Government intends to reform law on temporary employment agencies

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The Spanish government announced in April 1999 that it intends to reform the law on temporary employment agencies before the end of its term of office. Trade unions have for some time been calling for legal changes to improve the working conditions of agency employees, but the resistance of the employers' associations has so far prevented reform.

The reform of the law on temporary employment agencies (TEA s) continues to be a bone of contention between trade unions, employers' associations and government. Since TEAs first appeared in Spain in 1994, the unions have been calling for a reform of the legislation to improve working conditions in these agencies, which often offer very low wages and poor job security. However, little progress has been made. One of the results of the intersectoral agreements signed in April 1997 (ES9706211F) was the creation of a tripartite working group to deal with this question, but the group concluded its work in February 1999 without reaching agreement.

The government has thus recently reopened the dialogue with representatives of: the Spanish Association of Temporary Employment Agencies (Asociación Española de Empresas de Trabajo Temporal, AETT); the principal employers' confederation, CEOE; and the UGT and CC.OO trade union confederations. The Minister of Labour announced publicly in April 1999 that he intended to introduce a reform of the law on TEAs, based on the maximum consensus of all the actors involved, before the end of the government's present term of office. However, there are still major differences between the social partners, and an agreement seems very far away.

Current model

Temporary employment agencies (empresas de trabajo temporal) were legalised in Spain in 1994 by Law 14/1994. According to this law, a TEA is a company whose activity consists in temporarily providing another company with workers contracted by the TEA. In order to carry out this activity, TEAs must meet a series of requirements and receive government authorisation. In Spain, no other form of transferring workers between companies is allowed.

According to the current model of TEAs in Spain, it is the TEAs which employ the workers concerned. There is an employment contract between the worker and the TEA that may be permanent or temporary; on the other hand, there is no employment contract between the worker and the user company (the workers are provided through a business contract between the TEA and the user company). Nevertheless, in some respects the user company acts as the employer: during the period over which the service is provided: it is responsible for health and safety, and manages and monitors the work activity.

The number of TEAs has increased rapidly since their introduction. By the end of 1998 there were 438 TEAs, and the volume of contracts to provide services concluded by them represented 15% of the total number of contracts concluded. The main reason for this increase is that the use of TEAs involves a great reduction in labour costs. The wages of TEA workers are determined by the collective agreement applying to TEAs, and only in its absence by the agreement which applies in the user company. Although the second general agreement for TEAs (signed in January 1997 - ES9702103N) lays down that wages must be progressively harmonised with those of the user companies, differentials are still considerable.

There is also little job security in the sector. The vast majority of employment contracts of TEA workers with the agencies are temporary. The workers of TEAs have a temporary labour relationship not only with the user company, but also with the TEA.

Varying standpoints

The legalisation of TEAs in 1994 was resolutely opposed by the trade unions. They claimed that the TEA model that was introduced encouraged insecure and poorly-paid work. In other European countries, there are two basic models of temporary employment. The first is secure work with relatively low wages (workers with permanent contracts with the TEAs and wages determined by the collective agreement applying to the TEA). The second is insecure work with relatively high wages (workers with temporary contracts with the TEAs but wages determined by the agreement applying to the user company, and usually with a bonus for insecurity). In both cases, workers are usually specialised and carry out strictly temporary tasks in the user companies. According to the unions, the Spanish model is the worst possible combination: temporary contracts with the TEA and wages determined by the TEA agreement.

Since 1994 the unions have been trying to improve the working conditions of TEA employees through collective bargaining, but they have also been continuing to demand new regulations to govern TEAs. An example of this is a recent proposal by CC.OO's Catalonia region for a new law to regulate TEAs. This proposal contains this union confederation's basic demands on TEA reform, which are as follows:

  • TEAs should cover only the strictly temporary work requirements of user companies. Restrictions should be placed on the use of TEAs, especially with respect to the prevention of occupational risks;
  • TEAs should give permanent contracts to their workers. A new type of special permanent contract is necessary for TEAs, in order to regulate discontinuities in the worker's activity (the periods of time during which the employee is not working in a user company) and to establish minimum guarantees; and
  • TEA workers should have greater protection in the event of non-compliance with the law. The use of TEAs to cover non-temporary work requirements should be considered as fraud. It should also be laid down that in such cases the workers involved will be entitled to choose between receiving a permanent contract in the TEA or in the user company.

UGT also supports these demands, though it recently made its own proposal that places more emphasis on wages and representation and leaves greater flexibility over contractual conditions. Some of its main demands are as follows:

  • equal wages. To guarantee by law that the wages of workers hired through TEAs are governed by the agreement which applies to the user company;
  • union representation. To create "territorial delegates" for each autonomous community (region). These delegates would reinforce the rights to information, representation and consultation of TEA workers, which are currently the responsibility of the workers' committee s of the user companies. They would be appointed by the most representative trade unions in the region; and
  • job security. To promote a greater degree of job security, establishing minimum proportions of the workforce of TEAs that must have permanent contracts and maximum proportions of the workforce of user companies that can be hired through TEAs.

So far the union demands have been strongly rejected by the employers. However, this situation may soon change because public opinion shows clear opposition to TEAs and pressure from the trade unions in the user companies is increasing. The use of TEAs is usually a source of tension and conflict, and the number of companies reaching agreements to limit it is increasing. Although the official position has not changed, there are differing points of view within CEOE and even within AETT.

The government has apparently finally decided that hostile attitudes towards TEAs have negative consequences for the user companies and for the TEAs themselves. In the past few months it has taken certain steps to remedy the situation. First, it has increased employers' unemployment contributions in respect of temporary contracts with TEAs. Second, it has finally passed a decree prohibiting the use of TEAs for especially hazardous activities (ES9903112N). Third, it recently announced its intention to undertake a reform of the current law on TEAs before the end of its current term of office, and made special reference to the issue of equal wages.

Commentary

TEAs will certainly play an important role in industrial relations in 1999. The current model for TEAs is not only rejected by the trade unions but is also unpopular in society at large, and government and employers' associations are beginning to realise it. However, there are still major differences of opinion, and negotiations to reform this model of TEAs will certainly be long and complex. Furthermore, it should not be forgotten that this question is set against a far more general problem, namely the abuse of temporary recruitment in Spain. The abusive use of temporary recruitment - whether directly or through TEAs - is deeply ingrained in Spain and cannot be dealt with through isolated measures. (María Caprile, Fundación CIREM)

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