UK: Temporary agency work and collective bargaining in the EU

  • Observatory: EurWORK
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  • Published on: 18 December 2008



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This article gives an overview of the situation regarding temporary agency work in the UK.

Section 1. Definitions

1) In your country, is there a statutory definition of:

  • a) temporary agency work?
  • b) agency worker?
  • c) user enterprise?

If yes, please give definitions.

There is no single statutory definition in these terms. The relevant law (Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Business Regulations 2003) makes a clear distinction between an ‘employment agency’ and an ‘employment business’. For the purposes of the Regulations an employment agency is an organisation that provides a service to employers seeking to fill a permanent vacancy within their organisation, and a parallel service to work-seekers who are looking for permanent employment. An employment business is an organisation that supplies temporary workers to employers.

The situation is also complicated in the UK as there is no clear requirement under UK law for agency workers to be ‘employed’ by either the agency or the user company. The situation has been described as ‘a legal vacuum’ (Wynn and Leighton, 2006: 303). Under the Conduct of Employment Agencies and Employment Businesses Regulations 2003, agencies must either engage workers under a contract for services or employ them under a contract of employment. UK courts have also increasingly found there to be an implied contract between the worker and the agency or user firm. However this is decided only on a case-by-case basis and also complicated by the triangular nature of the employment relationship. Whether a temporary worker is an ‘employee’ (i.e. employed under a contract of employment) or a worker engaged under a contract sui generis (of its own kind) will depend in large part on the existence or otherwise of ‘mutuality of obligation’. A contract of employment may be deemed not to exist in circumstances where the employer is not obliged to provide the worker with work, and the worker is free, without penalty, to accept or reject any offer of work made to him or her by that employer. In February 2007, the Employment Appeal Tribunal ruled that a claimant in an unfair dismissal case was neither an employee of Haringey Council nor of the employment agency. The judge, Mr. Justice Bean, commented that ‘the state of the law regarding the status of long-term agency workers is, in my view, far from satisfactory, but it will need legislation to change it’.

2) Is there a collectively agreed definition of:

  • a) temporary agency work?
  • b) agency worker?
  • c) user enterprise?

If yes, please give details (e.g. how and where defined).

No.

3) In your country, would you describe TAW as a sector in its own right?

Yes. Temporary agency work is extensive and widely treated as a service sector in its own right.

Section 2. Regulatory framework

1) Have there been any changes in the law concerning TAW since 2004?

a) Yes b) No

Yes. The Gangmasters (Licensing) Act 2004 set up the Gangmasters Licensing Authority to regulate labour providers in the agriculture, horticulture, shellfish gathering and associated processing and packaging industries. A gangmaster is an individual or business who supplies labour to these sectors or uses labour to provide a service in the regulated sector (egg harvesting or gathering agricultural produce, or to gather shellfish). From Autumn 2006 it became a criminal offence to operate as or use a gangmaster without a licence.

The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007 came into force in April 2008. It amends the 2003 Regulations to make further provision for the proper conduct of employment agencies and employment businesses, increasing protection for work-seekers and reducing certain regulatory burdens on employment businesses. It stipulates that a work-seeker who takes ‘additional services’ such as accommodation or transport will be able to give notice to cancel or withdraw from those services without incurring any detriment or penalty and that a worker must be informed of this right. It also increases the protection available to work-seekers where agencies propose to charge fees for the inclusion of information about them in a publication, which affects mainly the entertaining and modeling sectors.

Finally, following parliamentary support in 2007-8 for a ‘Temporary and Agency Workers (Equal Treatment) Bill’, in May 2008 the government promised in its Draft Legislative Programme to ‘bring forward proposals’ for the ‘fair treatment of agency workers’ and to ‘continue to pursue an agreement on the treatment of agency workers through an EU Directive incorporating the principle of equal treatment’. This makes the prospect of some form of further regulation likely in the near future.

2) How is TAW regulated in your country?

a) Is there a legal framework specifically for TAW; and/or is it covered by general labour law (including case law/ jurisprudence)?

Agency work is primarily regulated by the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Business Regulations 2003. The 1973 Act places a number of obligations on agencies; the main one being to prevent a person carrying on an agency from requesting or directly or indirectly receiving any fee from an agency worker (work-seeker) for providing work-finding services. The only exception is that agencies can charge agency workers for the provision of such services for certain occupations in the entertainment, modelling and professional sports sectors. The Conduct Regulations giving work-seekers the right to cancel or withdraw from non-work-finding services at any time, without suffering any detriment or penalty, and introduces a 7-day ‘cooling off ‘period for contracts between agencies and work-seekers in the entertainment and modelling occupations. Agencies will no longer be able to take fees from a work-seeker for including their details in a publication until 7 days after the work-seeker has entered into a contract with the agency. During the cooling off period, the work-seeker is entitled to cancel or withdraw from the contract with the agency with immediate effect and without detriment or penalty. The agency must not publish information on the work-seeker during this period. The cooling off period applies whether the work-seeker signed the contract at a casting session or directly approached the agency.

Finally, the Regulations also seek to ease some administrative burdens on agencies: they will no longer have to provide detailed written information to workers on assignments of less than 5 working days (providing an employment business has already given essential details in writing to a work-seeker, such as the type of work, experience, training and qualifications necessary, any risk to health and safety and the rate of pay). Similarly, if an employment business has already obtained from the work-seeker all the essential information regarding identity, experience, training, qualifications and any necessary authorisations and where the assignment is intended to last for 5 working days or less, it only needs to inform the hirer (orally or in writing) of the name of the work-seeker and give written confirmation that it has obtained this information.

There is also a significant body of case law. Otherwise, agencies that meet the definition of ‘gangmasters’ are subject to register and obtain a license to operate as a supplier of labour.

b) What is the role, if any, of collective labour agreements and self-regulation?

The Recruitment and Employment Confederation (REC) requires members to sign up to a Code of Professional Practice. Members that breach the Code may be expelled, but this would not necessarily mean they could not continue to be able to operate as an agency. The REC introduced an enforcement team in 2007 to ensure the compliance of its members with legislation and a strengthened Code of Practice. It is estimated that the REC covers around 50% of potential membership (Winchester, 2005).

There are also a number of trade associations representing the various elements of the private recruitment industry. These sectors include the high street agencies providing services for the commercial, industrial, driving, construction, catering and care sectors; and specialist agencies for the modelling and entertainment sectors, and the IT and technology sector. Each of these associations have a code of practice, which their members agree to follow, and will normally issue best practice guidance (and operate disciplinary procedures) for its members.

There are a number of collective agreements in the larger agency firms and in firms supplying specialist services to unionised sectors like education, but these operate at company-level and further information is difficult to obtain.

3) What is regulated in these provisions? In particular, does it cover:

a) use of agency work (e.g. length of assignment, sectoral bans, permitted reasons of use, number of agency workers per company, other)

No.

b) the form of the contract (e.g.project, fixed-term, special contract, open ended, etc.)

No.

c) social security and social benefits

No.

d) conditions to open a TAW agency (e.g. license or authorisation schemes, supervision by public authorities, financial requirements, or others - please specify)

No license is required (since 1995) but the Employment Agency Standards Inspectorate (EAS) has the power to investigate complaints and to undertake random checks on temporary employment agencies.

e) business activities/services delivered by TW agencies (e.g. prohibition to provide other services than TAW)?

No

f) third-national companies or temporary agency workers (e.g. activities of foreign agencies)?

No.

4) Do any regulations (by law and/or collective bargaining in the TAW sector) specify equal treatment rights for agency workers with permanent workers in the user enterprise concerning:

a) pay

No

b) training

No

c) other terms or conditions of employment?

Every worker, including agency workers, has the right to the protection afforded by the Sex Discrimination Act 1975; Race Relations Act 1976; Disability Discrimination Act 1995; Employment Equality (Religion or Belief) Regulations 2003; Employment Equality (Sexual Orientation) Regulations 2003; Employment Equality (Age) Regulations 2003; National Minimum Wage Act 1998; Working Time Regulations 1998; and Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.

Furthermore, employers have a common law and implied contractual duty to take reasonable care for the health and safety at work of every person in their employ. That duty is reinforced by the Health and Safety at Work Act 1974, section 2 and by the Management of Health and Safety at Work Regulations 1999. To avoid civil claims for damages at the suit of injured workers and/or prosecution under the Health and Safety at Work Act 1974, employers must ensure that temporary, casual and seasonal workers receive as much information, instruction, training and supervision as is needed to enable them to carry out their assigned duties safely, and without risk to themselves or to the people with whom they come into contact. The risk assessment exercise prescribed by the Management of Health and Safety at Work Regulations 1999, regulation 3 must identify the risks confronting temporary, casual or seasonal workers working in an unfamiliar environment and the steps that must be taken to eliminate or minimise those risks

Where they are not ‘employees’, certain rights and protections, including unfair dismissal or redundancy, do not apply.

5) Do TAW workers have the right to information, consultation and representation?

If yes, please specify the nature/basis.

Rights to information and consultation, and representation, are largely associated with the recognition of trade unions. In the absence of collective agreements, and given the typically short duration of assignments with user-enterprises, it can be assumed that most temporary agency workers have very limited access to information, consultation and representation rights in most agency firms or their user companies. Otherwise, information and consultation rights may arise from the Information and Consultation of Employees Regulations 2004, which from April 2008 apply to undertakings with more than 50 employees. However these rights are not automatic but must be triggered by management, or 10 per cent of the employees in an undertaking. In the calculation of the employee threshold, temporary agency workers are explicitly excluded as they are not employees of the user company.

6) Is there a control/enforcement mechanism regarding any TAW regulation?

If yes,

a) is there a special labour inspectorate or a bi-partite body governing TAW?

Yes. The Employment Agency Standards Inspectorate (EAS) has the power to investigate complaints and to undertake random checks on employment agencies. This part of the Department for Business, Enterprise and Regulatory Reform (BERR). The Inspectorate, which was established in 1976, carries out routine inspections of agencies and investigates complaints about agency conduct. The Inspectorate operates an enquiry line which receives around 10,000 enquiries and 1,000 complaints each year. The number of inspectors is to double to 24 in 2008.

The Gangmasters Licensing Authority (GLA) was established in 2005 following the death of 23 Chinese cockle pickers in Morecambe Bay. It has 19 intelligence, compliance and enforcement staff and is responsible for inspecting gangmasters in the agricultural and associated food processing sectors. There are currently 1197 gangmasters licensed by the GLA

b) are there any sanctions/penalties for not respecting the regulations (whether stemming from law and/or collective agreements)?

The EAS has the power to prosecute willful breaches of the regulations or where cases of serious harm have arisen from a failure to meet them. In the most serious cases the EAS may seek a Prohibition Order from an employment tribunal to require the agency to cease business. Between 1999 and 2004 there were 24 prosecutions and 7 orders to cease business. In addition, the GLA has the power to revoke licenses and initiate prosecutions for gangmasters. To date, 55 licences have been revoked by the Gangmasters Licensing Authority and its first prosecution (for operating without a license) was brought in April 2008.

7) Are there any procedures governing use of TAW and strike breaking?

In particular, can workers on strike be replaced by agency workers?

No, if the strike is ‘official’, i.e. is organised by a trade union and meets the requirements on balloting and notice periods. The Conduct of Employment Agencies and Employment Business Regulations 2003, Part ll General Obligations, regulation 7 (‘restriction on providing work-seekers in industrial disputes’) states:

‘an employment business may not supply a temporary worker to a hirer to replace an individual taking part in an official strike or any other official industrial dispute. In addition, an employment business must not introduce or supply a work-seeker to do the work of someone who has been transferred by the hirer to perform the duties of the person on strike or taking industrial action. An employment business will have a legal defense to having acted in breach of this regulation if it does not know, or has no reasonable grounds for knowing, that official strike action is in progress’.

Regulation 7(2) provides that this regulation applies to official strike action. If an agency or business has not complied with the regulations, it can be sued for damages by anyone who suffers loss or injury as a result of that failure and EAS can initiate a criminal prosecution against it (the maximum penalty is a fine of up to GBP 5,000 per offence and a ten year ban). This is in addition to its power to apply to an employment tribunal to have someone declared unsuitable to carry on, or be concerned with, an employment agency or business.

Section 3. Social dialogue and collective bargaining

1) Is there any employers’ association(s) for TAW firms in your country?

If yes, please provide any data on membership (e.g. sectoral coverage of firms/workers)

The Recruitment and Employment Confederation (REC) was formed in January 2000 as the result of a merger of two long-established bodies in the recruitment industry - the Federation of Recruitment and Employment Services (FRES) and the Institute of Employment Consultants (IEC). It’s membership is made up of over 8,000 recruitment agencies and businesses (corporate members) and 6,000 recruitment professionals (individual members). It is estimated it covers 50% of the sector (Winchester, 2005). It also operates twelve specialist groups representing some of the key niche markets within the recruitment industry. However it has no industrial relations role.

2) Is there any union(s) specifically for agency workers?

If no, have any unions or confederations targeted the recruitment of agency workers? launched any campaigns around agency workers’ rights?

There is no specific union but agency workers are at the forefront of the Trades Union Congress (TUC) campaigns around ‘Vulnerable Workers’ (www.vulnerableworkers.org). The TUC established a ‘know your rights’ hotline for agency workers in 1999. The TUC campaign is also endorsed and supported by the major general unions Unite and GMB, the Communications Workers’ Union (CWU), the construction workers’ union UCATT, the public sector union Unison and the retail and wholesale union USDAW.

3) Collective bargaining levels

Is TAW governed by collective bargaining at:

a) intersectoral/ national level?

No

b) the sectoral level for TAW?

No

c) company (ie. temporary agency firm) level?

Sometimes.

If yes, please provide details of the parties concerned.

4) Collective bargaining outcomes

Please provide examples and details of any recent/ significant collective agreements governing TAW at the levels referred to in question 3.

Nothing to add to above.

5) Are there any examples of sector- or company-level collective agreements in other sectors that restrict, permit or otherwise regulate the use of TAW within their domain?

None known of.

6) Please provide any data concerning:

a) trade union density for agency workers

No data.

b) the coverage of collective bargaining within the sector.

No data.

Section 4. Employment and working conditions of TA workers

1) Please provide the most recent data (averages) on TAW employment

a) longevity of TAW employment, i.e. how long workers remain employed

- in the sector?

- with a particular agency?

b) duration of TAW placements, i.e. i.e. the length of assignment in a user company.

a) No data readily available on longevity of employment in the sector, or with an agency. In more specific terms terms of assignment, according to LFS data for 2007, 9% of agency workers had been in their current job for less than a month; 22% < 2 months; 30% < 3 months; 53%< 6 months; 73% < 1 year; 82% < 18 months; <87% <2 years and 96% < 5 years (Forde et al, 2008). Mean tenure is 13.3 months, but the median is 4.5 (and mode 1 month).

2) Please provide any evidence from official, academic and social partner sources concerning:

a) the reasons for user companies’ usage of TAW, including any differences by sector, occupation, firm size etc.b) reasons for workers participation in the sector and levels of satisfaction, including any differences by age, sex, education etc.

a) According to the management survey of WERS 2004, 16% of workplaces with 10 or more employees use TAW, comprising 2% of their total workforce on average (Kersley et al, 2006: 103-4). Much use of TAW (58%) is for covering staff absence such as sickness or maternity leave, or for shorter cover whilst waiting to fill vacancies; 37% used TAW to respond to demand variation; 24% referred to difficulty in filling vacancies; 9% to obtain specialist skills and 4% because of a freeze on permanent employment. (Note that 32% cited more than one reason).

According to Forde and Slater (2006), increases in the use of TAW are linked to increased competition and ‘lean’ staffing strategies based on cost and protection of a ‘slimmed down’ core workforce. Their analysis of the 1998 Workplace Employee Relations (WERS) survey, a nationally representative survey of over 2,000 establishments with 10 or more employees, found that 20% of workplaces then used TAW. They are more likely to be larger workplaces and organisations, especially where downsizing, but also where a policy of no compulsory redundancies are in place. Agency labour is thus ‘a means of achieving flexibility’ (p. 150) in staffing levels, as well competitive ‘pressures on labour costs’.

Stanworth and Druler (2006) draw on 12 case studies to argue that reasons for TAW use vary according to whether it is designed to supplement or substitute for permanent staff, with the former likely to be on a lesser scale, and whether it is planned or ad hoc (reactive). Reactive use reflected tight headcount budgeting and more variable demand conditions. This seems to describe the conditions encouraging TAW in labour-intensive and low-skill sectors such as hotels, according to case study research by Lai et al (2008). There, TAW was used not just to meet demand fluctuations but to minimise costs. Hoque and Kirkpatrick (2007) suggest that the growth of agency work in the poublic sector reflects tight short-term budget control and labour shortages and that this is a problematic rather than a preferred labour management strategy.

Purcell et al (2004) also draw attention to changes in labour supply as well as client demand. For example, smaller specialist agencies in ICT or healthcare, and not just the ‘household names’, are increasingly better able to enter into long-term relationships with client companies and to carve out a market for their services, to workers as well as client companies. This includes the development of a wider range of services than temporary labour supply.

b) According to TUC (2007) analysis of LFS data, 45% of agency workers would prefer a permanent job (compared to 23% of all temporary workers), and 29% said they did not want a permanent job. Forde and Slater (2006) use evidence from the ‘Working in Britain 2000’ survey, which is a national sample of nearly 2,500 people, which finds that agency workers are significantly more likely to report job dissatisfaction, across a range of indices (e.g. pay, promotion prospects, security, the work itself, organizational identification). However, in a literature review commissioned by the REC, Biggs (2005) argued that results were mixed and more focused research was necessary into the motivations and effects of agency employment.

3) In practice, which rules and procedures may apply to temporary-agency workers in contrast to other workers in the user company?

Agency workers are not employees of the client organisation hence may lawfully be treated differently in terms of pay and other terms and conditions of employment, regardless of time spent at the user company. Also significant in the UK context is that, even where they are members of a trade union, they may be precluded from participating in legal industrial action alongside permanently-employed colleagues because of rules against so-called ‘secondary action’.

Section 5. The extent and composition of TAW.

1) For 2004 and 2007, please state

a) the number of agency workers b) total revenues of the TAW sector

a) Authoritative data is hard to come by. An annual survey of member firms conducted by the REC estimates there are around 1.4 million agency workers, though this has been criticised on the methodological grounds of low response rate and an inflationary focus on staff on the books rather than in actual placement at the time of the survey (Forde, et al, 2008). According to these authors’ analyses of Labour Force Survey (LFS) data from 2007, 250,000 people held a TAW job as their main form of employment, representing one in five of all temporary workers and just over 1% of employees. The figure for 2004 was around 230,000. TUC (2007) analysis of LFS data agrees that agency workers represented 1.1% of all UK employment in 2006, which was the same figure as 2001 and 2005. In 1997 the figure was 1.0% and in 1992 0.4%. However, LFS data is likely to significantly underestimate the number of agency workers since it is a survey of individuals (drawn from 60,000 households); groups such as (short-term) migrant workers are less likely to be sampled. Furthermore, respondents may be uncertain as to their employment status.

In December 2007, the employment minister Pat McFadden was unable to state figures on the number of agency workers to the Parliamentary Delegated Legislation Committee on the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007. A further written answer from the government also stated that ‘there is no reliable data on the number of employment agencies currently operating in Great Britain’. As a result, a survey of recruitment agencies was commissioned by BERR and conducted in the autumn of 2007. This research estimated the number of agency workers to be much closer to that of the REC at 1,196,000 (BERR, 2008).

b) Figures from REC and used by BERR state that the recruitment services sector as a whole currently has a turnover of GBP 26.673 billion, up from GBP 23 billion in 2003.

2) What proportion of the TAW workforce is currently

a) male/ female?

57%/ 43% (Forde, et al 2008)

b) full/part time?

75%/ 25% (Of 6.4 million part-time workers, just 72,000 were employed through agencies; TUC, 2007: 35)

c) young (<c. 25) or older (>c. 50) workers?

34% are aged 16- 25 (51% under 30) and 15% aged 50-64.

Only 8% are students, but nearly 1 in 7 have arrived in the UK since 2004 (compared to 2% of the permanent workforce)

3) Has there been any changes to the TAW sector in terms of

a) concentration, i.e. proportion of employees or turnover accounted for by the largest firms?

According to the TUC (2007) the five largest companies have 97 subsidiaries and employ 40% of those working in the personnel and recruitment industry. However there has been an expansion of smaller businesses; in 1994 there were 6,500 recruitment businesses registered for VAT and by 2005 this had risen to 16,800. (The VAT statistics also showed that 12% of firms had de-registered in 2004). Overall, the UK is an example of a fragmented market for TAW in that the largest five firms account for only 20% of sector revenues.

b) internationalisation, i.e. number/significance of multinational TAW firms?

No data.

4) What is your evaluation of the availability and quality of statistical data concerning TAW in your country?

It is generally acknowledged that statistical data is poor. BERR is currently commissioning a quantitative study of the sector.

Commentary by the NC

The TUC has led a sustained campaign for legislation to introduce greater protection for TAW workers, including equal treatment, on the grounds of fairness and on the basis that unscrupulous employers are exploiting them and using them to displace permanent workers on worse terms and conditions. A high proportion of agency workers stay in the same workplace for over six months or even more than a year, so the TUC argues that employers are using them for cost reasons rather than flexibility, and that it is unfair and discriminatory for workers doing the same job to be paid differently on the grounds of employment status. The TUC says agency workers should receive the same pay as comparable workers from their first day of employment. However, the CBI and REC oppose new law, and argue for more effective enforcement against ‘rogue’ agencies. They say that the agency is the employer of agency workers, and comparability within the user enterprise would be administratively difficult and costly. They are especially concerned where any equal treatment qualification period would be under one year’s employment. They point out that agency temps have significant employment rights under most employment legislation, including the minimum wage, working time law, discrimination and health and safety. They also argue that the draft Directive would disproportionably add to UK business costs and lead to job losses. David Yeandle, deputy director of employment policy for the manufacturers’ body EEF, has also said that ‘anything less than six months would be a serious problem and ideally we want it to be at least 12 months’.

James Arrowsmith, IRRU

References

Department for Business, Enterprise and Regulatory Reform (BERR), 2008. ‘Agency work in the UK: A review of the evidence’. Employment Relations Research Series no. 93. http://www.berr.gov.uk/files/file48720.pdf

Biggs, D. 2005. Satisfaction levels amongst temporary agency workers. London: REC.

Forde, C, and Slater, G. 2006. ‘The nature and experience of agency working in Britain’, Personnel Review, 35:2. 141-57.

Forde, C, Slater, G and Green, F. 2008. ‘Agency working in the UK: What do we know?’ CERIC Policy Report no. 2, University of Leeds.

Heery, E. 2004. ‘The trade union response to agency labour in Britain’, Industrial Relations Journal, 35:5. 434-50.

Hoque, K. and Kirkpatrick, I. 2007. Making the core contingent: Professional agency work and its consequences in UK social services’, Public Administration, 1-14.

Industrial Relations Services (IRS), 1998. ‘Union recognition for temporary agency workers’, Employment Trends 659. 4-8.

Kersley B, Alpin C, Forth J, Bryson A, Bewley H, Dix G and Oxenbridge S (2006) Inside the Workplace. London: Routledge.

Lai, P-C., Soltani, E, and Baum, T. 2008. ‘Distancing flexibility in the hotel industry: The role of employment agencies as labour suppliers’, International Journal of Human Resource Management, 19:1. 132-52.

Newman, D. 2008. Temporary Workers: Employment Law. London: XpertHR.

Purcell, J. Purcell, K., and Tailby, S. 2004. ‘Temporary work agencies: here today, gone tomorrow?’, British Journal of Industrial Relations, 42:4. 705-725.

Stanworth, C. and druker, J. 2006. ‘Human resource solutions? Dimensions of employers’ use of temporary agency labour in the UK’, Personnel Review, 35:2. 175-90.

Trades Union Congress, 2007. Agency workers: Counting the cost of Flexibility.

Winchester, D. 2005. Thematic Feature – TAW in the UK: UK national response.

Wynn, M and Leighton, P. 2006. ‘Will the real employer please stand up? Agencies, client companies and the employment status of the temporary agency worker’, Industrial Law Journal, Sept. 301- 20.

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