United Kingdom agency worker law

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United Kingdom agency worker law refers to the

judge made law[1] and absence of statutory protection, agency workers have more flexible pay and working conditions than permanent staff covered under the Employment Rights Act 1996
.

For most of the 20th century, employment agencies were quasi-legal entities in international law. The

2004 Morecambe Bay cockling disaster, Parliament enacted the Gangmasters (Licensing) Act 2004
, requiring agencies (gangmasters) in the agricultural, shellfish and food packing sectors to be licensed.

In January 2010, the Government passed The

Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
to regulate atypical workers.

Employment agency regulation

Main articles: Employment Agencies Act 1973 and Gangmasters (Licensing) Act 2004

The Employment Agencies Act 1973 regulates the conduct of the 17,000 odd agencies operating in the UK. It prohibits most agencies charging upfront fees, makes it an offence to put out misleading advertising for jobs which do not exist, sets standards for assessing an employee's experience, and more. It was introduced after similar (though stronger) legislation was passed in France and Germany regulating agencies (for Germany, see Arbeitnehmerüberlassungsgesetz). The 1973 Act was amended by the Conservative government through the Deregulation and Contracting Out Act 1994, ostensibly to increase efficiency. It abolished the system of agency licensing, so that agencies can operate freely, unless inspectors find violations and close them down.

Supporting the Act are The Conduct of Employment Agencies and Employment Businesses Regulations 2003. These regulations restrict agencies from,

  • selling other services (r.5)
  • sending workers to employers as strike breakers (r.7)
  • sharing the agency worker's personal details (r.28)
  • advertising jobs which do not exist (r.27)
  • withholding pay from workers, regardless of whether they have timesheets
  • charging any fees directly to a worker for their work
  • require agencies to document the health and safety standards of employers they send workers to
  • require agencies to give a written statement of the pay and hours they will have, and state their contractual status (see the common law section below)

In reality these requirements are not enforced, because there are minimal resources devoted to oversight. Regulation enforcement relies on individual workers bringing claims, and these claims are simply non-existent. There is no reported case of an agency worker claiming a breach of regulations. The watchdog, the Employment Agency Standards Inspectorate, has 15 inspectors and 4 call centre staff. This was increased by twelve inspectors after the Employment Act 2008 ss 15-18. In a £26 billion industry with 17,000 agencies, in 2004 the Inspectorate investigated 1,057 complaints, secured 8 convictions (solely in the entertainment industry, 2 agencies were banned for 10 years) and £5,735 in compensation for workers.[2]

The Gangmasters (Licensing) Act 2004 covers some of the lowest-paid workers in a more comprehensive way. It was introduced in the wake of the

Gangmasters Licensing Authority
issues these (currently there are 1,159 licences) and it oversees and enforces standards requiring employees to be treated fairly.

Common law

The regulation of agency workers is affected by the interpretation by the courts of the word "employee" under s.230 of the Employment Rights Act 1996. If an individual is considered to be an "employee" then all the entitlements (such as a written statement of contract, reasonable notice before dismissal, time off for parenting, etc.) under the Employment Rights Act 1996 apply. But the courts have often held that agency workers fall outside of this definition, because they lack "mutuality of obligation" in their contracts.

The first important case was

at will
. Sir John Donaldson accepted this argument and deemed the waiters to fall outside of the scope of unfair dismissal legislation.

Not all judges took the same view. In Nethermere (St Neots) Ltd v Gardiner[5] home-working ladies stitching flaps onto trousers were held to be employees within the meaning of the Act. The leading judge, Stephenson LJ, held that "mutuality of obligation" was nothing to do with the promise of future work, but simply the exchange of work for a wage, and control over one's job by the employer in the employment contract. Before the case reached the Court of Appeal, a young Tony Blair had been arguing the exact opposite in the Employment Appeals Tribunal, that O'Kelly's case should be followed. Agency workers were presumed to fall outside the scope of protective employment legislation. In 1997, when Tony Blair led New Labour to election victory, the approach to employment policy he brought was one of upholding labour market flexibility. The position of agency workers was reaffirmed when Derry Irvine was appointed Lord Chancellor, and he sat in on, and gave the leading judgement in, Carmichael v National Power plc. He reasserted his view of "mutuality of obligation". It is notable that the Constitutional Reform Act 2005 removed the power of the Lord Chancellor to decide on cases in this manner; it now being an incursion on the separation of powers within government.

Current authority could be said to still be ambivalent. On the one hand, the recent case of Dacas v Brook Street Bureau (UK) Ltd [2004] IRLR 358 held that an agency worker would be the "employee" of the end-employer. But then a slightly differently constituted Court of Appeal in James v Greenwich LBC [2008] EWCA Civ 35 has held that a contract of employment only exists with the agency itself. A feature of this ongoing debate is that, despite the fact that court cases for the last five years have always found an agency worker to be an "employee" of at least someone, generally speaking, neither end-employers nor employment agencies regard themselves as the employer who is bound by the Employment Rights Act 1996.

Under UK law, a contractor can be found caught by the tax initiative IR35, that is to say there is a virtual ("deemed") employment because that would be the case had the contract between worker and hirer been direct and the worker is then subject to extra taxes to compensate the government in that regard, yet he still has no apparent employment entitlements. This is partly because the Tax Commissioners and the Employment Tribunals, and Tax and Employment Law, respectively allow for different treatments.

Securing equal pay and hours

Main articles:
Temporary and Agency Workers (Equal Treatment) Bill
Andrew Miller MP
.

Even if agency workers had any of the entitlements under the

Temporary and Agency Workers Directive was revived, and passed by the European Parliament. This was possible for the first time in 2008 because the United Kingdom
government dropped its opposition. In fact, the directive and the Bill are almost identical. It is understood that the law will be passed, but with a 12-week wait before agency workers will be eligible for equal pay and hours.

Scope

European directives have to be implemented by a UK law before they take effect in the country.

Act of Parliament or create a statutory instrument under the European Communities Act 1972 which puts the directive's required rules in place. In fact, the proposed 2008 Bill was based on the directive, and serves as a very good guide indeed as to what any implementation will look like. All the essentials are identical. The core of the new law is to oblige employers to treat agency workers and permanent staff equally in their contract terms,[7]
but only regarding

The bill does not protect agency workers from being

at the will of the employer. The courts are of two minds about whether agency workers should be considered "employees" (under s 230 ERA) and importantly whom they should be considered "employees" of. Confusion in the courts has encouraged more claims, and has prevented the enforcement of clear rights.[citation needed] Agency workers have almost none of the main entitlements under the Employment Rights Act 1996. None of this is covered in the directive. That means agency workers may potentially be left without the following rights.[9]

In cl 4(1) the Bill created a right to have access to an

ERA 1996
). The way people demonstrate "unfairness" is to show that some pre-existing right has been breached. If an agency worker is not considered an "employee", then he will probably not be able to rely on the ERA 1996 rights which require it. So while the rights to equal treatment in the directive would be effective, agency workers would remain unprotected by almost every right in the ERA 1996.

Background

The Bill largely implements the European Commission's

Temporary and Agency Worker Directive of 2002 (COD 2002/0149). The latter was delayed these six years due largely to the UK government's consistent opposition to substantial agency working regulations – it preferred labour market flexibility. Per newspaper reports,[10] the UK got the backing of Germany to torpedo the draft Directive in return for the UK to help sink the Takeover Directive (Germany has comprehensive agency work regulation under its Arbeitnehmerüberlassungsgesetz and its Civil Code, esp §622, and the UK has strong Takeover Regulation, especially Rule 21 of the City Code[11]
). The significant difference between the proposed Directive and the Bill is that governments, particularly the UK, managed to stipulate protections apply from 6 weeks of work in the Directive (equal treatment rights) per draft Art. 5(4). The first tabling of the Bill was undecided on this point, though more than one business consortium in the City of London called for one year of agency (or similar) work for a business to gain the protections.

The Directive included equal treatment only for pay, hours, parental rights and anti-discrimination (Art. 3(1)(d)). A significant omission therefore was any formulaic, fixed definition of minimum "reasonable notice before dismissal" enshrined in the UK by the ERA s.86 and defined by subsequent case law (common law).

Before the

Andrew Miller MP, with a small title change to emphasise "Equal Treatment" rather than "Prevention of Less Favourable Treatment". Identical in every way, save a tighter definition of employment agency and more provision for regulatory enforcement, it won the support of almost the whole Labour bench in the House of Commons. It was being heard in Committee each Wednesday morning as from 7 May. As of 21 May, the government said that it would table and move for Regulations. These passed (both Houses), received assent and became the Agency Workers Regulations 2010. They require a 12-week period of work before the rights to equal pay and time off begin.[14]

See also

Notes

  1. ^ see O'Kelly v Trusthouse Forte plc [1983] per Sir John Donaldson MR and James v Greenwich LBC per Mummery LJ
  2. ^ HC Hansard, 5.7.05, col. 284W, HC Hansard, 23.6.04, col. 1455W
  3. O'Kelly v. Trusthouse Forte plc
     [1983] ICR 728
  4. ^ per Cooke J. in the Market Investigations case [1969] 2 AC 173, "Is the person who was engaged himself to perform these services performing them as a person in business on his own account?" See also, per Lord Denning MR, Massey's case [1978] I.C.R. 590, at p. 596B; Also, Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance
  5. Nethermere (St. Neots) Ltd. v. Gardiner
    [1984] ICR 612
  6. direct effect
    ", and this directive's deadline is in 2011
  7. Temporary and Agency Workers (Equal Treatment) Bill
    cl 1 read with cl 5
  8. Equality in Employment (Sexual Orientation) Regulations 2003
    r 8.
  9. ^ See E McGaughey, 'Should Agency Workers Be Treated Differently?' (2010) SSRN, 3
  10. ^ see, Carl Mortished, ‘UK turns against EU merger law in deal with Germany,’ The Times, 19 May 2003. According to the report, "The Commission is hoping to have the Takeover Directive passed with Mediterranean support but Germany wants a compromise to strip the law of key articles that prevent management using takeover defences and poison pills without prior authorisation. The UK Cabinet is believed to have abandoned support for the free market principle and, instead, formed an alliance with Germany in return for its support in wrecking the Temporary Agency Workers Directive. "The Brits have sold the City down the river," a source close to the talks said. Britain has been fighting a desperate battle to prevent the introduction of rules that give temps the same employment rights as full-time workers."
  11. ^ for interesting discussion, see David Kershaw, 'The Illusion of Importance' (2007) 56 ICLQ 267
  12. James v. Greenwich LBC [2006] UKEAT/0006/06
  13. ^ see especially, this summary from Counsel for the employer who won the case, Jonathan Cohen at Littleton Chambers, Judgement details (19.02.08)
  14. ^ Patrick Wintour, 'Agency and temporary workers win rights deal', The Guardian, (21.5.2008)

References

  • N Countouris, 'The Temporary Agency Work Directive: Another Broken Promise?' [2009] 38(3) ILJ 329
  • BA Hepple and BW Napier, ‘Temporary Workers and the Law’ (1978) 7 Industrial Law Journal 84, arguing that the problem is that the worker is not deemed an employee of the agency, and this would be consistent with the fact that the agency exercises a ‘residuum of control’
    Bullock Report
    had a six month work requirement that would’ve excluded them.
  • E McGaughey, 'Should Agency Workers be Treated Differently?' (2010) SSRN

External links

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