of “temporary agency worker” is tightly drafted so as to exclude any application to those who are not temporary agency workers. This would include contractors, the self-employed and those working on managed service contracts, such as contract cleaning and catering staff. Precisely who is responsible in respect of alleged breaches of the transposing legislation – the agency or the hirer – also remains to be established. Because the agency is deemed to be the “employer” for the purposes of most employment legislation, it is likely that agencies will have the primary liability. This is likely to be subject to an obligation on the part of a hirer to provide the agency with correct information as regards the pay and other relevant conditions which would have applied had the worker been recruited directly. However, we must await the publication of the legislation to learn what will actually be proposed in this regard. Risks involved in keeping agency workers on or ending their contract There are a number of risks involved in ending the contracts of temporary agency workers. The most obvious of these is under the Unfair Dismissals Acts, 1977-1993. The Acts provide that for the purposes of a dismissal of an agency worker, the end-user company is deemed to be the employer of that agency worker. Therefore, for an agency worker who has the prescribed period of service in an end-user company (i.e. 12 months’ service) there is a danger that, if the agency worker’s contractis brought to an end and the agency worker is not assigned to another assignment, an issue may arise under the Unfair Dismissals Acts. Other complications may arise in respect of terminating assignments. Before making any decision in respect of agency workers, decision-makers should ask the following questions.
Advice should be taken before taking any action to minimise the risks of litigation, especially where end-user companies or agencies consider ending an agency workers contract. Call us on +353 1 8666426, email us or contact us for a confidential discussion. Through our Employment Law and HR Hotline you can obtain ongoing advice throughout the year at any time on all matters related to people and employment.
Collier Broderick Management Consultants Unit 17, St Olave's Business Centre, Malahide Road, Kinsealy, Co. Dublin, Ireland T: +353 1 8666426 F: +353 1 8666457 E: enquiries@collierbroderick.ie http://www.collierbroderick.ie/Articles/Temporary-Agency-Workers-Directive © Copyright 2005 by Accountingnet.ie |
