Memorandum by the Recruitment and Employment
Confederation
The Recruitment and Employment Confederation
represents around 8,000 recruitment agencies in the UK. The UK
recruitment industry is largely made up of small businesses who
place 1.2 million people into temporary jobs every week. Last
year the industry also placed over 700,000 people into permanent
positions in the workplace. The UK recruitment industry therefore
makes a significant contribution to the successful UK labour market
model.
REACTION TO
THE GREEN
PAPER
The REC welcomes a debate at the European level
about building successful labour markets and ensuring that workers
receive their correct working rights. Our starting point in this
debate is the diversity of European labour markets and their traditions.
When considering the rights of temporary agency workers in particular
it is important to view these rights within the context of national
labour market conditions and national labour laws. Comments in
the Green Paper relating to issues such as "segmentation
of the labour market", standard and non-standard contractual
terms and even what constitutes flexible work may have very different
resonance in different countries. It therefore becomes impossible
to draw meaningful generic European conclusions to a number of
the questions asked in the Green Paper.
The responses below reflect REC's position from
the UK perspective, particularly with regard to temporary agency
workers. An Appendix details the legal relationship between employment
agencies and temporary agency workers in the UK in detail. REC
is an active member of our European association Eurociett and
fully endorses Eurociett's response to the Green Paper. REC's
response should be read as an addition to the Eurociett submission.
This can be accessed at: http://www.euro-ciett.org/
1. What do you consider to be the priorities
for a meaningful labour law reform agenda?
The UK Government recently considered UK employment
rights in their paper "Success at Work"[109],
March 2006. This paper concluded that workers in the UK have a
sufficient number of employment rights and that focus should now
be turned to vulnerable workers who are denied access to their
rights. The REC fully supported the conclusions of this paper
and has been actively working with the DTI to support their work
on vulnerable workers. Currently the REC is in line with Government
thinking on this matter and believes that the priorities for labour
market in the UK are that of enforcement of current rules and
raising the employment level to 80 per cent.
In order to reach an 80 per cent employment
level REC is working with Job Centre Plus (the public employment
service in the UK) to explore ways in which those on incapacity
benefit can be helped back into work. The REC also supports the
focus taken in allowing those in permanent employment access to
more flexible ways of working through the right to request flexible
working. This may help young mothers, for example, to find work
which is flexible enough to meet their needs. Any system of flexible
working for the permanent workforce needs to be underpinned by
forms of more flexible work such as temporary agency, for this
to be a viable option for employers.
2. Can adaptation of labour law and collective
agreements contribute to improved flexibility and employment security
and a reduction in labour market segmentation? If yes then how?
REC supports Eurociett's assertion that temporary
agency work should not be viewed as a segment of "outsiders"
in the labour market. Rather than being marginal, temporary agency
work and other forms of employment contract which are not simply
full time permanent work should be seen as being at the centre
of a successful and inclusive labour market. This central role
is reflected in the rights of these workers in the UK. Labour
law in the UK allows for a number of different employment relationships
whilst preserving a base of working rights for all workers. The
REC considers this to be an effective way of ensuring that segmentation
within the labour market does not exist on the basis of contract
type. In addition there are relatively low barriers between temporary
and permanent positions which allows for easy transition from
temporary to permanent positions, when the worker wishes. By having
a system where it is no more expensive to employ workers on permanent
contracts (in fact it maybe a cheaper option) and it is not very
costly to dismiss people when necessary, for example when there
is a turn down in demand, a labour market is not truly segmented
as workers can move between different contract types at ease.
Where this choice is not available this is usually linked to regional
or local economic reasons rather than foundation of working rights
in UK labour law itself.
3. Do existing regulations, whether in the
form of law and/or collective agreements, hinder or stimulate
enterprises and employees seeking to avail of opportunities to
increase productivity and adjust to the introduction of new technologies
and changes linked to international competition? How can improvements
be made in the quality of regulations affecting SMEs, while preserving
their objectives?
The REC has no detailed comment to make regarding
technological changes other than it is essential that employees
have the opportunity to adapt and improve their skills so they
can adapt to new positions in the labour market. It is also essential
that businesses are afforded flexibility within their regulation
so that they can adapt quickly to new realities.
With regard to SMEs, regulations should always
be designed with them in mind as the employ the vast majority
of workers in Europe. If regulations are too complex to implement,
or do not allow for a small business to respond to critical changes
in the market place swiftly they will simply go out of business,
or ignore the regulations. In addition to the quality of the regulation
itself, how it is communicated to SMEs and what tools SMEs are
given to cope with the new regulation should also be considered.
4. How might recruitment under permanent and
temporary contracts be facilitated, whether by law or collective
agreement, so as to allow for more flexibility within the framework
of these contracts while ensuring adequate standards of employment
security and social protection at the same time?
The REC, and the UK Government in their March
2006 paper Success at Work, believes that the current balance
between flexibility and employment security and social protection
has been reached in the UK market. UK temporary workers receive
all of the basic working rights. There are no restrictions on
contract length and type in the UK recruitment market—thus
allowing for maximum flexibility. Employment security is preserved
in the UK labour market through ease of entry into the labour
market (for example through recruitment agencies) and through
a steady supply of jobs. More could be done to improve the skills
training of some in the UK labour market, the link between skills
levels and security of work is well proven.
5. Would it be useful to consider a combination
of more flexible employment protection legislation and a high
level of assistance to the unemployed, both in the form of income
compensation (ie passive labour market policies) and active labour
market policies?
The balance between unemployment assistance
and active labour market policies is set in the UK by our Government.
The REC has been supporting the public employment service, Job
Centre Plus, in getting "work ready" candidates into
work in a number of ways. December 2005 saw the launch of a joint
Diversity Pledge for the industry which encourages recruitment
agencies to seek more diverse pools of candidates and gives them
the tools to do it through an online toolkit. On a local level
many recruitment agencies advertise their vacant positions through
Job Centre Plus and large agencies work with Job Centre Plus on
national projects. Finally the REC is building regional links
to job centre plus to ensure that the private recruitment industry
is doing as much as possible to support the UK Government's active
labour market policies.
6. What role might law and/or collective agreements
negotiated between the social partners play in promoting access
to training and transitions between different contractual forms
for upward mobility over the course of a fully active working
life?
See comments to question 2 for a response on
transitions.
Regarding training recruiters can play a useful
role in identifying areas of skills shortages in the labour market.
This can be used by Governments to tailor their skills training
to the labour market need. A great deal of informal and formal
training is conducted on the job in the UK. It is right for employers
to support this as when they perceive there is a need. REC is
also exploring ways in which recruitment agencies can actively
support apprenticeships and other training schemes which are supported
by our Skills Councils.
7. Is greater clarity needed in Member States'
legal definitions of employment and self-employment to facilitate
bona fide transitions from employment to self-employment and vice
versa?
This matter is currently being considered by
the UK Treasury and Her Majesty's Revenues and Customs (HMRC)
with regard to workers who work as limited company contractors,
and are therefore self-employed for tax purposes, through managed
service companies. As this matter is in the process of being addressed
by the UK Government, with the REC making lengthy representations
on the way in which the new framework will work, further comments
will not be made in response to the Green Paper. What is certain
is that this is a very complex matter which needs to be addressed
at the Member State level as it has implications for both employment
and tax law, which vary greatly between Member States.
The REC strongly defends the right for contractors
to operate as limited company contractors when this is appropriate.
Recruitment agencies may facilitate the placement of limited company
contractors onto assignments. It is vital that any system of identifying
employment and self-employment allows for this type of transaction
to continue. Typically it benefits end users who need highly skilled
contractors at short notice and benefits contractors, who may
be at the end of their career, but want to continue working on
a more flexible basis.
It is worth noting that REC supports fully open
labour markets in the EU as the current transition periods may
lead to inappropriate use of self-employed status for immigration
reasons. This subject is new to the UK as it only concerns citizens
of Bulgaria and Romania, but it is one REC will continue to monitor.
8. Is there a need for a "floor of rights"
dealing with the working conditions of all workers regardless
of the form of their work contract? What, in your view, would
be the impact of such minimum requirements on job creation as
well as the protection of workers?
The UK has a set of working rights that apply
to all workers. This allows for companies to engage people on
non-permanent contracts when it is needed for business reasons
without it creating a "2 tier" work force with respect
to comprehensive basic rights. Companies should still be able
to, for example, reward long-standing employees with extra rights,
eg extended holiday leave, which go above the statutory minimum.
The REC considers that the current base of working rights in the
UK is sufficient and does not have a detrimental effect on either
job creation or the protection of workers.
9. Do you think the responsibilities of the
various parties within multiple employment relationships should
be clarified to determine who is accountable for compliance with
employment rights? Would subsidiary liability be an effective
and feasible way to establish that responsibility in the case
of sub-contractors? If not, do you see other ways to ensure adequate
protection of workers in "three-way relationships"?
It is essential to recognise when considering
"multiple employment relationships" that the case of
temporary agency workers is different from other forms of multiple
employment relationship. As Eurociett clearly states in their
response to the Green Paper the relations between client, worker
and employment agency are clear in the EU. In the case of the
UK the Employment Agencies Act very clearly sets out how this
triangular relationship should be managed. The EAA and the associated
conduct regulations tightly regulates the relationship between
the agency and the client company and the agency and the worker.
If these regulations are breeched this can be investigated by
the Department for Trade and Industry's Employment Agency Standards
Inspectorate, which if appropriate can prosecute the agency concerned.
Ultimately Directors of employment agencies can be prohibited
from running employment agencies for a number of years. Alternatively
if the relationship between the worker and the agency breaks down
on a matter of employment law this can be referred to an Employment
Tribunal. In addition to this the worker receives all working
rights (see Appendix 1 for further information).
It is clear in the UK that matters such as anti-discrimination
and health and safety are a joint responsibility of both the agency
and the end client. REC believes that this joint responsibility
reflects the nature of the three-way relationship. It also means
that the worker should be doubly protected as both the agency
and the end user are ensuring these rights.
Temporary agency work is an example where the
relationship between the worker and more than one company is very
clearly regulated.
10. Is there a need to clarify the employment
status of temporary agency workers?
The REC support's Eurociett's view that the
employment status of temporary agency workers is clearly defined
at the national level.
Employment status is a matter which needs to
be considered at two levels, employment status for taxation purposes
and employment status for employment rights purposes. As both
of these matters have a strong national focus it is most relevant
to analyse the employment status of temporary workers at the national
level.
In the UK temporary agency workers are usually
engaged on a contract for services. They are employees of the
temporary work agency for tax, national insurance and immigration
purposes.
With respect to employment rights they have
a large number of working rights but are not employees of the
agency or the client company. In practice this means they receive
number of rights including to the national minimum wage, working
time, health and safety, anti-discrimination, health care coverage.
They do not, however, receive the right to claim unfair dismissal
after a year working with the agency, they have no right to redundancy
pay (eligibility for statutory redundancy pay in the UK is earned
after two years service) and the right to return to the same position
after maternity leave (this would make no sense in the temporary
staffing market and agencies frequently assist returning mothers
back into the labour market).
The UK Government considered the question of
the employment status of temporary agency workers from 2002-06
and concluded in March 2006's publication Success at Work that
the status was clear and no further legislation is needed in this
area. The REC has best practice guidance on its online legal reference
guide for members to ensure that agencies understand how to engage
temporary workers correctly.
It is worth noting that some temporary work
agencies do engage their temporary workers on zero hours contracts
of employment. This therefore avails the temporary workers of
the employment rights outlined above. However should the end user
effectively treat their temporary worker in a way similar to an
employee an employment relationship could still be found between
the temporary worker and the client company in a tribunal.
11. How could minimum requirements concerning
the organisation of working time be modified in order to provide
greater flexibility for both employers and employees, while ensuring
a high standard of protection of workers' health and safety? What
aspects of the organisation of working time should be tackled
as a matter of priority by the Community?
Temporary agency workers are usually employed
and paid on an hourly basis—it is therefore simple to track
their working hours. The REC is happy with the current working
time arrangements in the UK and does not call for action on behalf
of its members by the Community.
12. How can the employment rights of workers
operating in a transitional context, including in particular frontier
workers, be assured throughout the Community? Do you see a need
for more convergent definitions of "worker" in EU Directives
in the interests of ensuring that these workers can exercise their
employment rights, regardless of the Member State where they work?
Or do you believe that Member States should retain their discretion
in this matter?
The definition of a worker is largely defined
by national employment law (see Appendix 1 re the UK definition).
A more convergent definition of a worker in EU Directives, would
presumably require a revision of these Directives. Considering
the current political environment and the lack of agreement on
social legislation in the Council this seems to be an unrealistic
suggestion.
A harmonised definition of "worker"
would not be welcomed by the REC, which believes that difficulties
relating to cross-border working should be tackled through the
correct implementation of the Posting of Workers Directive rather
than other means. Additionally the REC does not believe that a
harmonised definition of a worker would provide clarity for workers
or employers in the future. Working rights can be attached to
national taxation and social security regimes and so a harmonised
definition at the European level would not, in itself, make sense.
13. Do you think it is necessary to reinforce
administrative co-operation between the relevant authorities to
boost their effectiveness in enforcing Community labour law? Do
you see a role for social partners in such co-operation?
Greater administrative co-operation could assist
in tackling abuses in the cross-border posting of temporary agency
workers and would be welcomed by the REC. National enforcement
regimes should exchange information on licensing and other requirements
for temporary work agencies. In addition much could be gained
through greater cross-border sharing of intelligence on agencies
who operate in more than one country. Both sides of industry should
be able to feed into the process of cross border co-operation.
For example greater knowledge of the REC's Code of Professional
Practice could help authorities when dealing with UK recruitment
agencies who are operating abroad.
14. Do you consider that further initiatives
are needed at an EU level to support action by the Member States
to combat undeclared work?
The EU can contribute to the debate on the battle
to combat undeclared work. Firstly if Member States reduce restrictions
on legitimate forms of flexible forms of work, such as temporary
agency work, this would allow for employers to have access to
the flexible workforce they need without resorting to undeclared
work.
Action on undeclared work at the European level
could include:
— The promotion of temporary agency
work and other forms of legitimate flexible work to combat undeclared
work.
— Assistance in greater co-operation
between labour and taxation authorities when tackling cross-border
undeclared work.
— The EU can also assist in sharing
best practice in the field of undeclared work.
March 2007
109 http://www.dti.gov.uk/er/successatwork.htm Back
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