Job losses and new rules on employment conditions in temporary work agencies

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During October 2001, the Dutch temporary agency work market (Europe's largest) started to suffer as the economy entered difficulties, with agencies experiencing falls in profits and announcing job cuts. Meanwhile, the social partners within the Labour Foundation agreed a set of recommendations to address the problem of the relationship between specific collective agreements for the temporary agency work sector and those applying in user companies. The Foundation has produced a more exact definition of when the pay and conditions set by temporary agency work sector agreements apply, and when they are superseded by those in the sectoral agreement covering the user company.

At the end of October 2001, a series of large-scale redundancies affected a number of temporary work organisations, with this sector the first to be hit by a wave of thousands of job losses that is mounting across the Dutch economy. Over the next three years, the Start temporary employment agency will cut 760 of its 4,000 permanent jobs and reduce its number of offices from 550 to 240. The specialised dockworkers' 'labour pool ' for the port of Rotterdam, SHB, will cut 460 of its nearly 1,000 jobs in the short term to avoid imminent bankruptcy, and has filed for mass redundancy for the employees concerned (see below).

The major temporary work agencies, including Randstad and Vedior, have reported declining operating profits. In the third quarter of 2001, Randstad saw its profits drop by 45%. The temporary work agencies are not particularly downbeat about developments, mainly because temporary agency employees are the first to be considered surplus in an economic downturn but the first to be hired when the economy improves. Such rapid changes are seen as being simply intrinsic to temporary agency work. Such work involves 3.6% of the national workforce (800,000 employees), thus making the Netherlands the country with the highest proportion of temporary agency employees in the world, though the share of agency employment in total employment declined during the second half of the 1990s.

The case of SHB

SHB is a form of temporary employment agency used by the Rotterdam municipal port authority to place surplus dockworkers and hire employees when necessary (NL9705112F). The pool has been in trouble for some years: expenditure exceeds income, and the Rotterdam port authority and national government have lent a helping hand financially in the past. Changes in the type of cargo (with increased container traffic) and changes in port destinations (with more traffic now going to Bremerhaven in Germany) have diminished the demand for dockworkers in Rotterdam.

Although SHB's financial figures for the first half of 2001 were good, there was no recovery after the usual summer dip because of the economic aftermath of the attacks on the USA on 11 September. In addition to making redundancies, the management of the labour pool has been seeking new shareholders, as the entire SHB organisational structure has been described as outdated. Alongside the personnel, who currently own 14% of the pool, management wants to drum up interest among the municipal port authority, the Rotterdam harbour training centre and commercial temporary work agencies. It believes that this is the only way to continue SHB in a sustainable way. The trade unions have not opposed the redundancies, but call for priority to be given to redundant employees for new vacancies that arise.

Labour Foundation agreement

As temporary agency work involves a significant part of the total workforce, the political and social partners believe that it is important to reach agreements regulating the terms and conditions of employment for such workers. In October 2001, employer and employee representatives thus reached an agreement within the bipartite Labour Foundation (Stichting van de Arbeid) on the relationship between specific collective agreements for temporary agency workers and the collective agreements which apply to directly employed workers in the industry or sector where the agency workers are placed.

An initial agreement between the temporary agency work social partners on this and other issues was reached in 1999 in conjunction with the new law on 'flexibility and security' (NL9901117F). This law aimed to bring about a new balance between employers and employees in the labour market. It made 'fixed' employment more flexible and increased the security of flexible employees. The legislation had specific consequences for temporary agency work and the sector's social partners subsequently reached an agreement - the 'temp covenant'- addressing these consequences (NL9902125N). The covenant included the provision that, after a certain period and after three contracts, employees of temporary work agencies would receive a permanent contract with the agency (NL9906146N). 1999 also saw the first specific sectoral collective agreements on the terms and conditions of temporary agency employees, signed on the employers' side by the General Association of Temporary Work Agencies (Algemene Bond voor Uitzendbureaus, ABU) and the Dutch Association of Temporary Work Agencies (Nederlandse Bond van Bemiddeling en Uitzendondernemingen, NBBU)

In practice, major problems have arisen since 1999, particularly over the issue of the relationship between the specific collective agreements for the temporary agency work sector and the collective agreements applying to the user companies in which agency workers perform their work. Furthermore, in some sectors where the terms and conditions of agency workers differ considerably from those of the workers in the user company, there have been calls for these terms and conditions to be brought closer to the sectoral norms applying to the user company.

In their October 2001 agreement, the social partners within the Labour Foundation make a number of recommendations on the bargaining coverage and terms and conditions of temporary agency workers, though they stress that these are not regulations.

The Labour Foundation starts from the the position that specific collective agreements for the temporary agency work sector exist and are legitimate. However, because because temporary agency work occurs in all economic sectors, further attention needs to be paid to regulating the alignment of the terms and conditions applying to agency workers with those laid down in the sectoral collective agreement applying to the user company. Temporary agency workers working for the same agency but in different sectors - for example, as a receptionist for a consultancy firm or for a school - interact with colleagues who are subject to divergent terms and conditions of employment. The receptionist at the consultancy firm might feel undercompensated (given that the direct employees of such companies are likely to have higher pay and conditions than laid down in the temporary agency work collective agreement) whereas the receptionist at the school might possibly be quite content with the pay and conditions provided by the temporary agency work collective agreement (given that the pay and conditions of direct school employees may be relatively low).

Employers' representatives believe that they should have the right to intervene to amend the terms and conditions set out in the temporary agency work collective agreement in the case of 'grossly imbalanced' relationships between the pay and conditions of agency workers and of user company employees. This applies both where the agency worker has inferior pay and conditions to user company employees, and in the case of highly specialised temporary employment where the pay and conditions of the agency worker might be superior to those of the user company employees (as might occur, for example, in a hospital).

The Labour Foundation proposes that when a sectoral collective agreement is declared binding (ie extended and made legally applicable to a whole sector by decree) it should also apply to temporary work agencies operating solely in that sector and their employees. However, a temporary agency has the right to continue to be covered by the temporary agency work collective agreement if its primary activity is to provide workers in a number of different sectors. The Foundation hopes to prevent the problem that temporary agency workers might possibly fall under the scope of application of multiple collective agreements by defining (or continuing to define) temporary work agencies as the employer in the sector.

In order to prevent unfair competition between agency workers and a sector's permanent employees and to combat the problem of overlap between the agreements for temporary agency work and the other sectoral agreements, the Foundation thus proposes exact definitions for the type of economic activity covered by the various agreements. Since this does not serve to solve every problem, the Foundation also calls for an exact description of what is included under the definition of a temporary work agency's activity. This description is modelled on the suggestions of ABU, one of the largest employers' associations in the sector, which concluded one of the most important collective agreement for temporary work agencies.

Commentary

The discussion and consultation on the 1998 flexibility and security law (including the subsequent 'covenant' on temporary agency employees) proceeded relatively smoothly. The legislation, which specified that temporary employees must be hired as permanent staff after a certain period of time, had hitherto been seen as operating in a positive way. Of course, this occurred in a favourable economic climate. Now that the economic tide is turning slightly and the formerly tight labour market is increasingly becoming less so, the question is whether the legislation and emerging regulations will fit as well as they did in times of more favourable economic development. (Marianne Grünell, HSI)