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ARC challenges Government Agency Workers Regulations

ARC challenges Government Agency Workers Regulations And Comments On Asda Deal

Part of the draft regulations to bring the Agency Workers Directive into UK law may not be legal, according to inquiries carried out by the Association of Recruitment Consultancies (ARC).

The government laid draft Regulations before Parliament in January 2010, following a two part consultation which ended in December 2009. However it would appear that the draft regulations contain important new aspects that were neither raised in the consultation process nor more importantly should be introduced via secondary legislation.

The Regulations provide that recruitment businesses which have no contract at all with an agency worker, can be made liable for the rights that the agency worker will now acquire, even though such recruitment businesses are excluded from the scope of the Directive. According to legal advice including that of Queens Counsels obtained by the ARC, this is not lawful.

ARC Chairman Adrian Marlowe explains that to be an agency worker within the scope of the Directive, the worker must have a contract with a temporary work agency, which in turn must be in the business of concluding employment contracts or relationships with agency workers for assignment to a hirer. A recruitment business, such as a master vendor, does not usually enter into contracts with agency workers, has no employment relationship with the worker under UK law and therefore cannot be a temporary work agency under the Directive. Therefore such organisations should not be brought within the scope of the Regulations and held to account. The point is technical but it has considerable ramifications.

The ARC has recently raised this with the government (BIS) and has asked for the relevant Regulations 3(3) and (4) to be removed. BIS has currently declined to do so, arguing that this aspect of the regulations did not go beyond what the Directive aimed to achieve in protecting agency workers, particularly as it applied in the UK context. It has argued that to exclude certain organisations from liability would be to deny agency workers access to rights that the Directive required.

However ARC argues that the issue is an entirely legal one. If the Directive does not include certain organisations within scope, the government should not bring them into scope by redefining what an employment relationship means within national law. For it to be able to do so there must already be a national law in existence permitting that definition, and as there is no such national law the deemed relationship and liability that follows is unlawful.

A suitable response from BIS is awaited. In the meantime, ARC has written to MPs to alert them. Adrian Marlowe adds: It is crucial to understand that this argument does not affect the rights of agency workers to equal treatment or enforceability against the actual temporary work agency or the hirer. It is unfortunate that so little time has been given to consider these regulations when we have pressed for more time, and that they have been laid before Parliament ahead of an approaching election when MPs minds are probably more on their constituents than anything else. However we are where we are and everyone can be assured that the ARC will take whatever action is required to clarify this issue as it could have serious consequences for agencies.

He added The Governments sledgehammer to crack a nut approach also highlights an element of mistrust of the recruitment industry that regrettably still exists in Government. This makes it all the more important that ARC pursues its objective of improving relationships and understanding between Government and the recruitment industry.

Commenting on recent reports about the deal struck between supermarket chain ASDA and the trade union Unite in advance of the Agency Workers Regulations that are due to come into force next year, the Association of Recruitment Consultancies (ARC) urges caution against adopting the model ahead of Regulation.

ASDA has won kudos for its agreement to liaise with its suppliers, unions and temporary worker agencies to ensure the workers are paid the same as permanent staff and its competitors, and other businesses will now be under pressure to follow in its footsteps.

However The British Chamber of Commerce has estimated the cost of the Agency Workers Directive to be 1.5 billion per year. By the Governments own estimates, there are 1.3 million agency workers in Britain, about 5 per cent of the working population. That figure is likely to rise as companies start to come out of recession but do not want to take on extra permanent staff that may be expensive to shed if things get worse again.

Adrian Marlowe, Chair of ARC, said what has been largely overlooked in the mainly media and union comment about the deal is that ASDA is in a totally different situation from most other employers and the deal it has agreed is likely to be far less problematic for it, than for most others. It is unrealistic to claim that ASDA is trailblazing a path that everyone else should follow.

He points out Firstly, ASDA is owned by the giant US Wal-Mart, the world's largest public corporation by revenue, and the largest private employer in the United States. Thus whatever the cost, it is hardly likely to make much difference to its balance sheet.

Secondly, ASDA, along with other supermarket chains, has enormous power over its suppliers, and is in a position to squeeze their margins further in order to recoup any additional costs. Very few will have the financial muscle of ASDA. Accordingly they are likely to be seriously affected.

The reality of enforcement of the Regulations is that it is likely to be the suppliers who will have to meet the increased bill. Of course there is the option of ending the agency workers hire in advance of the twelve weeks qualifying period, but this would be disadvantageous to swathes of temporary workers. Furthermore, it may be more attractive to end the employment of regular employees on a redundancy basis those likely to be most subjected to this would be new employees with less than 12 months service. This again would disadvantage existing employees.

Marlowe adds that in the anxiety to be politically correct in favour of agency workers some hard economic realities appear to be being ignored. ARC has consistently encouraged a realistic approach to these Regulations and we continue to warn against an over zealous implementation of the EU Directive which undoubtedly will threaten jobs and the benefits of a flexible workforce. One of Newtons laws of motion was to every action there is always an equal and opposite reaction. We should not lose sight of that.


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