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Page 92, line 20, at end insert--

("Annual report by Certification Officer

. In section 258(1) (Certification Officer: annual report) for "calendar year" there shall be substituted "financial year".")

On Question, amendment agreed to.

Clause 27 [Partnerships at work]:

[Amendments Nos. 134 to 137 not moved.]

Lord Simon of Highbury moved Amendment No. 138:

After Clause 28, insert the following new clause--


(" .--(1) In section 285(1) of the Trade Union and Labour Relations (Consolidation) Act 1992 (employment outside Great Britain) for "Chapter II (procedure for handling redundancies)" there shall be substituted "sections 193 and 194 (duty to notify Secretary of State of certain redundancies)".
(2) After section 287(3) of that Act (offshore employment) there shall be inserted--
"(3A) An Order in Council under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.".
(3) Section 196 of the Employment Rights Act 1996 (employment outside Great Britain) shall cease to have effect; and in section 5(1) for "sections 196 and" there shall be substituted "section".
(4) After section 199(6) of that Act (mariners) there shall be inserted--
"(7) The provisions mentioned in subsection (8) do not apply to employment on board a ship registered in the United Kingdom if--
(a) the ship is registered at a port outside Great Britain,
(b) under his contract of employment the person employed works wholly outside Great Britain, or
(c) the person employed is not ordinarily resident in Great Britain.

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(8) The provisions are--
(a) sections 8 to 10,
(b) Parts II, III and V,
(c) Part VI, apart from sections 58 to 60,
(d) Parts VII and VIII,
(e) sections 92 and 93, and
(f) Part X.".").

On Question, amendment agreed to.

Schedule 7 [Employment Agencies]:

Baroness Miller of Hendon moved Amendment No. 139:

Page 92, line 35, at beginning insert ("subject to subsections (1B) to (1E) below,")

The noble Baroness said: My Lords, in moving Amendment No. 139 I should like to speak also to Amendment No. 140. I crave the indulgence of the House in this matter. My notes on these amendments are somewhat lengthy, but I feel so strongly about this matter that I cannot omit any part of them. I shall speak rather quickly so that I do not take up too much of your Lordships' time.

Amendment No. 139 is just a paving amendment to make way for Amendment No. 140 which is the substantive provision. Under the Employment Agencies Act, which has operated perfectly satisfactorily since 1973, the Secretary of State has power to make general regulations. Paragraph 2(2) of Schedule 7 introduces a new regulation which gives the Secretary of State power to restrict or regulate,

    "the charging of fees by persons carrying on such [employment] agencies and businesses".

It is no exaggeration to say that on an ordinary interpretation of those words that draconian power would enable the Secretary of State to put employment agencies out of business by making it totally uneconomic for them to trade either by stipulating unreasonably low fees or even prohibiting the charging of any fees at all in certain circumstances. In case it be thought that this is too fanciful an interpretation, I read a shortened extract from paragraph 266 of the Explanatory Notes:

    "Examples of matters on which regulations may be made include ... restricting the ability of ... employment agencies to impose terms on employers which seek to prevent or discourage ... them dealing ... with workers supplied to them.

    Where businesses seek to impose charges in any of these circumstances regulations might limit the size of those charges ... or prohibit them altogether".

That is the whole point. The object of the 15 words in this sub-paragraph is hidden among the 15 lines of the Explanatory Notes.

At a meeting with the noble Lord, Lord Simon, last Monday, for which I thank him, he assured me that the Government's objective was not to ban charging for temp to permanent engagements but merely to regulate the fees. But that is not what the clause says, and that is

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not what the Explanatory Notes say it says. At the very least, it seems to me that this may be New Labour taking the first step on the road to price controls.

The Government want to ban employment agencies from conducting simple, straightforward, everyday transactions with employers that have been carried on with their willing clients for years, even decades. That simple transaction goes like this. An agency sends an employer a temporary worker in return for a fee which includes the worker's wages, tax and national insurance that the agency pays, as well as the agency's charge or commission. The most common kind of temp is a secretary or clerical worker. The employer decides that she entirely fits into his business and he invites her to take a permanent job with him, which she accepts.

The agency has a clause in its contract with the employer that in this very common situation the employer will pay the agency the commission that it usually charges for the finding of permanent employees. One may ask: what is wrong with that? I confess that I do not know. There may be all kinds of reasons put forward. One is that somehow it would put the employee at a disadvantage because the employer for whom she had been temping might be inhibited from offering her a job because he would be liable to pay a commission. I believe that that is absolute nonsense. The very fact that this is a regular, indeed daily, type of transaction proves that it does not inhibit workers from finding permanent jobs that way.

Employers who look for permanent workers have to get them from somewhere. If they do not pay a commission to an agency for the promotion of a temp to a permanent employee they will pay it to an agency for finding a total stranger; or else the employer will have to spend time and trouble, and quite a lot of money, advertising and interviewing prospects on their own, including any number of unsuitable people whom the agency would have weeded out in advance. That is one of the services that an agency provides to its clients.

Together with many other employers, I have found excellent permanent employees from among temps who have worked for me, and I have been more than pleased to pay the commission. In effect, temp to permanent arrangements are often trial engagements on both sides. I always asked my temps why they did not take a permanent job rather than face the uncertainty of blank periods and constant changes of employers while temping. The fact is that temps work in that capacity for a variety of reasons. Some like the variety of work that temping gives them; most do not want a permanent job but to work as and when it suits them; others want the flexible hours that such work provides or to use temping as a means of finding a permanent job by trying out potential employers themselves. Far from putting a temporary employee at a disadvantage, it gives them the opportunity to find an employer and a job that suits them. Perhaps it is the workers who do not find jobs via the temporary worker route who are adversely affected.

The other untenable reason proffered by the Government for seeking these powers is that a poor ignorant employer may not realise that by hiring a temp and then converting him or her into a permanent

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employee will cost him a fee. I would have thought that even someone newly arrived from the planet Zorg would realise that you do not get something for nothing, or that you can in effect poach somebody else's employee with impunity and without paying a fee--apart from the fact that this potential liability is invariably spelled out in the agreement with the agency. Failure to read an agreement that one signs is no excuse, but in order to ensure that there is no possible misunderstanding most agencies specifically refer to the condition in a covering letter.

At Committee stage I proposed a very simple amendment that called on the Government not to make any order which interfered with the commercial arrangements between what might be described as consenting adults--the agency and its client--so long as they did not interfere with an employee's rights. The Government rejected it out of hand.

In order to meet the Government's specious and totally flawed argument against my very simple amendment, I now propose a much more elaborate one which takes into account what the Minister told me then. It requires the contract with the employer and the contract with the worker to state clearly that a fee will be charged to the employer, not to the worker, if the worker takes permanent employment with the business for which he or she has worked on a temporary basis. The clarity is achieved by the words being spelt out in prominent characters in the two contracts, being surrounded by a printed box and being initialled by the employer and the worker.

To anticipate a possible objection from the Government, I have also made it quite clear that an employee may not suffer detriment by refusing to acknowledge the potential arrangement, which will not be of any effect in any case if he or she does not convert a temporary job into a permanent one. There is no cause for the provision tucked away in Schedule 7. It is not merely an exercise in nannyism, to protect employees from possible exploitation or to protect unwary employers from a hidden, unexpected liability. The Unfair Terms and Conditions Act would do that. It is not in response to any public outcry about an injustice to either employers or employees. In fact, the Government have at no stage in this legislation, particularly before your Lordships, produced the slightest evidence of any abuse or of any real public demand for it.

The noble Lord, Lord Simon of Highbury, told the Committee:

    "Some in the industry admit that they use "temp to perm" fees to stall that process". With the greatest respect, that is a totally misleading spin on whatever the Government say they have been told.

My noble friend Lord Tebbit, speaking on the same amendment, told the Committee on the basis of his former connection with an employment agency that,

    "temporary staff are an asset of the agency".--[Official Report, 16/6/99; cols. 397-98.] What the agencies are doing when they charge a commission when one of their employees whose services they hire out as a temp is taken into permanent

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    employment by one of their clients is to prevent blatant poaching by someone who has had that asset--the temp--on trust. It is also to ensure that when employers decide to keep a temp permanently they are compensated for the loss of revenue generated by the temp and the cost of finding a replacement.

Among those who have lobbied me on this subject is the Federation of Recruitment and Employment Services, a trade association representing over 50 per cent of the industry, with 5,500 offices in membership throughout the country. The industry has an annual turnover of a staggering £16 billion. Each week it finds temporary work for about 1 million people. Each year it finds permanent jobs for 450,000 people. Some 16 per cent of the industry's revenue comes from temporary to permanent fees. FRES estimates that about 170,000 of those for whom the agencies find permanent jobs--that is, just over a third--do so via the temp-to-permanent route. That belies the totally unsupported and specious suggestion that it somehow inhibits people from finding jobs or puts temps at some disadvantage. Many employers recruit staff exclusively by this means. Many disadvantaged people find that the temp-to-permanent route offers them the opportunity of a permanent job following rejection by employers on the grounds of age or recent illness and--reprehensibly and illegally--on the grounds of some disability. Recruitment agencies play an important part, not just in placing people in jobs, but in helping difficult candidates to find jobs.

The industry says it is difficult for it to understand the Government's attitude to it, especially on this issue, where everybody--employers and employees alike--is content with the system. I suspect what the problem may be. Although the agencies have not said this, I wonder whether in some of the deep recesses of old Labour--not on the Front Bench, I hasten to add, but perhaps behind--people are waiting to pounce and settle old scores. In 1983 the Labour Party's extreme Left-wing election manifesto--the noble Lord will not be surprised if I repeat it again--said:

    "We will take urgent steps to abolish private employment agencies". "Urgent steps"! What was the reason for having that in the manifesto? Again I quote. It was to:

    "ensure that the Manpower Services Commission develops a national job centre network". That was nationalisation through the back-door, and in that case nationalisation without compensation. I know that the Minister will tell me that that is a great exaggeration, but that is exactly what I think it is. In Committee when I quoted the same words, I invited the noble Lord to assure us that New Labour had forsworn that ambition. Answer came there none then. Maybe tonight some answer will come.

I said in Committee that I was prepared to assume that the Government had simply not understood the destructive nature of these proposals. I again say that if they claim they do not know, then it is not for want of being warned by the industry and my honourable friends in the other place, even in advance of the draft regulations. The fact is that their proposals will put the

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agencies out of business, or at least make their operations unviable, simply because they cannot recruit temporary workers only to lose them through the poaching that the Bill would encourage. The proposals will make it harder for thousands of people, many of them single mothers, to obtain temporary work. They will make it harder, if not impossible, for employers and temporary workers alike to find suitable staff and positions by a straightforward system under which employees are in effect working on a trial basis and at the same time can discover, while still being paid, whether they like the work, the employer and, equally important, their potential colleagues.

I repeat, this provision provides for no known need and removes no injustice or abuse. It is in this Bill for no good reason. If it is eventually passed, it will, I believe, also be found to infringe the article in the Treaty of Rome which prohibits any restriction on the free movement of labour, and it is entirely possible that the Government will find themselves dragged off, kicking and screaming, to the European Commission to be told once again that their conduct is illegal.

Noble Lords opposite, including the Ministers, know that I do everything that I can to save them from this fate. I therefore urge the Government to accept the modification to their proposed powers that this modest amendment calls for. I beg to move.

8.45 p.m.

Viscount Thurso: My Lords, I have had the great pleasure of taking part in most stages of the Bill--nearly all the Committee stage and all the Report stage from this Front Bench. Today, I believe, I have uttered only two sentences, so I ask your Lordships' indulgence if I now break my duck and go to three or four.

I have considerable sympathy with the noble Baroness, Lady Miller of Hendon, not because I am a director of a recruitment agency--we do not deal with any temporary staff at all; we are concerned purely with what is euphemistically called "executive search"--but because as an employer I have used temporary staff from time to time and some of those staff have become permanent members of our staff. On one occasion without my knowledge--I found out about it afterwards--somebody who had been working for us for some nine months took a permanent position. It was arranged by the person who employed him that he simply left for a week, left the agency and came to us a week later. We thereby rather neatly avoided paying a commission. I am not proud of that, but it is what happened.

I have great sympathy with the noble Baroness, Lady Miller, but I think she has attacked this matter from the wrong angle. I regard the key issue as being one of time. Clearly, if a temporary employee comes to work for a week or a month and then becomes permanent much of what the noble Baroness says is right. But where a temporary employee has worked for six or nine months I do not see why there should be the penalty of an extra commission. If the noble Baroness

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could have framed her amendment on the grounds of time it would have had much more chance of success than the way she has chosen.

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