As the battle rages on over legislation for the equal treatment of temporary and agency staff, Matt Henkes has a look at the issue and what it could mean for employees.
The progress of Labour MP Andrew Miller’s private members bill for the equal treatment of agency and temporary workers has reignited a long running debate – can agency workers be given equal rights without seriously damaging the temping industry?
There are a number of powerful vested interests at loggerheads in the debate over factors such as equal pay, pensions and training entitlements for agency staff. The bill passed its second reading in February when around 150 MPs, with no small amount of union lobbying, supported its progression to the committee stage. But further investigation points towards the fact the government and industry bodies would much rather it went away.
Andrew Miller, MP
No one is suggesting that agency and temporary working should be stopped. Agencies provide staff for firms with short-term needs, matching them with workers who either have short-term availability or who prefer the flexibility of agency work. The industry not only makes perfectly good business sense, it is good for the health of the wider economy.
However, some high profile cases of abuse by less reputable work agencies have brought the industry into the spotlight. “How can it be right for people to work alongside each other with the same skills doing precisely the same task and yet one category of employee is worth less than another?” asks Miller.
Flexibility risk
Detractors of the bill argue it is a characteristic of the UK labour market that there isn’t commonly one rate for one job. Pay rates are more usually calculated based on each worker’s skills, loyalty and performance. Equally, other benefits, such as pensions and occupational sick pay, are part of a package given by employers to reward loyalty and long service.
“An agency worker has the right not to be treated less favourably in respect of his basic working and employment conditions than a comparable direct worker is or would be treated.”
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Lizzi Holman, policy adviser on employment and pensions for the Confederation of British Industry (CBI), feels that the National Minimum Wage provides a solid statutory floor to the labour market. “Above this, companies and workers should be free to agree a rate for the employee’s work that matches their knowledge and skills,” she says. “Arbitrary comparisons with other staff would restrict this, damaging companies’ ability to reward good performance.”
The Unite union is running a campaign in support of the bill and is said to have had more than a guiding hand in its conception. A spokesperson for the union and a key figure behind the campaign told HRZone.co.uk that a large number of employers already operate under a system whereby permanent workers start their employment on a probationary salary and that this should be the comparison offered for agency staff.
“The idea of agency working is that it fulfils a need for either a fluctuation in demand or where there’s an absence to be covered,” she says. “Where there’s a genuine need for flexible working, employers aren’t paying national insurance or pensions. What we’re increasingly seeing is many employers are, in effect, outsourcing their workforce to cut costs.”
Past the politics
It’s the unions’ job to argue for better conditions for workers, just as it is an industry representative’s role to oppose new regulation. But amid all the political manoeuvrings, what is the likely effect for HR professionals who use temporary workers if this bill becomes law? A recent HRZone.co.uk poll showed that 72% of HR professionals were against the bill, but is their opposition justified?
Unite argues that it’s not about stopping the use of agency workers but ensuring those employees get fair treatment. “In terms of happy workforces and positive work environments, this can only be for the good,” it says.
However, businesses use temporary agency workers because they don’t come with the added complexities of arranging a short-term employment relationship, just a commercial relationship with the agency. Currently, the employment relationship is between the worker and the agency.
Regulations which muddy the distinctions, creating an employment-style relationship between the employer and the worker, could erode the appeal of going to an agency to obtain staff quickly and easily, whilst paying someone else to take care of the details.
And there may be other repercussions. “The bill would remove many benefits to HR professionals offered by agencies, leaving them with unattractive choices,” warns Holman. “They may have to move to managing a bank of temporary workers in house, or look to expand overtime of permanent workers.”
Lizzi Holman, CBI
Economic impact
Another facet of the argument centres around the so-called loss of a crucial, flexible element of the labour force that could impact negatively on the economy. Far from aiding these workers, the bill could actually result in a loss of available temporary positions. Losses of up to 250,000 jobs have been forecasted by the CBI.
However, debating his bill in parliament in February, Miller compared these “stories of doom and disaster” to arguments from the same quarters against the minimum wage. “We face the same doom merchants, recycling the same speeches,” he said. “They were wrong then and they are wrong now. My bill, if introduced with care, will not impact at all on our competitiveness.”
Faced with staunch opposition from industry and a notable lack of support from the upper levels of government, it looks unlikely the bill will be passed. However, this isn’t really the issue for its supporters; it’s more about keeping what they see as a critical debate out in the open. With France taking over the EU presidency this summer, it looks likely that the EU directive on equal treatment for temporary workers may be revived.
Whether Miller’s bill is successful or not, the battle over temporary workers is far from over yet.
6 Responses
Flexible working must be recognised and accepted by the Governme
“How can it be right for people to work alongside each other with the same skills doing precisely the same task and yet one category of employee is worth less than another?”
Mr Miller is making wholly unjustified assumptions when he says that both workers are employees: in fact, their relationships with the client / employer company are very different, and this explains the differences that seem to mystify him. The employee is tied into the employer, and the employer is obliged to carry on offering him work; the agency worker has flexibility to up and leave – the pay-off is that their client also has flexibility to cease providing them with work. Neither relationship is inherently better or worse than the other; they are simply different.
It is worth remembering that in the recent James v Greenwich Council case, Ms James had used her flexibility to gain a pay rise by changing the agency through which she provided her services: this is an option that would not be open to an employee, and is a classic example of the benefit that flexibility can bring to the worker. The trade-off was that the client was able to let her go more easily some time later: while she was happy to take the benefits of flexibility for herself, Ms James took her client to court when it attempted to do likewise.
The rights and responsibilities in flexible working must be recognised and accepted by the Government, politicians, trades unions, and of course the workers and clients themselves. When this has been achieved, the current muddled debate will be shown not to be necessary.
John Kell, Policy Adviser, The Professional Contractors Group, http://www.pcg.org.uk
spam, spam and more spam
Hi Juliet,
Your right about the spam and emails. There are good recruiters out there, but there’s also a fair few shady ones. Seems to me they don’t like picking the phone up!
I have been on the recieving end of how poor recruiters can be. I was made redundant 4 years ago and sent my CV to several companies. Roughly half rang me back or contacted me. 2 sent me information on the same job.
Suffice to say I found a new role without their help. I guess thats a little off topic.
Having spoken to a couple of friends who work in HR, they are opposed to the bill for one reason only and thats the additional costs they feel they will incur. But they could always push back and squeeze the recruiters mnargins.
Yup
Cheers Grant,
Agree with your statements of the situation ie. contractors setting up Ltd companies to supply themselves – nothing wrong in that.
I dont know where it will end but confirm your understanding of current employer/recruiter/contractor relationships.
Like you I wasn’t speaking out of an impression of the marketplace but personal experience when dealing with specialist and high volume recruiters. its all emails and spam and the only thing doing the matching is a computer and the end client.
Matter of choice
I agree with the points you make about Temp – Perm fees, where the employing organisation is reluctant to make a committment but think thats a different point to the one I was making. Or trying to.
I have worked for recruitment organisations who operate in niche markets of white collar construction, engineering and manufacturing where a substantial number of people choose to work on temporary contracts.
They understand that they have a lack of security but believe they have more flexibility in terms of what jobs to accept. This is also matched with higher pay rates – which can be anything from £5,000 – £15,000 more per annumn compared to someone doing a similiar job in the client organisation.
If a temporary contractor chooses to work through an umbrella they can also choose to opt out of the Employment Agency Regulations that were updated and came into force in 2004, (but only from the point after registering with a recruiter).
In addition the contractual arrangement made between the 3 parties mean the agency pay the umbrella company a gross figure with the umbrella company calculating pay.
The reason I raised umbrella company’s – and it was out iof genuine interest is how they would fall into the agency workers bill.
On the face of it, contractually the agreement seems to be between 2 companies (agency and umbrella) to provide a temporary service to a 3rd party (hiring client).
There are a number of temporary contractors who operate their own Limited Companies (IR35 tightened the rules but didn’t stop this happening) and engage with recruiters on company to company basis.
Not all recruiters are purley focused on the client and ignore the needs of the candidate. The market sectors of the organisations I have worked for have seen great skill shortages and those recruiters who have been successful are the ones who have acted consultatively with both the client and the candidate.
Unfortunately when people talk of recruitment they have an impression of high volume, fast turn around recruitment agencies rather than the specialist consultancies who work on lower numbers concentrating on quality of service.
One way traffic
I disagree with Grant in that its the nature of the contract that’s important and not what the employee within it is earning, any more than their age, sex, race etc should be taken into account.
Higher paid temp jobs are available but come with strings – lack of security, pension etc, arguably this is even riskier life for a higher paid temp employee than a lower paid one as their costs are usually higher.
Lets not forget the tendency for employers to offer jobs at all levels that are ‘temp to perm’ ie. we’ll check you out and offer you no perks or benefits or security for 6 months and then you just may be offered a permanent contract but no guarantee of this as actually we haven’t worked the budget out yet.
What I’m getting at is this is an employer who is unable or unwilling to offer a permanent job – this happens at all levels and is frequently driven through by the temp agency seeking to derive extra commission if the temp is taken on permanently. Should we really be perpetuating this practice, whatever happened to business having faith in its abilities to make a strong permanent job offer?
The self employed angle is a misnomer as IR35 legislation has effectively closed this loophole and remember the self employed have hardly any rights at all.
Umbrella employees are legally employees of the umbrella company and are not self employed, they pay the same tax as other PAYE employees although frequently they have less holiday and pension benefits.
Is it a good thing? I dont know but in a market where all recruitment agencies are out to please clients and not pay heed to providing a meaningful service or benefits to candidates, any help for employees should be welcomed.
Temporary workers are not all the same
Having worked in the recruitment industry on and off for a number of years the one thing that strikes me is that the Bill is looking to treat all Agency workers as an homogenous mass.
More often not the supporters of the Bill point to the low paid – high volume end of the market rather than the highly specialised, technical contract/temporary market.
Do we really need a Bill to argue for “equality” for temporary workers that are earning upwards of £30 an hour? Often highly skilled temps working in engineering and construction (and other industries)choose to do so because the pay rates are higher than that on offer from permanenet positions.
I accept that there are abuses by agencies of temporary workers and yes that needs to be addressed – but I dont think this Bill solve all the problems.
The other question I have on this subject is regarding those temporary workers who are paid by an agency but through the services of an umbrella company.
I take it they would be excluded as they would be seen to be “self-employed”?