The
Committee consisted of the following
Members:
Chair:
John
Robertson
†
Andrew,
Stuart (Pudsey)
(Con)
†
Bacon,
Mr Richard (South Norfolk)
(Con)
†
Bagshawe,
Ms Louise (Corby)
(Con)
†
Baker,
Steve (Wycombe)
(Con)
†
Bingham,
Andrew (High Peak)
(Con)
†
Blackman,
Bob (Harrow East)
(Con)
†
Blackwood,
Nicola (Oxford West and Abingdon)
(Con)
†
Creasy,
Stella (Walthamstow)
(Lab/Co-op)
†
Davey,
Mr Edward (Parliamentary Under-Secretary of State for Business,
Innovation and Skills)
†
De
Piero, Gloria (Ashfield)
(Lab)
†
Fovargue,
Yvonne (Makerfield)
(Lab)
†
Lucas,
Ian (Wrexham) (Lab)
†
Newmark,
Mr Brooks (Lord Commissioner of Her Majesty's
Treasury)
†
Pearce,
Teresa (Erith and Thamesmead)
(Lab)
†
Sarwar,
Anas (Glasgow Central)
(Lab)
†
Simpson,
David (Upper Bann)
(DUP)
†
Spellar,
Mr John (Warley)
(Lab)
†
Swinson,
Jo (East Dunbartonshire)
(LD)
Ben Williams, Committee
Clerk
† attended the
Committee
Second
Delegated Legislation
Committee
Tuesday 6
July
2010
[John
Robertson
in the
Chair]
Draft
Conduct of Employment Agencies and Employment Businesses (Amendment)
Regulations
2010
4.30
pm
The
Parliamentary Under-Secretary of State for Business, Innovation and
Skills (Mr Edward Davey):
I beg to
move,
That
the Committee has considered the draft Conduct of Employment Agencies
and Employment Businesses (Amendment) Regulations
2010.
It
is a great pleasure to serve under your chairmanship, Mr Robertson. It
is the first time that I have been in a Delegated Legislation Committee
as a Minister and it is the first time that you have been in the Chair,
but I am sure that my frailties will be far greater than yours in the
different tasks on which we will now engage. I also note that it is the
first time that many hon. Members will have the pleasure and the joy of
being members of a Committee. I am sure that you are keen for their
names to be put down for more Committees in the
future.
As
the Committee will be aware, the amending regulations were laid by the
previous Parliament shortly before the general election, so I assume,
perhaps optimistically, that they will receive cross-party support
today. The regulations deal with the conduct of the private recruitment
industry and focus on two different audiences. First, they will reduce
regulatory burdens by eliminating unnecessary suitability checks, which
all agencies placing workers in permanent posts currently have to carry
out. Secondly, they will protect potentially vulnerable people seeking
work by tightening the restrictions on the charging of up-front fees in
the entertainment and modelling
sectors.
The
Government have now had an opportunity to consider the amendments
carefully. We have concluded that they are consistent with the new
approach of the coalition Government to regulatory policy. Taken in the
round, the amendments will reduce the regulatory burden on employment
agencies and businesses. While measures to increase protections in
respect of up-front fees will have some cost impacts in part of the
sector, they will be more than offset by the overall reduction of
burdens on the sector due mainly to the scrapping of unnecessary
suitability checks. We have consulted the Government’s new
Reducing Regulation Committee and it concurs with that
analysis.
Of
course, when regulating we need to show that the rules are keeping pace
with new technology and business practices, and we believe that is what
the regulations do. The entire employment agencies and employment
businesses sector has grown significantly in recent years. There are
now about 16,000 agencies employing about 1.3 million agency workers in
a huge variety of organisations and, as a whole, the sector is worth
about £24 billion a year.
The range of services offered by employment agencies and employment
businesses has grown hugely, particularly in the online sector. The
e-recruitment market alone, which has seen huge innovation, was worth
about £0.5 billion in 2007 and might well have grown in value,
despite the
recession.
Using
agency workers allows businesses to adjust their work force in the face
of fluctuating demand, while for the individual employee, agency work
offers greater freedom to choose their hours and conditions of work.
For those who have been out of the labour market for a while, it can
offer a quick and easy route back into paid employment. For many, a
temporary placement leads to a permanent position. Labour market
flexibility and dynamism will be vital if we are to build a sustainable
economic recovery and create the conditions for enterprise and
growth.
The
main purpose of the regulations is to end the requirement on employment
agencies to carry out various checks on workers who they put forward
for permanent recruitment—that is, individuals who will be
directly employed by the hiring business. However, I should stress that
the change will not reduce the obligations on employment businesses
placing people on temporary assignments. In such cases, it makes clear
sense for the responsibility to lie with
them.
Agencies
engaged in permanent recruitment also have to conduct several checks,
such as verifying the worker’s identity, experience, training
qualifications and any authorisation that the hirer considers
necessary. In those circumstances, it makes more sense for the hiring
employer to be responsible for the checks. Indeed, a range of other
legislation and the requirements of some professional bodies mean that
employers already have to make such checks. Insisting on the agency
also running the checks seems unnecessary and is often a duplication of
effort.
The
rapid growth of the online recruitment industry in recent years has led
to many “jobs boards” being set up. They fall within the
scope of the regulations, but their business models have proved
incompatible with conducting the checks that the previous regulations
required. That is especially true for jobs boards that allow users to
swap lists of vacancies and CVs. Such agencies merely offer a platform
for the services and have little interaction with their clients. If we
insist on the old regulations, that could destroy the business model of
the new online
agencies.
One
might say that non-compliance should seldom be an argument for
repealing regulations, but I believe, as did the previous Government,
that it is justified in this case. As I have outlined, the obligations
for the checks for permanent positions are of minimal benefit, so
forcing online businesses to comply would simply increase their costs,
probably to a point where it no longer made business sense to offer
their services, so the regulations could be job-reducing and could
destroy businesses if we do not amend
them.
Our
approach is therefore pragmatic. It will improve the regulatory
environment for one of the most dynamic and innovative sectors of the
UK economy. Removing the requirement to make checks on people being
placed permanently will reduce agencies’ costs and make it
easier for people to find
employment.
There
is one important exception that I should bring to the
Committee’s attention. The obligation on agencies to conduct
appropriate checks will remain in force if
they are placing individuals to work with vulnerable people. Our concern
is that otherwise situations might arise where there was no formal
requirement for important checks to be carried out—for example,
when a parent approaches an agency to hire a private tutor for their
children. It does mean that a relatively small number of checks will
still be carried out twice by different bodies, but I am sure the
Committee will agree that safety must be our paramount concern, and we
must make absolutely certain that necessary checks are always carried
out.
There
are also a number of other minor improvements to reduce the regulatory
burden. The regulations remove the requirement for employment agencies
making permanent placements to agree terms with individuals before
finding them work, and with hiring firms before placing workers with
them. This removes provisions that add little value. It was clear from
the consultation that agencies did not think that those were necessary.
In such cases, agreement of terms is a matter between the individual
and the permanent employer, while agreement of terms between an agency
and a hirer should be a purely contractual matter. The deregulatory
measures will further help the online sector, which found these
provisions particularly
restrictive.
The
regulations also remove the requirement for an advert to state whether
the agency placing it is acting as an employment agency or as an
employment business. Instead, the advert will simply state whether a
position is temporary or permanent—terms that are far more
likely to be understood by both candidates and
recruiters.
Let
me now turn to the amendments in respect of up-front fees. While we
know there are many workers who value the flexibility and choice that
agencies can offer, there are circumstances where agency workers can be
more vulnerable than their permanent counterparts. Sadly, that is the
case in some parts of the entertainment and modelling sector, where
there is a long history of abuse and exploitation of up-front fees by
unscrupulous
agencies.
The
regulations currently allow agencies in that sector to charge up-front
fees in certain limited circumstances in recognition of the industry's
long-established practice of using publications such as casting
directories as a means of introducing artistes to would-be clients.
Fees are generally charged in such circumstances to offset the cost of
producing the publication. There are many reputable agencies that
operate this business model and provide a valuable, well regarded
service and a legitimate route to
work.
In
contrast, however, unscrupulous operators use this up-front fee
provision as a way of ripping people off. They are in the business of
targeting the young and often vulnerable, with cynical promises of work
and a glamorous lifestyle. They use hard-sell tactics to persuade
people to part with their money on the promise of work that never
materialises, because there was never any serious attempt to find
it.
Members
of the Committee will recall that the problem is not new and there have
been previous attempts to tackle it. Most recently, a seven-day
cooling-off period was introduced in 2008 to allow individuals to
assess, away from the limelight of the audition or photographic
session, whether the promises were realistic and whether they wanted to
proceed. However, it is clear that that has not been effective. The
employment agencies standards inspectorate continues to receive a
steady stream of
complaints, and a public consultation undertaken by the previous
Government in 2009 confirmed that widespread concern about the issue
remained.
For
those reasons, I believe it is now right to take decisive steps to
tackle the problem once and for all. The statutory instrument will
amend the conduct regulations to ban outright the practice of charging
up-front fees to would-be models, who are targeted by the vast majority
of the scams. That should not cause concern to reputable modelling
agencies, which will instead be able to charge commission on actual
work found, which is the basis on which the rest of the agency sector
operates.
The
absolute ban will not extend to the placement of other entertainers,
such as actors, musicians and extras. The risk of abuse is
significantly lower in those sectors, and a ban would have a
disproportionate effect on perfectly legitimate businesses. Those in
the casting directory business, for example, will still be able to
charge an up-front fee as a legitimate part of their business
model.
However, we
still want to provide those parts of the sector with some added
protections. Therefore, the amendments will significantly enhance the
safeguards that that group has to protect it further against any
unscrupulous agencies and discourage the disreputable operators in the
modelling sector from simply shifting their target. The amendments will
extend the current seven-day cooling off period to 30 days for the
group, which will also benefit from increased rights on cancellations
and refunds over the period.
I am
delighted to recommend the package of proposals to the Committee. I am
grateful to the Ministers in the previous Government for their work in
shaping the proposals and listening to points made, for example by the
Minister of State, Department for Business, Innovation and Skills, my
hon. Friend the Member for Hertford and Stortford (Mr Prisk), who
showed a particular concern for models and believed that a cooling-off
period might not be effective, as has been proven the case. I believe
that we have a balanced package, which I commend to the
Committee.
4.42
pm
Ian
Lucas (Wrexham) (Lab):
It is a pleasure to appear before
you for the first time, Mr Robertson. It is also a
pleasure—perhaps that is not the right word—to have the
Minister in his new post. I welcome him there and wish him well in that
role, however brief it may be. I note that the tremendous team behind
him is bright-eyed and bushy-tailed, and I am sure that there will be
many more statutory instruments to come, which will be more contentious
than the one before us today. It always helps when the Opposition who
have presented a statutory instrument when in government then address
it in opposition.
I caution the
Minister: not all political parties say the same thing after an
election as before it. However, in this case, we are dealing with the
Labour party, so I am pleased to say that the proposal is one that the
former Minister of State, my right hon. Friend the Member for
Wolverhampton South East (Mr McFadden), had taken forward and done much
work on. He is my colleague in shadowing the Department for Business,
Innovation and Skills, and he certainly commends the new
Government’s approach of taking forward the legislation at an
early stage.
The issue of
up-front fees for modelling has been a problem for some time. As the
Minister indicated, the previous Government sought to address the
problems in 2008 with a seven-day cooling-off period. However, as a
result of the consultation undertaken by the previous Government it
became clear that it was widely held across the sectors that as far as
modelling was concerned, there needed to be an outright ban. The
proposal is sensible. It appears to be widely approved of within the
sector, and we welcome it from these
Benches.
I
have a particular concern. The Minister referred to the distinction in
respect of acting and the fact that the outright ban will not apply to
that area. Clearly, there are hazy areas between acting and modelling
that might cause some difficulty in definition. Could the Minister say
a little more about the definitions? How can we be sure clear
distinctions will be drawn between acting and modelling, in order to
avoid future
problems?
The
regulations refer to the terms of agreement between the employment
agencies and the model—or the actor, because the question
applies to both situations. I am not clear at the moment whether those
agreements are required to be in writing, or will oral agreements
suffice? From the documentation that I read, it is not clear whether a
written contract is required—that would be helpful, but I am not
certain of the
position.
One
further area of great concern in the sector is that of vulnerable
people. Could the Minister say a little more about the definition of
what constitutes a vulnerable person? It will apply to minors, clearly,
but would it extend to others who we might generally consider
vulnerable? I would welcome
clarification.
Subject
to those questions, those are my
submissions.
4.46
pm
Mr
Davey:
I am grateful to the hon. Gentleman for welcoming
the regulations, but not that surprised. It is good that on this
occasion the Labour party is saying the same thing in opposition as in
government. I hope I can give him the answers that he
seeks.
The
hon. Gentleman’s first substantive question concerned the
distinction between modelling and acting. The previous regulations made
those distinctions—we
are not introducing anything new. In fact, our concern was more whether,
if we had extended the ban to acting, we would have had a much greater
problem with definitions distinguishing between extras and
actors—there are some difficult distinctions there. That is not
why we did not apply the ban on up-front fees to actors; as I am sure
the hon. Gentleman is aware, the findings of the consultation were that
there was less abuse in that sector, so it would have been
disproportionate to have a ban on the fees. However, the distinction
from the past between modelling and acting in all its different guises
is not one with which the employment agency standards inspectorate has
found a problem. The consultation did not deem that to be an issue, so
I can reassure
him.
The
definition of vulnerable people is in legislation, and it bears on the
previous, 2003, regulations. The change is slight and technical, but I
am happy to read out the full
definition:
“any
person who by reason of age, infirmity, illness, disability or any
other circumstance is in need of care or attention, and includes any
person under the age of
eighteen”.
It
deals with the elderly, the young, the disabled and people who are ill;
it is a common-sense definition of “vulnerable person”,
which I am sure will commend itself to the
Committee.
As
to whether the agreements with employment agencies legally have to be
in writing, I will have to write to the hon. Gentleman, unless I have
inspiration in the next few seconds.
[
Interruption.
] In fact, inspiration has arrived:
the agreement to terms does not have to be in writing but it should be
documented. That is provided for in regulation 16(7). I am not sure
whether that means a record that is produced in due course, but I am
happy to send the hon. Gentleman the full
details.
I
hope that answers the hon. Gentleman’s
questions.
Question
put and agreed
to.
Resolved,
That
the Committee has considered the draft Conduct of Employment Agencies
and Employment Businesses (Amendment) Regulations
2010.
4.49
pm
Committee
rose.