Temporary agency work: from suspicion to general acceptance

Download article in original language : LU9812181FFR.DOC

Over the past 10 years, Luxembourg's trade unions have run an orchestrated campaign against temporary agency work, taking a very negative view of the phenomenon. However, by late 1998, four years after it was passed, 1994 legislation on temporary agency work has made this type of employment appear almost "normal".

Luxembourg did not regulate temporary agency work (travail intérimaire) and the temporary lending-out of workers (prêt temporaire de main d?oeuvre) until the law of 19 May 1994. This type of employment was not widespread until the adoption of the law of 24 May 1989 on contracts of employment. Up until then, Luxembourg had no legislation specifically dealing with fixed-term employment contracts. As a result, it was possible to work on a fixed-term basis without legal restrictions, even though case law redesignated fixed-term contracts as contracts of indefinite tenure if the worker "could legitimately believed that he or she was conclusively associated with an employer" after a number of contract renewals.

Since the 1989 legislation, it has been possible to recruit workers on fixed-term contracts only to perform precise, non-permanent tasks that do not form part of the company's normal, ongoing activity. Moreover, such employment may not exceed a period of two years and contracts must not be renewed more than twice. As the worker must earn at least as much as a newly recruited employee in the company, this kind of employment virtually disappeared overnight following the adoption of the legislation.

Temporary agency work became relatively widespread from this period onwards (unofficial figures cite 5,000-10,000 workers a month out of a total national workforce of 200,000). In the absence of legislation dealing with agency work in specific terms, the outcome has reportedly been widespread abuse and dishonesty, with which the relevant state bodies have been powerless to deal. Temporary agency work became the bête noireof trade unions, several government departments and some employers, who saw it as a form of unfair competition. Regulation followed in 1994.

Below we examine in detail the current legal provisions designed to protect temporary agency workers, and the measures that aim to monitor closely all aspects of temporary agency work.

The legal situation of temporary work agencies

A temporary work agency is defined as any physical or moral person in the business of recruiting and paying staff, and supplying them to user companies on a temporary basis to carry out specific, non-permanent tasks (known as "missions").

Dual permit to start a business

Nobody may run a temporary employment agency without the permission of the Minister of Labour, who gives rulings based on opinions issued by the Employment Administration (Administration de l?emploi, ADEM) and the Inspectorate of Labour and Mines (Inspection du travail et des mines, ITM) or the Minister whose responsibilities include the issuing of permits to start up businesses.

A Ministry of Labour permit is issued for an initial period not exceeding 12 months, which may be extended for two years before being granted for an indefinite period. It may be withdrawn at any time after a period of notice has been given.

Managers' guarantees and skills

People acting as managers of temporary work agencies must present guarantees of probity and good standing, and undergo training in employment legislation, social security and accounting.

A temporary employment agency may not be involved in any other type of business. It must present a financial guarantee linked to its real turnover, and ensure the payment not only of salaries and compensatory benefits but also of social security contributions and taxes.

Monthly statements of account

The owner of a temporary work agency must, during the first eight days of each month, provide the Minister of Labour with a statement of the mission contracts concluded in the previous month. This gives an account of each posting and of each posted temporary worker, and includes such details as: employee's first and family name, address, gender, date of birth and nationality; the post held; the user company's business activity; the number of days worked; and the salary paid, including social security contributions and paid holiday compensation. This information is passed to ADEM and ITM for verification and monitoring.

The Central Social Security Unit (Centre Commun de la Sécurité Sociale) also has a duty to send the relevant information in the databank that it manages to ADEM

Penalties

The courts may punish breaches of the 1994 law with fines of up to LUF 500,000 and imprisonment of two to six months.

The legal situation of temporary agency workers

A temporary agency worker is defined as an employee who agrees under the terms of a "mission contract" to be supplied to one or more user companies on a temporary basis for the performance of specific, non-permanent tasks.

Requirement for written documentation

The mission contract must be set out in writing and sent to the employee no later than two working days following the posting. If not, the employee will be deemed to have been recruited by the temporary work agency on an open-ended employment contract. The contract must not only contain the information - eg salary, duration of contract and job description - that is demanded under the law, but must also state that there is nothing to stop the user company itself recruiting the employee when the mission comes to a close, and that any clause to the contrary shall be considered null and void.

Duration of the mission

The mission contract may be renewed twice for a fixed period, and may not exceed 12 months. Where a user company continues to employ a temporary agency worker after the mission has been completed, without signing a contract of employment with him or her, or a new temporary transfer contract with the temporary employment agency, the employee is deemed to be bound to the user company by an employment contract of indefinite duration.

Pay

The salary paid to the worker on mission by the temporary work agency may not be less than what an employee with the same or equivalent skills, recruited by the user company on the same conditions of employment as a permanent employee, might expect to earn after a trial period. Workers posted to the user company are entitled to the same conditions of employment as the company's permanent employees - this particularly refers to catering facilities and transport arrangements available to these employees.

Temporary agency workers' rights

For the duration of a temporary agency worker's mission, the user company is solely responsible for ensuring that occupational health and safety standards are applied. Temporary employees are entitled to annual leave in respect of each mission, irrespective of how long it may have lasted. The employee may claim paid leave from the user company pro rata to the length of the mission with that company.

Temporary workers do not have voting rights in elections for, and may not stand for the posts of, workforce delegate or workforce representative on the user company's joint committee or board of directors. However, temporary agency workers may raise issues within the user company and have the right to consult workplace delegates.

Acceptance of temporary employment by those affected

After the law of 1994 was published, special training was organised for about 50 individuals seeking permits to run temporary work agencies. Tutors came from different government departments with responsibility for overseeing this sector in future; this facilitated an initial contact, and made it clear that temporary agency work is a sensitive area that would be closely monitored in future.

The atmosphere between ADEM, which claims a monopoly on job placements, and temporary work agencies was somewhat tense during the first two years. However, a cooperation contract intended to to make it easier for job-seekers registered with ADEM to contact employers using the services of temporary work agencies was signed by ADEM and the Luxembourg Union of Temporary Employment Agencies (Union Luxembourgeoise des Entreprises de Travail Intérimaire, ULEDI) on 9 December 1997 (LU9801140N).

More recently, two collective agreements for the temporary work sector were signed in May 1998 by ULEDI and two nationally representative trade unions, the Luxembourg Confederation of Independent Trade Unions (Onofhängege Gewerkschafts-Bond Lëtzebuerg, OGB-L) and the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) (LU9806167N). This appears to mark the final stage in the introduction into Luxembourg of this form of "atypical" employment.

Commentary

In 1994, lawmakers authorised the use of a type of employment - temporary agency work - which, although perhaps not ideal for workers, at least enables employers temporarily to have access to extra staff. The cost will normally prevent employers from using this form of employment as a habitual way of managing staff requirements. (Marc Feyereisen, ITM).