Select Committee on European Union Twenty-Sixth Report


Letter from the Secretary of State for Business Enterprise and Regulatory Reform to Lord Grenfell dated 28 May 2008

I am writing to outline the Government's position on the Working Time and Temporary (Agency) Workers Directives. I attach the Slovene Presidency's proposals on both Directives, on which they have indicated an intention to reach political agreement at the Employment Council on 9 June.

On Working Time, the new text is a further step forward. The issue surrounding legal certainty on use of the opt-out has been clarified and the 12 month reference period for offshore workers has been re-instated. There is also important additional flexibility for short-term contracts regarding restrictions on the early use of the opt-out, and the maximum cap on working hours. The text also strengthens previous wording on the reconciliation of work and family life. The text addressing the issues raised by the ECJ SIMAP and Jaeger judgements remains as previously agreed.

The Government is optimistic that this new proposal can provide a basis for agreement. Our priorities will remain a solution to the problems caused by the SIMAP and Jaeger judgements, and the retention of the individual right to opt out of the 48 hour maximum working week, without unnecessary restrictions. We will continue to pursue these, and to ensure that the new text on work/life balance is consistent with Government policy on the right to request flexible working.

The new text on Agency Workers (on which we are separately providing an updated Explanatory Memorandum at the Committees' request) is also a significant step forward. Importantly, it provides a means of basing UK implementation of the Directive on the agreement announced between the CBI and TUC on this issue on 20 May. In doing so, the new text provides the UK with similar flexibility to that previously available to other Member States, in particular those with an established practice of implementing Directives via collective agreements, to derogate from the equal treatment principle on the basis of social partner agreement.

The Government considers that the CBI-TUC agreement will deliver fairer treatment for agency workers without removing the important flexibility agency work can offer both employers and workers. A copy of the agreement was sent to your Committee clerk on the day of the announcement and is attached for information.

The agreement deals with a number of key issues, in particular an appropriate qualifying period—after 12 weeks in a given job there will be an entitlement to equal treatment. The agreement uses the terminology in the draft Directive to define the scope of equal treatment ("basic working and employment conditions") and how the principle would be applied in individual cases (workers should be treated at least as well as if "they had been recruited directly by the hirer undertaking to occupy the same job"). It also clarifies that equal treatment should not extent to occupational social security schemes.

The Government therefore believes that there is now for the first time a real possibility of securing agreement acceptable to the UK on both these dossiers. We believe this can be achieved at the 9 June Employment Council, ending six years of deadlock in the EU. It is highly likely that alternative proposals will emerge on both texts in the run up to the Council and at the Council itself; on which the extremely tight timetable will unfortunately not enable me to seek the Committee's further views, If a deal is on the table that addresses UK concerns and is acceptable on one or both these dossiers, I hope the Committee can agree that we should accept it. I would of course write to you as soon as possible after the Council with more precise details of the terms of the agreement. Pat McFadden is of course due to meet the Committee on 10 July to discuss both Directives.

Letter from Lord Grenfell to the Secretary of State for Business Enterprise and Regulatory Reform dated 5 June 2008

Your letter of 28 May on the above amended proposals was considered by Sub-Committee G (Social Policy and Consumer Affairs) at its meeting of 5 June 2008.

We very much welcome the progress that has been made in negotiating these proposals and we urge you to continue to press strongly for revised text that meets the points which are of outstanding concern for the UK. We would welcome your assurance that the definitions of "temporary agency workers" and "temporary agencies" used in the draft temporary agency workers directive are sufficiently clear to ensure that the scope of the directive is appropriate.

We consider a high level of flexibility to be crucial in both directives but we also believe that the success of the directives in protecting workers will be dependent on the application of robust enforcement mechanisms in order to avoid any abuse.

We note that you still aim to secure an improved text on clarifying the application of the SiMAP/Jaeger judgements to the revised Working Time Directive. This is an issue that we take extremely seriously and we regret the lack of information on that matter in your letter.

The continuing uncertainties are such that we are not in a position to release either of the documents from scrutiny. However, we do feel that, if the opportunity arises at the 9 June Employment Council meeting to join political agreement to texts that remove the long-standing UK problems with both of the proposals, you should take it.

We would not regard your agreement to either or both of the revised proposals in those circumstances as a breach of the House of Lords Scrutiny Reserve Resolution of 6 December 1999. Under the terms of section 3(b) of that Resolution, we indicate that such agreement need not be withheld.

We look forward to discussing the outcome of the Council with your ministerial colleague, Pat McFadden MP, on 10 July. In advance of that meeting, it would be helpful if you could write to us describing the outcome of the 9 June Council meeting and addressing the other issues raised in this letter, including the implications for the SiMA P/Jaeger judgements.

Letter from the Minister for Employment Relations and Postal Affairs to Lord Grenfell dated 20 June 2008

Further to my letter of 28 May, I am pleased to inform the Committee that political agreement was reached on the Working Time and Agency Workers Directives at the 9 June Employment Council. I attach the texts on which agreement was reached, both of which represent good outcomes from a UK perspective.

On the Working Time Directive, the agreed text addresses the two priority objectives outlined in my earlier letter. There is a solution to the problems caused by the SiMAP/Jaeger ECJ judgments, enabling Member States to classify 'inactive on-call time' as rest in certain circumstances and providing increased flexibility on when compensatory rest can be taken. And, crucially, the right for individuals to opt-out of the 48 hour maximum working week is retained, with a review clause that does not imply an end date or any phasing out.

The text includes a number of safeguards on the use of the opt-out, including a maximum cap on hours of 60 (or in some circumstances 65) hours averaged over 3 months, a 'cooling-off period' of 6 months (or possibly longer if there is a probation period) and a ban on opting out in the first four weeks of a contract. However, there is important flexibility for workers on short-term contracts (up to 10 weeks per year with the same employer), enabling them to opt-out from day 1 and not be bound by the cap. The text is also a step forward as regards the reference period, with the time for calculating an average week's work in the UK effectively set at six months (compared with four months in the current Working Time Directive). Finally, the text also includes a provision on the 'reconciliation of work and family life' which, unlike the draft attached to my previous letter, is consistent with the Government's established policy that the interests of parents and carers be given priority by legislation on the right to request flexible working.

On the Agency Workers Directive we were able to achieve agreement on a text which means the UK can fully implement the recent agreement between the CBI and TUC. This includes specific references to a qualifying period and to the ability of a Member State to decide whether occupational social security schemes, including pension, sick pay or financial participation schemes are included (or excluded) from the definition of pay. These changes are in Article 5(4) of the text.

Political agreement was achieved by a qualified majority on both dossiers. Member States abstaining or voting against did so primarily because of opposition to the very positive text (from a UK perspective) on the Working Time opt-out, a number of them expressing hope that the text will 'improve' in this regard during the European Parliament's consideration of the texts. It will be important, therefore, to engage with the European Parliament in advance of its second reading of both directives to ensure the texts remain as close as possible to the current drafts.

Letter from the Minister for Employment Relations and Postal Affairs to Lord Grenfell dated 10 September 2008

I refer to your letter of 5 June in which you advised that the Committee is not in a position to release either of the above documents from scrutiny, and to my letter of 20 June outlining the political agreement that was reached on the Working Time and Agency Workers Directives at the 9June Employment Council. Further to my meeting with Sub-Committee G on 10 July, I am now writing to keep the Committee informed of the latest developments and to seek your agreement to voting in support of adopting the Common Position at the General Affairs and External Relations Council on 15 September.

Agreement on a Common Position on both Directives was reached on 6 August; the texts of both Directives are the same as the texts agreed on 9 June (subject to changes agreed by jurist linguists). The next step will be for the General Affairs and External Relations Council to formally adopt the text of the Common Position on 15 September. As you will be aware, this is the formal next step in the process (and does not involve any change in Government policy) so that both Directives can be submitted to the European Parliament for Second Reading on 22 September. Although the Directives are still held under scrutiny reserve, I would appreciate your agreement to vote in support of the Common Position. We will of course continue to keep your Committee informed of developments.

We will of course be engaging with the European Parliament in advance to preserve the texts as currently drafted.

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