New EU directive aims to prevent exploitation of foreign workers

Temporary agency work in the Czech Republic was intended to address the insufficient flexibility of the Czech labour market. However, it became a means of exploitation of foreign workers in particular. The new EU sanctions directive should help to eliminate this problem. It places more responsibility on user companies to check the legal status of the worker. Reputable employment agencies have welcomed the legislation as it will reduce unfair competition in the market.

In the Czech Republic, as part of the generally binding labour law amendment, effective from 1 October 2004, the use of temporary agency employment replaced the so-called temporary assignment of employees to work for another employer. Under the current labour legislation, the employer – that is, the employment agency – intermediates employment in compliance with the licence issued by the Czech Ministry of Labour and Social Affairs (Ministerstvo práce a sociálních věcí České republiky, MPSV ČR), and may allocate its employees temporarily to another employer – the user company. Through a written agreement, the employment agency will guarantee its employees a temporary job at the user company.

Benefits and risks of temporary agency work

Temporary agency work was intended to increase the flexibility of the Czech labour market: workers from temporary employment agencies are hired and dismissed more easily than the user company’s own staff. At a time of above average economic growth, temporary agency workers represented a labour pool into which employers could tap to cover growing market demands. Out of the total number of 2,153 employment agencies registered at the MPSV ČR, 1,075 agencies focus on foreign workers from Ukraine, Mongolia, Kazakhstan and other countries, and on low-qualified workers.

This group of workers is, however, the most vulnerable in the labour market, mistreated by a number of employment agencies, which employ foreigners without the necessary permits or employment contracts, or without paying the compulsory social and health insurance. These workers are employed under notably worse pay and sometimes even working conditions compared with the Czech permanent staff. The user companies are often uninterested in the legal and social situation of such workers, since the temporary employment agency bears all of the responsibility for the worker, including the necessary permits, pay and working conditions (CZ0812029I). Tax evasion is also a problem in relation to temporary agency employment. According to the Chair of the Czech Metalworkers’ Federation (Odborový svaz KOVO, OS KOVO), Josef Středula, tax evasion amounts to about CZK 5–10 billion (€193–€387 million as at 3 March 2010).

Stricter requirements set out by sanctions directive

European Union Directive 2009/52/EC (761Kb PDF) providing for minimum standards on sanctions and measures against employers of illegally staying third-country nationals (the so-called ‘sanctions directive’) should significantly reduce the exploitation of temporary agency employees from abroad (EU0812039I). The directive requires documents to be inspected: the user companies will have to check the necessary documents, such as the residence permit, and store their copies. Moreover, the user companies instead of the employment agency will have to pay the wages of any illegal worker and will also have to pay any insurance owing. Companies that employ a large number of foreign workers illegally will bear criminal liability.

The sanctions directive thus supports organisations helping migrants, temporary employment agencies and trade unions. A representative from the Organisation for Aid to Refugees (Organizace pro pomoc uprchlíkům, OPU), Pavel Čižinský, believes that Czech authorities treat foreigners repressively, while the employment agencies and user companies should be held accountable:

‘To persecute guest workers is very easy and efficient. The EU standard is intended to shift the check to companies themselves.’

Well-established personnel agencies also welcome the sanctions directive, since it is considered necessary to clean up the employment agency market. According to a spokesperson from the Association of Personnel Services Providers (Asociace poskytovatelů personálních služeb, APPS), Petr Skondrojannis, the position of reputable employment agencies has become increasingly difficult: ‘Unfair competitors, who rob the state, are pushing them [fair agencies] to lower their prices.’

Commentary

The situation regarding the new directive is not quite clear. It allows for the criminal liability of the legal entity, which is, however, not present in the Czech legislation and it is not likely that it could be implemented based on this directive only. The future of the sanctions directive, which is welcomed by most actors in the labour market, is therefore still uncertain in the Czech Republic.

Soňa Veverková, Research Institute for Labour and Social Affairs (RILSA)