House of Commons
|Session 2007 - 08|
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General Committee Debates
Temporary and Agency Workers (Equal Treatment) Bill
Temporary and Agency Workers (Equal Treatment) Bill
The Committee consisted of the following Members:
Chris Shaw, Committee Clerk
attended the Committee
Public Bill Committee
Wednesday 14 May 2008
[Mr. Mike Hancock in the Chair]
Equal treatment of agency workers
Amendment proposed [7 May]: No. 1, in clause 1, page 1, line 2, to leave out , or employment agency,.[Lorely Burt.]
Question again proposed, That amendment be made.
The Chairman: Good morning. Please do not hesitate to take your jackets or whatever else off if you feel that it is too warm in here. We shall resume at the point at which we stopped in our previous sitting.
Adam Price (Carmarthen, East and Dinefwr) (PC): When we adjourned, the hon. Member for Bromsgrove, who is not here at the moment, was referring to the advantages of labour market flexibility for women workers. It is true that part-unemployment can be more appropriate for women and, indeed, men with caring responsibilities, but that does not undermine the purpose of the Bill, which is to achieve equality between temporary agency workers and permanent workers. We want to see off the amendment gently and avoid loopholes that could be used to undermine the Bills principal purposes.
Andrew Miller (Ellesmere Port and Neston) (Lab): Let me deal briefly with some of the points that have come up in the debate. My hon. Friend the Member for Lewisham, West was spot on in his intervention during the previous sitting, and colleagues who believe that such matters are a problem for head-hunters are wrong. Under existing legislation and the Bill, an agency worker is a person supplied by an employment business or an employment agency to work for another personthe end-userunder a contract or other arrangement made between them.
As my hon. Friend said, head-hunters enter into relationships with the end-user and, subsequent to that, the person appointed to the task in hand is under contract to, and has an employment relationship with, the end-user. That does not alter the fact that there could technically beand no doubt arecases when head-hunters act in more than one way, but the position is clear. We must consider definitions carefully as we proceed through the Bill.
Some provisions take us back to 1973 and it is important that we examine definitional issues, such as the case of James v. Greenwich London borough council. A woman had worked continuously for the council through employment agencies for several years.
Lorely Burt (Solihull) (LD): The debate has been extremely interestingcertainly longer and more involved than I had anticipated when I tabled the amendmentand it has raised a number of important issues. I am particularly concerned about some of the issues raised in the previous sitting by the hon. Member for Carmarthen, East and Dinefwr regarding builders. Having discussed the matter with the Recruitment and Employment Confederation, to whom I am grateful for all its help and guidance, it seems that the issue is not necessarily covered by the Bill, but it is worthy of further investigation in another place. We should have a Westminster Hall debate on it, so that we can get to the bottom of what is happening in the industry. If people are being exploitedI understand that there are loopholes: opportunities for unscrupulous employers and agencies to manipulate self-employment regulations regarding that class of workersthen it is most important for us to address that, although I believe that we should do so separately.
The right hon. Member for East Yorkshire, who is not in his place this morning, raised some interesting issues last week about the entertainment industry. He has tabled an amendment to clause 5, so I look forward to the joy of discussing the matter again. What is important is the illustration of the Bills unworkability.
Andrew Miller: It may help the Committee to know that both the Musicians Union and the Broadcasting Entertainment Cinematograph and Theatre Union have advised me that they would not support the amendment of the right hon. Member for East Yorkshireeven though he is a musician.
I do not think that the crux of the amendment is alteredemployment agencies do not employ temporary workers; temporary agencies employ temporary workers. Whatever the agency calls itself makes no difference, because what is important is what it does. What it does defines where it stands under the law. It would be completely inappropriate to put this bureaucratic stranglehold on employment agencies. Therefore, I regret that I am unable to withdraw the amendment. There should be a vote on the record.
Question put, That the amendment be made:
The Committee divided: Ayes 3, Noes 6.
Division No. 2 ]
Question accordingly negatived.
The amendment would delete subsection (3), which applies the pro rata temporis principle. What exactly is the principle being applied to? In lay terms, the principle is, if I am an agency worker I should get equivalent benefits. What are we talking aboutpension rights, bonuses, gym membership? It is difficult to understand how one could possibly pro rata all those benefits. While one could make the case for equivalent pay, there are two problems regarding benefits and other things that accrue to a permanent employee in a company. There is the practical problem of how to achieve that aim, and there is a philosophical problem. Why should a temporary worker automatically receive the same benefits as a long-serving employee, if they will be there for only a few days, weeks or months? Theoretically it is possible to apply the principle to basic pay, but what about the many small businesses with no formal pay bands? My concern is that the principle could open the door to thousands of tribunal cases, which might fill the pockets of the lawyers but do nothing to improve fairness and the lot of temporary and agency workers.
We have referred to the European legislation going though at the moment, saying that we should not discuss it today because there is a parallel process in Europe that may affect the legitimacy of any legislation passed here. In Europe, one can see widely accepted pay bands in industry, but in the UK so much is informal, so finding a comparable pay band is extremely difficult.
Mr. Jonathan Djanogly (Huntingdon) (Con): Good morning, Mr. Hancock. The nature of the discussion of the amendment is similar to a clause stand part debate, so I will speak more fully to the whole clause at that point.
Andrew Miller: I urge colleagues to reject the amendment. In clause 5 there is a definition of the pro rata temporis principle, and I direct colleagues to the phrase, comparable direct worker. The word comparable clearly takes into account different rates that may be applicable in a workplace, reflecting length of service and so on. The most important point that I make to the hon. Lady is that there ought to be a comparison between people, whether they are in full-time or part-time work. Leaving the Bill to one side, I am sure that she would accept that part-timers in normal workplace environments should not be disadvantaged with regard to pay and progression and gaining additional holidays and sick pay, just because they are part time.
Andrew Miller: If someone does not work the same hours, they will not get the same pay as someone who works longer, and the same principle applies when someone has not been working for as long as someone else in a workplace in which there is a means of gaining higher benefits through an established system of progression, and that is perfectly reasonable. In my model, a temporary worker would move along the same pathway as someone who came into the job on a permanent basis, but that is not intended, because of the use of the term comparable direct worker, to provide any incoming temporary agency worker with a means of leaping up the pay scale to a median point. It would be a comparable position, and comparable means comparable.
Lorely Burt: I have tabled an amendment to clause 2 to substantiate what the hon. Gentleman has just said. If we are going to go down that road, it should be clear that a temporary worker cannot just come in and get all the benefits that every other worker should have. It would amend the clause to insert the words
at the point of recruitment
for those who come into a business at an initial stage, and the hon. Gentleman might be minded to accept that amendment.
Lorely Burt: I was just referring to it in passing, Mr. Hancock, and do not want to try your patience.
Tony Lloyd (Manchester, Central) (Lab): The problem with the hon. Ladys amendment is that, whether by design or accident, it would blow a complete hole through the purpose of the Bill, specifically because, were there to be an exemption for part-time workers, it is not beyond the wit of management to come up with a system in which, for example, part time would mean 40 minutes or half an hour less than full time. If that drove a coach and horses through the whole spirit of comparability, it would render the Bill null and void.
Lorely Burt: I think I see where the hon. Gentlemans comment came from. He is reading pro rata temporis as meaning part-time work, whereas I mean temporary work, and temporary full-time work, rather than temporary part-time work. The fault is probably mine, as it was not my stated intention to refer to part-time workers. I was actually referring to temporary workers and I apologise if I caused any misunderstanding in that respect.
Tony Lloyd: That is helpful, but would the hon. Lady, in that case, go as far as withdrawing her amendment, which would be the logical conclusion of where we had got to? If the Committee refers to the notes in clause 5, which mention the pro rata temporis principle, it will see that that refers to proportionality
I hope that the hon. Lady will withdraw the amendment, as that would be for the convenience of the Committee. However, for the sake of completeness, I refer the Committee to clause 1 (2) (b), which states:
Subsection (1) above applies only if
...the treatment is not justified on objective grounds.
In any case, when considering whether part-time, or even temporary, workers are being treated unfairly, objective circumstances would certainly be taken into consideration in defence of the difference of treatment. It is not as if there is no defence built into the clause already. Given the hon. Ladys ownership of a mistaken principle, perhaps it would be sensible if I invited her to withdraw her amendment.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I have a few questions for the hon. Member for Solihull. As the Committee knows, I think that there are a number of flaws in the Bill, but I am not sure that the pro rata principle is one of them. It is not unknown in other employment legislation to ensure that people working part time have benefits on a pro rata basis. For example, under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, workers already have pro rata rights. That would cover part-time agency workers and I am not sure why she would object to the same principle here. If she is talking about temporary employees on fixed-term contracts, those are covered by the fixed-term employee regulations that came into force in 2002 following the EU fixed term contracts directive.
A fixed-term employee is defined as
a person with a contract of employment which is due to end when a specified date is reached.
Under those regulations, fixed-term employees have the right not to be treated less favourably than comparable permanent employees because they are on a temporary, fixed-term contract.
I want to explore with the hon. Lady what the amendment tries to get at. Presumably she understands that part-time work is an important and flexible option both for businesses and employees. In todays times, people often have to juggle with a number of different responsibilities. Why would she want to move an amendment to not confer pro rata benefits on those workers? If her real objection is about pro rata of what, rather than the principle itself, surely there are other ways of dealing with that. There are a number of flaws in the Bill but the substantial issue is that of precisely what is covered by equal treatment, not whether part-time agency workers should get pro rata benefits compared to full-time agency workers. The focus of her concern about pro rata, should not be about the pro rata principle, but be about what is meant by equal treatment.
The draft directive, which serves as the backdrop to the Bill, defines what is covered by equal treatment. It
The issues surrounding hourly rates of pay are perhaps easier to compare; issues regarding other benefits that tend to go with long-term association with an employer are more difficult to include. The directive makes an attempt to deal with that problem by including some issues and excluding others, so it is possible to define what is being compared when we talk about equal treatment, but I am not sure whether the hon. Ladys path would be correct, in removing the right of pro rata benefits to part-time workers. My question is: what exactly is she driving at with the amendment? It seems an odd way to deal with the problem of defining what is covered by equal treatment.
Adam Price: I agree with the Minister; we cannot have an equal treatment Bill without some agreed measure of comparability. That is true whether, as he said, we are talking about full-time and part-time workers, or whether we are talking about equal pay between men and women. One has to have a way of measuring comparability and the pro rata temporis principle has been widely accepted in other legislation. If the amendment were passed, it would completely hollow out the Bill and there would be no mechanism to achieve its objectives.
The Minister is right that perhaps the debate that the hon. Lady wishes to have is what constitutes equal treatment and what we should include in the definition of basic working and employment conditions. It should be reiterated that the Bill does not say that there should be complete equal treatmentwe are talking about basic working and employment conditions as set out in the Bill. That is, of course, the case in other contexts of equal treatment also, but the amendment would render the rest of the Bill completely otiose and that is presumably why the hon. Member for Huntingdon is going to speak against it. I urge the hon. Lady to withdraw the amendment because I am not sure that it would achieve the objectives that she had in mind when she drafted it.
Lorely Burt: When I read the pro rata temporis definition, I saw that it refers to agency workers and I therefore took it to mean all agency workers, whether part-time or full-time. I wholeheartedly endorse the point that was made about the importance of part-time workers having the same pro rata rights and entitlements as full-time workers and if I have given rise to any misunderstanding that I was in some way seeking to remove those rights from part-time workers, I certainly wish to dispel that idea.
My concern is that the pay and benefits are being pro ratad and that they are the pay and benefits accruing to the employer of the temporary or agency worker. Such workers have a contract, they have employment conditions and protections, but those are the protections of the organisation that they have the contract with, which is the employment agency and not whichever company they happen to be working for at a particular time. There is concern about the energy and effort that would
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr. Djanogly: We have problems with this clause and, therefore, the Bill on many different levels. I thought that at this stage it would be appropriate to call a stand part debate so that I could set out those problems. First, there is no definition of temporary worker. Without clarification of the meaning of this fundamental term it is impossible fully to gauge the scope and application of the Bill or the clause. Secondly, we do not think that employment agencies should come within the scope of the provision. The individual seeking work has no contract with the employment agency when it carries out its service, so it makes no sense to compare the treatment of said individual by the employment agency with that of a person who is employed under contract as a direct worker.
Clause 1 represents a one-size-fits-all approach to giving agency workers the same rights as those given to direct workers. This misses the key point. There is a huge range of different circumstances in which agency workers are used. The Bill has been put forward on the premise that temporary and agency workers are unsatisfied with their current treatment. That is simply not true in the majority of cases, as borne out by statistical evidence. The term
basic working and employment conditions
is poorly defined and confusing in its implications.
Finally, the provision drafted into subsection (2), which attempts to allow for different treatment of direct workers and agency workers, lacks clarity. For instance, there is no definition of the objective grounds on which an employer can lawfully pay an agency less than a comparable direct worker. For those reasons alone, I shall recommend to my colleagues that we divide on this matter.
Andrew Miller: The clause is fairly straightforward. It sets out the basic principle that shows a clear distinction between the views held by Members on this side of the Committeethat includes my hon. Friend the Minister, who has a different opinion about the method by which the problem is addressedand those of Opposition Members. I was fascinated to hear that agency workers are satisfied and that the statistics bear that out; that hardly reflects the views expressed by the agency workers who have approached me about the Bill and its formulation. Nor does it reflect the views of a number of reputable agencies, which recognise that there are unacceptable practices in their industry.
I find it difficult to see where the hon. Member for Huntingdon is coming from. The simple reality is that the Bill sets out a principle that he fundamentally disagrees with. He is using his comments on clause 1
The hon. Gentleman rightly says that a huge range of circumstances apply in agencies, and the reason for the breadth of the definitions used in the clause is to cover the various circumstances. We had a long discussion last week about the position of musicians. We have discussed categories of people who are employed in different circumstances, and agencies that are structured in different ways. It is vital that the Bill start by ensuring that any worker who is employed through an agency-type arrangement is covered by the Bill. Not to do so would do a disservice to a significant number of people.
I appreciate that the hon. Gentleman may not be able to produce wholly reliable statistics on this issue. He is relying on surveys conducted by people who are asking their employees, Are you satisfied? If the reply is no, the employee does not get a job the next day; if it is yes, perhaps they will get a days work. To my mind, that is not a satisfactory way to produce meaningful statistics. I ask the hon. Gentleman to reflect on his contention that agency workers are a satisfied breed.
There are severe problems for agency workers, but there are some excellent agencies. There are several in my own constituency with which I have first-rate relationships. There are agencies that follow a model such as that advocated by the Minister, and that do their best to place people in jobs and develop them into permanent employees. That is a sound approach. Such companies act in the first instance as an employment agency and gradually get people into permanent places; they then look around for other people to join. That kind of practice is very good.
As I explained on Second Reading, there are agencies that have serious ethical problems with some of the practices that are going on to drive down wages, particularly by manipulating the rights of migrant workers. There are agencies that work hard to ensure that they do not get trapped into using those practices. Those agencies should be applauded, but that does not alter the fact that case after case is brought to my attention involving circumstances that are deplorable by the standards of the 21st century. I have examined some of them personally. One would hope, given the discussions happening outside this place and the commitment that the Department has given, that those practices will be severely curtailed by strong use of the existing legislation. To suggest that there is a great deal of satisfaction with current practice among agency workers is fundamentally wrong.
I do not accept that the definitions in the clause are inaccurate, and even if they were, I do not see that as a principled reason for rejecting it. If somebody believes the clause to be insufficiently precise, they should follow the lead set by the hon. Member for Solihull and seek to amend it. As the hon. Member for Huntingdon did not do so, I presume that there is a fundamental political difference between him and me.
Andrew Miller: The hon. Gentleman nods in agreement. The truth is that he does not want the Bill and that he does not want agency workers to be protected at any cost. I urge my colleagues to support the clause, which I believe is fundamental to resolving agency workers problems properly.
Mr. McFadden: Throughout the debate, there has been a lot of talk about whether there should be a qualifying period, given the nature of agency work and its relationship to flexibility. Why is the clause silent on that?
Andrew Miller: I deliberately drafted the clause without a qualifying period because a principle of fairness should apply. It starts from the premise that if two people are working alongside each other and have the same skills, experience and qualifications, they ought to be entitled to the same pay. I recognise that we are considering a complex set of circumstances, and I accept that a single qualifying period would simplify the problem and enable us to deal with all sets of circumstances.
My hon. Friend the Minister has mentioned that the draft directive, the Portuguese attempt to create a compromise, included a fixed qualifying period. However, that would not be my first-choice solution. I accept that it is very practical, and I can well see there being a sensible compromise based on it. My view is that we should drive a few lawyers out of human resources. Discussions about comparators and qualifying periods should be addressed on a far more common-sense basis. We should not allow ourselves to go for the simplest solution. I appreciate that we are looking for a pan-European solution, and that a tidy compromise might be necessary. On that basis, I would be happy if my hon. Friend the Minister came back on Report with an amendment that had a sensible qualifying period. By sensible, I do not mean the kind of 12-month date that has been kicking around.
Lorely Burt: If the hon. Gentleman has the stated intention of driving the lawyers out of HR, what is his estimate of the additional number of jobs that would be created in the associated occupations of the tribunal system? How many tribunals would be created as a result of implementing the Bills conditions?
Andrew Miller: To avoid getting drawn into discussing clause 4, I will answer the hon. Lady in a couple of sentences. I have always taken the view that we need a simple system of arbitration that is strong and, possibly, enforceable, outwith tribunal cases. Of course, tribunals must be there as the last resortpeople must have their right to a day in court. However, as a means of driving tribunals out of the process, I would prefer that we move toward a strong process of arbitration that can be enforced. Obviously, in collectively bargained workplaces such matters would be dealt with inside the workplace. To avoid masses of tribunals, especially for the small and medium-sized enterprises sector, there needs to be a mechanism. That is why my hon. Friend the Minister recognised that there needed to be a money resolution.
I urge colleagues to support the clause, which is fundamental to the Bill. I accept that my hon. Friend the Minister raised a perfectly fair point. If we moved toward a neat and tidy solution in having a single qualifying period, I could be easily persuaded to support such an amendment if it were tabled on Report.
Ms Dawn Butler (Brent, South) (Lab): Will my hon. Friend explore a little further the comment made about temporary or agency workers who are happy in their jobs? Is it true that, although some temporary workersperhaps some session musicianswho can command higher salaries for temporary work may indeed be happy, the Bill deals with people at the lower end of the scale? Therefore, those who are happy would not seek recourse to the law. For those who are unhappy, the Bill provides an avenue through which to seek equal treatment.
Andrew Miller: I do not necessarily think that it is about where people are in the pecking order of jobs. There is substantial evidence of exploitation in all areas of work. Examples are perhaps most readily identifiable in certain manual occupationsparticularly food processing and agricultureand some of them are quite horrendous. Quite a number have been brought to my attention in places such as call centres, where people have fairly long training paths. Some of those training paths are quite long, and I would expect such a person to move along the path in the same way as a permanent worker. Some interesting practices also occur in health trusts, in that adjacent trusts treat people in an entirely different way. Okay, they are individual employers under the structure of that service, but it is pretty anomalous that an adjacent health trust should treat people differently.
The question of social care causes me great concern. People undertake that work through convictionthrough the love of looking after fellow human beings. In some circumstances, they may be happy in the work that they are doing, but not satisfied with their remuneration and the way they are treated by certain agencies. There are worrying examples throughout the country of people being forced to choose between doing work that they deeply and passionately care about, and leaving to do other work, when social care needs more people with the right mental approach. It is shameful that some agencies are driving out highly committed people.
Lorely Burt: The hon. Gentleman is being very patient in taking interventions this morning. On unacceptable exploitation, I completely agree that it would be entirely inappropriate to depress pay rates for anyone doing a good job in caring or any other occupation. However, the employment agency industry is a thriving, competitive industry. Does he accept that in some circumstances, although obviously not all, if someone is not happy with a particular employment agency, there will be more than one agency in the local area, andunless uncompetitive practices are being engaged inone that will pay them a reasonable rate for the job?
Reference was also made to making people happy and the question of whether they are happy in their work. Constituents have come to me and said, Great to hear what you are doing, Lorely, because we are very concerned about this Bill.
Lorely Burt: If I may, I will take just a couple more seconds to finish this point. Because of the Bill, people such as professional contractors will have to receive a pay cut in order to get exactly the same pay and conditions.
Andrew Miller: I will deal with the last point first. The hon. Lady needs to read further into the Bill. I anticipate that my hon. Friend the Minister, when he enacts the Bill, will introduce secondary legislation under clause 4(1)(e)he has thought about it alreadywhich deals with
the applicability of the rights to special classes of employment.
The Bill is a private Members Bill and, as usual, such Bills need to be relatively straightforward.
The hon. Lady raises a perfectly fair issue. As I have said to the Professional Contractors Group and to other professional organisations, it is not my intention that the Bill should cover people who sell their professional services through an agency, rather than setting up a limited company. There are people in IT and in power engineeringparticularly in the nuclear sectorin that category. The Bill is not intended to cover them. My problem, as the drafter of a private Members Bill, was that the definitional issues needed considerably more work than I could undertake, given my resources. I passed that responsibility to the Minister for his civil servants to ponder. There are some difficult definitional issues when we come to the secondary legislation.
Nobody in the Committee would want the Bill to cover those categories of workers, whatever their views about the broader issue of agency workers. However, we do not want a loophole that means that a building contractor, for example, can say to a shuttering carpenter, Ill tell you whatregister yourself on this piece of paper as a professional contractor and we can dodge the Bill. There are some difficult definitional issues, and there needs to be a dialogue between the Minister and the stakeholders to ensure that we do not end up with such a loophole, whether through my Bill or any other mechanism that emerges.
I have drifted on to clause 4, which was not my intention, Mr. Hancock. With those remarks, I urge colleagues to support the clause unamended. I point out to the Minister that I understand why he posed the question about a qualifying period. A logical case can be made for a qualifying period, and if agreement can be reached on that, I would be delighted to see the Bill so amended on Report.
Lorely Burt: I have made all of the points that I wanted to make. In response to my last intervention, the hon. Gentleman said that it was not his intention to make professional contractors and others whose services attract a premium suffer. However, my understanding is that that would be the Bills effect. While it is vital that vulnerable workers in all areas be protected, by imposing this sledgehammer to crack a nut, he is catching in his net whole categories of agency employees who do not want to be caught. If enforced, the current legislation that protects all employees would provide many of the protections that the Bill would re-impose.
Mr. Frank Doran (Aberdeen, North) (Lab): I obviously support the position of my hon. Friend the Member for Ellesmere Port and Neston that the clause should stand part of the Bill. It is a fundamental clause that sets out the categories of workers that will be covered.
I am interested in the point made by the hon. Member for Solihull that the complexity of the proposals would add to the work of lawyers. I have no wish to do anything to harm the career prospects or financial situation of any of my former colleagues, but one of the reasons why the legislation is so complex is that employers try constantly to get round existing law. Employment tribunals are stuffed with lawyers because employers decided to bring them into the system. The original system was set up to be an informal process for dealing with problems at work.
I first represented someone in an employment tribunal in 1976, a year after the Health and Safety at Work, etc. Act 1974 came into force. The involvement of lawyers was unusual at the time, but it has now grown. I was recently involved in a case with the offshore trade unions. The legal bill has grown to more than £1 million, and that is not the collective bill but the bill for each side. That is a fact of life.
Laws need to be written clearly and definitively. Of course, there will always be areas of argumentthis Committee is an example of how arguments developbut, if the aim of the Bill is to protect vulnerable workers, it will necessarily be complex and precise. I am a Scots lawyer. Scots law depends on principle, not precedent, but the Bill is written to cover the whole of the UK, so every t has to be crossed. It is extremely important that the clause stand part of the Bill.
I listened carefully to the hon. Member for Huntingdon, and I want to pick up on a couple of points that he made. He said that the Bill takes a one-size-fits-all approach, and that that is the wrong approach. He is absolutely right to point out that there are different kinds of agency workers. I mentioned my involvement with the oil industry. There are about 20,000 workers offshore in the oil and gas industry, all working out of Aberdeen, where my constituency is.
Some people in the industry are delighted to be agency workers. They tend to be highly skilled, and they are very much in demand at a time when we have a severe skills shortage. They are highly paid, and the only arguments that I have ever had with them was over the section 85 tax legislation that dealt with some of the income tax abuses. Colleagues may remember that from a few years ago. My hon. Friend the Member for Ellesmere Port and Neston was heavily involved in that in respect of some of his constituents.
Some agency workers develop into substantial businesses. One small company in my constituency started off as two men working in a garage. It recently opened a factory where it employs 100 workers. It works in a very technical area and has helped the subsea industry based in Aberdeen to become probably one of the leading subsea industries in the world.
I accept what the hon. Member for Huntingdon said about there being different types of agency workers, but the aim of the Bill, as I am sure Labour members
Jim Dowd (Lewisham, West) (Lab): My hon. Friend and the hon. Member for Huntingdon mentioned the satisfaction or otherwise of temporary and agency workers. Will my hon. Friend accept that that is the primary purpose of the Bill, but that there is a secondary and equally beneficial element to it, which is equal treatment with the permanent work force and the cohesion of the work force? The aim is not only that temporary and agency workers are not exploited but that the position of the permanent work force is not undermined by the use of such workers.
Mr. Doran: My hon. Friend is absolutely right. When Labour came to office in 1997, we had a policy to develop the principle of a flexible work force, which was necessary in a global economy. At the same time, we wanted to establish a floor of minimum rights that were available to every worker and that protected them from exploitation. We have done that job remarkably well through, for example, the minimum wage and several other measures such as the Employment Rights (Dispute Resolution) Act 1998 and subsequent legislation. One thing that we have not doneit is unfinished business for many of usis deal with the problem of agency workers. That is what the Bill is intended to do.
The hon. Member for Huntingdon said that in the vast majority of cases, agency workers are not exploited. I do not know where he gets that information from. Most of the surveys that I have seen have been of employers. As my hon. Friend the Member for Ellesmere Port and Neston said in relation to a previous amendment, the workers who tend to be surveyed are not going to tick a box to say that they are dissatisfied with their work. Most of them are too scared, and they are not prepared to put their employment at risk.
It is worth looking at a recent survey that was part of a process that has been started by the TUC. It published last week the latest findings of a commission on vulnerable employment that it has set up. That commission includes a number of distinguished representatives of not just the trade union world but business, including Kevin Beeston, the chairman of Serco, a large international company, and Paul Myners, chair of the Land Securities Group. The executive summary of its report states:
The Commission on Vulnerable Employment estimate that around two million workers in the UK find themselves in vulnerable employmentwhich we
define as precarious work that places people at risk of continuing poverty and injustice resulting from an imbalance of power in the employer-worker relationship.
Again, the focus is on vulnerable workers.
Interesting evidence was submitted to the commission by Community, the trade union. As I have said, most of the surveys that have been conducted have been of employers, and if we go directly to agency workers, they do not give honest replies, for their own
Some of the findings of Communitys survey were interesting. Some 75 per cent. of workplaces surveyed used temporary and agency workers, which is quite a high proportion. In those workplaces, 40 per cent. of temporary contracts rarely lasted more than a week. Those involved are often unskilled workersOn the Waterfront is one of my favourite films, and it shows the sort of employment situation that exists. People are picked for work on an almost daily basis in some cases. According to Communitys findings, some workers in factories such as I have mentioned are on just two hours notice, which is a difficult position for any employee to be in.
Community found that temporary and agency workers are paid less than permanent employees in 56 per cent. of workplaces surveyed. That relates to the point that my hon. Friend the Member for Lewisham, West made that temporary workers can undermine the terms and conditions of existing workers. More than 60 per cent. of temporary and agency workers are not entitled to the same holidays as permanent staff. Again, that undermines conditions, as does the fact that in 40 per cent. of workplaces, temporary and agency workers are replacing what would normally be overtime for permanent staff.
We should remember that the union has membership in each of the workplaces surveyed, and recognition in most of them. Terms and conditions are negotiated between the employer and the union, on behalf of its members and all the employees. They therefore tend to be the better workshops and places of employment, where there is independent negotiation.
Mr. Jim McGovern (Dundee, West) (Lab): My hon. Friend mentions the trade union, Community. I had a disagreement with my wife after the Committee last week. She is a fully trained secretary and went to college when she left school and took up the appropriate training. When an agency worker comes into her workplace, it is generally considered that if they can use a keyboard and a computer, they are a secretary. My wife asked why a person who simply has keyboard skills should be paid the same rate as her, a fully trained secretary. Perhaps I should point out that my wife is employed by Unite, the trade union.
Mr. Doran: I think I would prefer it if my hon. Friend sorted out his domestic disputes himself, but he makes a fair point. I said last week that I tended to use reputable employment agencies when I was employing. But on the odd occasion I had someone who just was not up to the job. That is a problem for the reputation of the agency. There is a problem there, but we are talking about the situation in which there are comparable skills. If I enter into a contract with an employment agency to give me someone with a specified range of skills and these skills are not there, I have to sort that out with the agency as it is not maintaining its side of the contract. As for my hon.
Another important point that is brought out in the survey is that in 34 per cent. of workplaces, permanent employees are always replaced by temporary and agency workers. In some areas, we are seeing a drift. Employers no longer want to take on the full responsibility of permanent employment. The security in employment at some established workplaces is being eroded because of the growing tendency for flexibility and to hire people who can be removed and disposed of very quickly. That is a worrying trend. Obviously it undermines the confidence of permanent workers as it becomes much more attractive for management who have no need to hire these temporary replacement workers. Some of those workers, as we know, become almost permanent. They are temporary permanent workers and can sometimes be employed for years. There has been some whittling away of that process in the employment tribunal system which we discussed earlier. Nevertheless, it is a serious trend that is destabilising for the rest of the work force and concerning because there is always the fear that ones own job is next.
There will come a point in some companies when it is cheaper to make someone redundant, or manufacture a redundancy and take on temporary workers as a replacement. That clearly creates more instability in the system. There is also evidence from the survey that some employers are actively discouraging temporary workers from joining a union. That is disturbing, particularly as this survey took place in areas where there are established relationships between the unions and management.
There are many issues that will be discussed as the Bill progresses. The basic point is that clause 1 is fundamental to the Bill. It sets out the target group of workers who are to be protected and how that is to be done. Removing the clause would fatally weaken the Bill. Of course, that is the Oppositions intention. I am sorry about that. It is an area where, given some of the evidence that is available to us, we should be able to find some consensus and a way forward. But if that is not possible, we must vote in favour of the clause.
Mr. McFadden: The clause is very important. It gets to the heart of the issue about agency workers, which has been debated for some time. First, we must ask what the problem is that we are attempting to resolve. We have heard examples from my hon. Friends about good and reputable practice from employment businesses that supply agency workers and try to secure the best possible deal for them, and we all accept that that is a perfectly legitimate part of the labour market. The issue about agency workers that has given rise to debate has not been about that reputable end of the market. Rather, it has been about whether there is unfairness in the system and whether people can be hired on much lower wages for a lengthy period of time when they are, in effect, replacing long-term staff.
None of us would object to the use of agency work to fill in short-term fluctuations in demand. For example, some companies may experience a boom at Christmas, during the summer or over a particular period of the year. It may not make sense for that company to hire permanent staff, when it knows that the period in which it needs agency staff will be relatively limited. There may be an unforeseen spike in orders, where it is simply quicker and more beneficial to get agency staff in, or for a number of other reasons. There are also other industries, such as the entertainment industry which we talked about last week, where by its very nature, the placement is likely to be short-termsometimes it could be a matter of hours.
However, there are other parts of the terrain where we have heard about agency workers being employed, sometimes on less generous terms and conditions and, for periods of years so that they are, in effect, permatemps. I think that reference was made to that in earlier discussions, and it ranges through the whole terrain of short-term placements, perhaps numbered in a period of hours right up to a period of years. The question before any of us who are trying to legislate in this area is about how we attempt to resolve the problems of mistreatment or unfairness where they exist, without causing an unnecessary reduction in labour market flexibility for the rest of the economy. That is what employment rights legislation seeks to achieve.
I do not believe that there is always a trade-off between greater employment and fewer employment rights. My hon. Friend the Member for Aberdeen, North referred to the initial aims of the Government when we came into power, and 11 years on, we now have more than 2.5 million more people in work, and just about all of those are in work enjoying more employment rights than would have been the case a decade ago. As a Government, we have shown that we can deal with mistreatment or unfairness, or simply improve the condition of people at work, without threatening the economys job-creating potential. That is because we have always been considered and careful about how we have extended those rights.
I want to discuss several issues with regard to the clause, which I hope my hon. Friend the Member for Ellesmere Port and Neston will be able to respond to. I mentioned the qualifying period. That is important in several respects. The clause is silent on that issue, yet I have described the hugely differing nature of agency work placements. Placements can range from a few hours to several years. The Bill is silent as to whether there should be a period before which new rules come into force. That has been the subject of great discussion in the debate on the European directive. There are firm views. Some member states say that there should be no qualifying period, that there should be equal treatment from the first day of employment, but that collective agreements may also operate, whereby equal treatment might not kick in until after a specific period. Other member states, including the UK, have said that there should be a qualifying period to take account of the wide variety of agency work, and to focus the debate about equal treatment where unfairness and mistreatment is greatest. That is why a qualifying period is important in this debate. The clause is silent on that, and therefore its effect would be that equal treatment would have to be introduced on the first day of employment.
Perhaps that brings us to the domestic discussion in Dundee recently, about how one compares one worker with another. My hon. Friend the Member for Dundee, West may, if the subject comes up again, wish to referor not, one always has to think flexibly in such circumstancesto the directives attempt to deal with the issue that his wife raised. That issue is that the comparison should not be with permanent workers as such, but with a worker whose conditions are at least those that would apply if they had been recruited directly by that undertaking to occupy the same job. Therefore some attempt is made to deal with issues such as experience and training. The comparison would not be with my hon. Friends wife, who trained and increased her skills and therefore her selling power in the labour market, but with a permanent worker with the same skills as the agency worker, if they were hired on the same day. That takes some account of the difficulty of comparing one worker with another. The issue of a qualifying period is important, and the silence of the clause on that means that it fails to take account of the wide variety of agency workers and placements.
Jim Dowd: I am sensitive to the idea that there is a problem about the qualifying period, but will the Minister expand on that and say what the Governments position is? There are hon. Members who believe that people have rights based on what they do, rather than on how long they have been doing it. The Minister has said on a number of occasions that there is no qualifying period. Can he give the Committee a broad outline of what period he contemplates as being necessary to rectify the defects that he identifies in the Bill?
Mr. McFadden: A wide variety of opinions have been expressed on that matter. The current draft of the directive mentions a period up to six weeks; others have argued for a significantly longer period. The Government have said that there should be more flexibility than that in the arrangements.
On the other part of my hon. Friends questionthat it is what people do that matters rather than how long they have been doing itit is not unknown for qualifying periods to be part of our employment rights framework. I could give him a couple of examples. We have successful right-to-request flexible working in operation in our labour market at the moment: it applies to parents of children up to the age of six and to those with caring responsibilities. In fact, that has been so successful that the Government instituted a review of it recently, headed by Imelda Walsh, head of human resources at Sainsburys, with a view to extending that right to request to parents of older children. That right to request requires that a person exercises their right in a qualifying period of six months, because building up a relationship with an employer, which may be a small business, is important before exercising such flexibility. So qualifying periods are not unknown.
Andrew Miller: My hon. Friend the Minister makes a fair point, but I am sure that he accepts that the clause would not provide for an agency worker coming in on
Mr. McFadden: I was going to come to comparable, because it is important and requires definition. As I have said, the draft directive attempts to give some definition to that term, which is important in this field, partly because of the potential for litigation, as my hon. Friend the Member for Aberdeen, North mentioned. I am not convinced that simply talking about comparable without any attempt at defining it in context or differently from the directivebringing us back to our possibly being second-guessed if there is a wider agreementis necessarily the right way forward on this issue.
Mr. Greg Knight (East Yorkshire) (Con): The Minister is tantalising the Committee, but not satisfying it. Will he say what qualifying period he has been arguing for in Europe? If the Bill were an unstoppable vehicle into which he had the opportunity of inserting a qualifying period at some point in its proceedings, what period would he advise us to go for?
Mr. McFadden: We have been discussing the matter intently with businesses, trade unions and our European partners. Much as the right hon. Gentleman tempts or presses me, the answer is not as simple as my plucking number of days, weeks or months out of the air. It is something that rightly should be based on taking important soundings from voices in business and the trade unions.
Qualifying periods are not unknown in employment rights legislation. I referred to flexible working. We can also consider unfair dismissal. When the Conservative party was in power, the qualifying period for accessing rights under unfair dismissal was two years. When we came into power, we took a different view and reduced it to one year. We thought that two years was too long and changed the legislation, but a qualifying period was again built in. It is not something that is unheard of, nor is it necessarily in itself unfair. It is based on the recognition that, of course, some rights should kick in from day one. None of us would expect someone to have to work for six or 12 months before accessing the minimum wage.
Mr. McFadden: Even among Opposition Members, I am sure that that is the case. People also accrue their rights to paid leave from the beginning of their employment. Some rights are there from the first day of employment, but others are built up over time. Another example that comes to mind was referred to by the hon. Member for Solihull when she talked about occupational pensions. It is not unheard of for a business to say that, before someone can access the pension scheme, they should have been working there for a time12 months, for example. Occupational
Andrew Miller: My hon. Friend is absolutely right. That is why I have always argued that the agency worker should follow the same pathway as a permanent employee. If a permanent appointee on day one receives particular rights, why should an agency worker not receive them?
Mr. McFadden: I appreciate my hon. Friends point, but I have set out my position on a qualifying period fairly clearly. However, let us consider the potential, unintended consequences of a day-one right inhibiting the route from benefit into work that agency work often provides. Some people use agency work as a stepping stone to permanent employment. Many agency workers were previously outside the labour market because they were unemployed, students or for another reason. In fact, a European business survey estimates that in the United Kingdom it could be about a third or more of agency workers. Short-term placements can be important in giving people a stepping stone from unemployment, either official unemployment or because they might be outside the labour market for some reason, to perhaps permanent employment in the future. That is a difficulty with the clause.
Another difficulty is comparators. The Bill refers to a comparable direct worker. My hon. Friend clarified that by talking about the path that such a worker would take. The comparison should therefore be between an agency worker and a comparable direct worker. To use a colloquial expression, that would do it for him, but I am not sure whether it would do it for the labour market as a whole. A more precise definition of who is to be compared with whom is important in this case. After all, to go back to my first point, what is the unfairness that we are attempting to address? It is the perceived unfairness, not just that agency workers are hiredI think that we have laid that ghost to rest and people are not trying to stop that practicebut that they are in effect doing the same job as a long-term worker. Simply talking about a comparable direct worker does not sufficiently take account of the difficulties. The terms and conditions should be at least those that would apply if a worker had been recruited directly by that undertaking to occupy the same job. That is significantly more precise in terms of what we are talking about.
Mr. Knight: For the avoidance of any doubt, is the Ministers position that he would like to have a qualifying period of 12 months, but that because the pass has been sold to the European Union and we are now no longer masters of our own destiny, he has to wait and see what consensus is arrived at in these EU discussions before he dare mention a qualifying period?
Mr. McFadden: I have to disagree with the right hon. Gentleman on several counts. I have certainly not said that my preference or the Governments preference is for a qualifying period of 12 months. That would be too long. He tempts me, perhaps by a process of salami-slicing, to now settle on a time, but we are not
The right hon. Gentleman referred to selling the pass to Brussels. We know the position of his party with regard to any social or employment legislation passed at a European level. The Government do not always take the same view on those issues and we do not think that it is necessarily inappropriate for European legislation to be passed in these sectors. Indeed, in our previous discussions I referred to the flexibility intentions of the directive, which could be highly beneficial to British business by opening up markets in other European countries, alongside our discussions of equal treatment. It is not inappropriate that Brussels, as he puts it, or the European Union takes a view on employment and social matters. That is part of the treaties to which we have agreed, but we should not go down that road too much here.
I was talking about a comparator and the importance of some precision on what that should be. There is also another problem with the clause that I would like to raise with my hon. Friend. On line 2, it refers to an agency worker having the right
not to be treated by the employment business, or employment agency, or by the end user less favourably in respect of his basic working and employment conditions.
I want to pause on the notion of the end-user, because a thread running through the Bill is the notion that the joint and several liability for the agency workers conditions is in the hands of not only the employment business that supplies their services to the hiring company, but the end-user. I fear that that relationship could be highly legally complex and result in more litigation than we would see otherwise. There will always be some enforcement of rights, and we should not deny that that will be the case, but dividing the responsibility in the way that the Bill proposes might make life more complicated than would otherwise be the case.
Andrew Miller: I would have thought that the Minister would accept that aspects of employment law already do that. For example, in health and safety law it would be improper for the agency knowingly to place someone in an unsafe working environment and it would be improper for the end-user so to do. What is so special about the Bill in that respect?
Mr. McFadden: My hon. Friend refers to health and safety, but that is not what is mentioned in the Bill. I refer him to clause 5, which states that
basic working and employment conditions means working and employment conditions relating to
(a) the duration of working time, rest periods, night work, paid holidays and public holidays;
(b) pay, including sick pay;
That is his definition.
The Chairman: Order. I do not want hon. Members to be swayed to debate clause 5 at this stage. I hope that we can confine our remarks to clause 1.
Andrew Miller: As I said, there are already plenty of legal examples of where the responsibility is in two places. Surely things such as rest periods, which would be a safety issue in some working environments, must be a dual responsibility.
Mr. McFadden: This is certainly not how the draft directive deals with that issue. With regard to agency workers, it is a three-way relationship, but it is important to follow the contractual thread of what is happening, lest we create too much work for my hon. Friend the Member for Aberdeen, North and his colleagues in the future, important though it is to keep them fed and watered. It is clear that the series of directives works so that it is the agency that contracts with the hiring firm to meet its demand in some way. As I have said, that could be short-term labour or something more long term, such as a skill that it does not have, particularly at the high end or in IT.
Therefore, the agency is responsible for securing such a persons terms and conditions. Indeed, reputable agencies would say that they had an incentive to secure the best possible terms and conditions for the workers they supply in that way, because often the commission paid by the hiring firm to the agency might be a proportion of earning, so it could be in the agencys interests to secure the best possible deal for the agency worker. However, if that went wrong in some waythat is not an unknown field, as the conduct regulations already govern the conduct of employment agenciesthe agency is liable, rather than the end-user. If a worker felt, even under the current situation, that they were not getting what was due to them under the agreement, it would be their agency that they would contact.
There is always a three-way relationship because however it is structured, there is an end-user, an employment business supplying the agency workers and the agency workers themselves. Despite that, I think that the notion of joint and several liability would overcomplicate the situation if it came to litigation. I am not sure why my hon. Friend the Member for Ellesmere Port and Neston has structured the Bill in that way. We have talked about tribunals. If, under clause 1, someone wants to exercise his rights because he feels that he is being treated
less favourably in respect of his basic working and employment conditions
and he wants to take his case to an employment tribunal because mediation and conciliation have failed, does my hon. Friend envisage that on the other side would be not just the agency, but the end-user? In that situation, there would be not just two teams of lawyers, as suggested by my hon. Friend the Member for Aberdeen, North, but three. What would happen if the two teams of lawyers on the employers side disagreed with one another? It seems to me that having three people in that marriage might be a little complex.
Andrew Miller: My hon. Friend will no doubt accept that under current legislation, there are people who fall through a gap. Case law has demonstrated that the rights of some people are inadequately covered. He has suggested that the draft directive would close that
Mr. McFadden: I have been invited in this discussion to table amendments on a couple of matters; I give notice that were the Bill to reach further stages, I may well do so. However, I will stick to the clause, as I know you would want me to, Mr. Hancock.
I think that the intention of my hon. Friend the Member for Ellesmere Port and Neston regarding joint and several liability is really about enforcementit is about saying that we want to make it easier for vulnerable workers to access their rights. That is an intention I agree with. I chair a Government-sponsored body called the vulnerable worker enforcement forum, which includes representatives from business and trade unions. It also has representatives from the different enforcement agencies around Government, such as Her Majestys Revenue and Customs, which enforces the minimum wage; the Health and Safety Executive, which enforces regulations in that area; the agency standards inspectorate, which operates the current conduct regulations governing the activities of the kind of employment businesses that we are talking about; and the Gangmasters Licensing Authority, which is a relatively new body created a couple of years ago to deal with the food and agricultural sector.
Going back to some of the points made by my hon. Friend the Member for Aberdeen, North, I agree that we should do everything we can to ensure that the rights legislated for in this Parliament are fully available to people at work. Sometimes we have to do a better job of that than we have done in the past. That is why we have put more money, for example, into enforcing the minimum wage. Some £3 million more per year has been used to employ more staff and to advertise minimum wage rates more widely, and we are changing the law in other ways. Enforcement is important to vulnerable workers across the piece. We do not want a situation in which we legislate for rights thatbecause of peoples precarious position, because they do not know that the Government have different enforcement agencies, or because they do not know about the employment tribunal system or their access to rightsremain only on paper, rather than a reality in the workplace.
Tony Lloyd: My hon. Friend is making an important point. He said that the forum that he chairs includes employers representatives. One of the myths that we have heard from Opposition Members this morning is that the world is polarised, consisting of employers, who are opposed to protection for vulnerable workers, and the rest of the world, who are in favour. However, good employers, for various reasonssometimes out of self-interest, sometimes out of a genuine desire for improvementare happy to support proper protections. Employers in my constituency come to tell me about the anti-competitive behaviour of those who undercut proper employment protection to gain an unacceptable competitive advantage. Does the kind of employer with whom the Minister deals negate the basic Opposition claim that there is no room for protection? Does he agree that the opposite is true, and that good employers want protection for vulnerable workers?
Mr. McFadden: My hon. Friend is absolutely rightthat has been shown time and again in the deliberations of the vulnerable worker enforcement forum. For example, the CBI representative has been consistent in her view that good employers are sometimes more resentful than anyone else of the rogue employer. Good employers pay the minimum wage, give people access to paid leave and abide by the law. They do not want to see rogue employers breaking the law and mistreating their workers, thereby enabling themselves to undercutnot in a normal, market competition way, but in an illegal waythe prices for work that reputable employers can offer.
Lorely Burt: I totally agree with the Minister. Does he see in the Bill protections not already afforded by the law that should be introducedexcluding those relating to permatemps, which we have already discussed?
Mr. McFadden: Whether or not they are in the Bill, there are protections in this area. There might be an issue with equal pay after a period of time, which we talked about at some length, and whether the Bill deals with that is a different question. Do I think that the suite of employment rights is complete and incapable of improvement? No, I would not say that. The Government
Lorely Burt: I appreciate the points that the Minister is making. I agree that there is always room for improvement. The Liberal Democrats will continue to work with the Government where appropriate to facilitate those improvements
The Chairman: Order. It is with regret that I say that our two hours has gone by in this enjoyable atmosphere in the blink of an eye. I thank you for your attendance, good humour and participation.
It being twenty-five minutes past Eleven oclock, The Chairman , adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned accordingly till Wednesday 21 May at half-past Nine oclock.
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