United Kingdom agency worker law - AbsoluteAstronomy.com

United Kingdom agency worker law refers to the law

Law

Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

which regulates people's work through employment agencies in the United Kingdom

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

. Though statistics are disputed, there are currently between half a million and one and a half million agency workers in the UK, and probably over 17,000 agencies. As a result of judge made law and absence of statutory protection, agency workers have more flexible pay and working conditions than permanent staff covered under the Employment Rights Act 1996

Employment Rights Act 1996

The Employment Rights Act 1996 is a United Kingdom Act of Parliament passed by the Conservative government to codify the existing law on individual rights in UK labour law. Previous statutes, dating from the Contracts of Employment Act 1963, included the Redundancy Payments Act 1965, the...

.

For most of the 20th century, employment agencies were quasi-legal entities in international law. The International Labour Organisation in many Conventions called on member states to abolish them. However, the UK never signed up. The major piece of legislation which regulates agency practices is the Employment Agencies Act 1973

Employment Agencies Act 1973

Employment Agencies Act 1973 is a United Kingdom Act of Parliament and part of a wider body of UK agency worker law. It regulates the conduct of employment agencies which recruit and manage temporary and permanent labour. It applies to approximately 17,000 employment agencies operating in the UK...

, though it was slimmed considerably by the Deregulation and Contracting Out Act 1994

Deregulation and Contracting Out Act 1994

The Deregulation and Contracting Out Act 1994 is an Act of the Parliament of the United Kingdom. It introduced wide ranging measures aiming to cut government expenditure and bureaucracy...

. This abolished licences, so agencies operate without governmental oversight, except for a small inspectorate and occasional court cases. After the 2004 Morecambe Bay cockling disaster

2004 Morecambe Bay cockling disaster

The Morecambe Bay cockling disaster occurred on the evening of 5 February 2004 at Morecambe Bay in North West England, when at least 21 cockle pickers were drowned by an incoming tide off the Lancashire/Cumbrian coast....

, Parliament enacted the Gangmasters (Licensing) Act 2004

Gangmasters (Licensing) Act 2004

The Gangmasters Act 2004 is an Act of the Parliament of the United Kingdom that regulates the agencies that place vulnerable workers in agricultural work, and the shellfish collecting and packing industries . It is the most recent plank of UK agency worker law...

, requiring agencies (gangmasters) in the agricultural, shellfish and food packing sectors to be licensed.

In January 2010, the Government passed The Agency Worker Regulations 2010 (SI 2010/93) which require, at least, equal pay and working time rights when compared with what a direct worker would be paid. This is designed to implement the EU Agency Workers Directive

Agency Workers Directive

The EU Temporary and Agency Workers Directive is an EU Directive agreed in November 2008 which seeks to guarantee those working through employment agencies equal pay and conditions with employees in the same business who do the same work...

, which is the first transnational legal measure to ensure agency workers are treated equally. The Directive was the culmination of initial resistance by the Government under Tony Blair

Tony Blair

Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...

, and a final surge of Parliamentary support for a Temporary and Agency Workers (Equal Treatment) Bill

Temporary and Agency Workers (Equal Treatment) Bill

The Agency Workers Regulations 2010 are a statutory instrument forming part of UK labour law. They aim to combat discrimination of people who work for employment agencies, by stating that agency workers should be no less favourably treated in pay and working time than their full time counterparts,...

. The Regulations and the Directive are the third pillar of law, along with the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000

Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000

The Part-time Workers Regulations 2000 is a UK labour law measure which requires that employers give people on part time contracts equal pay to people on full time contracts who do the same jobs. It implements EU Directive 97/81/EC, and forms part of the European Unions programme to combat...

and Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002

Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002

Fixed Term Employees Regulations 2002 form a UK statutory instrument aimed to protect employees who have fixed term contracts...

to regulate atypical workers.

Employment agency regulation

The Employment Agencies Act 1973 regulates the conduct of the 17,000 odd agencies operating in the UK. It prohibits most agencies charging upfront fees, makes it an offence to put out misleading advertising for jobs which do not exist, sets standards for assessing an employee's experience, and more. It was introduced after similar (though stronger) legislation was passed in France and Germany regulating agencies (for Germany, see Arbeitnehmerüberlassungsgesetz). The 1973 Act was amended by the Conservative government through the Deregulation and Contracting Out Act 1994

Deregulation and Contracting Out Act 1994

The Deregulation and Contracting Out Act 1994 is an Act of the Parliament of the United Kingdom. It introduced wide ranging measures aiming to cut government expenditure and bureaucracy...

, ostensibly to increase efficiency. It abolished the system of agency licensing, so that agencies can operate freely, unless inspectors find violations and close them down.

Supporting the Act are The Conduct of Employment Agencies and Employment Businesses Regulations 2003. These regulations restrict agencies from,

selling other services (r.5)
sending workers to employers as strike breakers (r.7)
sharing the agency worker's personal details (r.28)
advertising jobs which do not exist (r.27)
withholding pay from workers, regardless of whether they have timesheets
charging any fees directly to a worker for their work
require agencies to document the health and safety standards of employers they send workers to
require agencies to give a written statement of the pay and hours they will have, and state their contractual status (see the common law section below)

In reality these requirements are not enforced, because there are minimal resources devoted to oversight. Regulation enforcement relies on individual workers bringing claims, and these claims are simply non-existent. There is no reported case of an agency worker claiming a breach of regulations. The watchdog, the Employment Agency Standards Inspectorate

Employment Agency Standards Inspectorate

The Employment Agency Standards Inspectorate is a division of the Employment Relations Directorate, part of the Department for Business, Enterprise and Regulatory Reform, which is meant to oversee employment agencies operating in the United Kingdom...

, has 15 inspectors and 4 call centre staff. This was increased by twelve inspectors after the Employment Act 2008

Employment Act 2008

The Employment Act 2008 is a Act of the Parliament of the United Kingdom which reformed a number of issues from random elements of UK labour law...

ss 15-18. In a £26 billion industry with 17,000 agencies, in 2004 the Inspectorate investigated 1,057 complaints, secured 8 convictions (solely in the entertainment industry, 2 agencies were banned for 10 years) and £5,735 in compensation for workers.

The Gangmasters (Licensing) Act 2004 covers some of the lowest-paid workers in a more comprehensive way. It was introduced in the wake of the 2004 Morecambe Bay cockling disaster

2004 Morecambe Bay cockling disaster

. It requires all agencies (commonly known as "gangmasters") which provide labour in the agricultural, shell fishing and food packaging sectors to operate under a licence. The Gangmasters Licensing Authority

Gangmasters Licensing Authority

The Gangmasters Licensing Authority is an agency in the United Kingdom regulating the supply of workers to the agricultural, horticultural and shellfish industries...

issues these (currently there are 1,159 licences) and it oversees and enforces standards requiring employees to be treated fairly.

Common law

The regulation of agency workers is affected by the interpretation by the courts of the word "employee" under s.230 of the Employment Rights Act 1996

Employment Rights Act 1996

. If an individual is considered to be an "employee" then all the entitlements (such as a written statement of contract, reasonable notice before dismissal, time off for parenting, etc.) under the Employment Rights Act 1996

Employment Rights Act 1996

apply. But the courts have often held that agency workers fall outside of this definition, because they lack "mutuality of obligation" in their contracts.

The first important case was O'Kelly v Trusthouse Forte plc. Some waiters worked various dinner functions in the Grosvenor House Hotel

Grosvenor House Hotel

Grosvenor House is a large and luxurious hotel. The iconic Mayfair, London hotel is owned by the Sahara Group. The name has also been licensed to a property in Dubai....

. They tried to form a union. They were dismissed. They claimed that this was unfair, and to do that, they had to show they were "employees" within the meaning of the unfair dismissal legislation. The word "employee" had hitherto always been taken to mean someone who is obviously not in business on his own account (i.e. not "self employed"), but recognised as subordinate labour, economically dependent on the employer. However, Alexander Irvine QC argued that the waiters had no "mutuality of obligation" with the employer: they were not bound to accept work engagements when they were called up, and the employer was under no obligation to call them up. They could leave, or be fired, at will. Sir John Donaldson accepted this argument and deemed the waiters to fall outside of the scope of unfair dismissal legislation.

Not all judges took the same view. In Nethermere (St Neots) Ltd v Gardiner home-working ladies stitching flaps onto trousers were held to be employees within the meaning of the Act. The leading judge, Stephenson LJ, held that "mutuality of obligation" was nothing to do with the promise of future work, but simply the exchange of work for a wage, and control over one's job by the employer in the employment contract

Employment contract

A contract of employment is a category of contract used in labour law to attribute right and responsibilities between parties to a bargain.On the one end stands an "employee" who is "employed" by an "employer". It has arisen out of the old master-servant law, used before the 20th century...

. Before the case reached the Court of Appeal, a young Tony Blair

Tony Blair

had been arguing the exact opposite in the Employment Appeals Tribunal, that O'Kelly's case should be followed. Agency workers were presumed to fall outside the scope of protective employment legislation. In 1997, when Tony Blair

Tony Blair

led New Labour to election victory, the approach to employment policy he brought was one of upholding labour market flexibility

Labour market flexibility

Labour market flexibility refers to the speed with which labour markets adapt to fluctuations and changes in society, the economy or production.-Definition:In the past, the most common definition of labour market flexibility was the neo-liberal definition...

. The position of agency workers was reaffirmed when Derry Irvine was appointed Lord Chancellor

Lord Chancellor

The Lord High Chancellor of Great Britain, or Lord Chancellor, is a senior and important functionary in the government of the United Kingdom. He is the second highest ranking of the Great Officers of State, ranking only after the Lord High Steward. The Lord Chancellor is appointed by the Sovereign...

, and he sat in on, and gave the leading judgement in, Carmichael v National Power plc. He reasserted his view of "mutuality of obligation". It is notable that the Constitutional Reform Act 2005

Constitutional Reform Act 2005

The Constitutional Reform Act 2005 is an Act of the Parliament of the United Kingdom. It provided for a Supreme Court of the United Kingdom to take over the existing role of the Law Lords as well as some powers of the Judicial Committee of the Privy Council, and removed the functions of Speaker of...

removed the power of the Lord Chancellor to decide on cases in this manner; it now being an incursion on the separation of powers

Separation of powers

The separation of powers, often imprecisely used interchangeably with the trias politica principle, is a model for the governance of a state. The model was first developed in ancient Greece and came into widespread use by the Roman Republic as part of the unmodified Constitution of the Roman Republic...

within government.

Current authority could be said to still be ambivalent. On the one hand, the recent case of Dacas v Brook Street Bureau (UK) Ltd
Dacas v Brook Street Bureau (UK) Ltd
Dacas v Brook Street Bureau Ltd [2004] is a UK labour law case, concerning the employment rights of agency workers.-Facts:Mrs Dacas had worked for Wandsworth LBC as a cleaner for four years. She was dismissed for apparent rudeness to a visitor...

[2004] IRLR 358 held that an agency worker would be the "employee" of the end-employer. But then a slightly differently constituted Court of Appeal in James v Greenwich LBC
James v Greenwich LBC
James v Greenwich London Borough Council [2008] is a UK labour law case, concerning implied contracts for workers who work through employment agencies...

[2008] EWCA Civ 35 has held that a contract of employment only exists with the agency itself. A feature of this ongoing debate is that, despite the fact that court cases for the last five years have always found an agency worker to be an "employee" of at least someone, generally speaking, neither end-employers nor employment agencies regard themselves as the employer who is bound by the Employment Rights Act 1996

Employment Rights Act 1996

.

In UK law a contractor can be found caught by the tax initiative IR35, that is to say there is a virtual ("deemed") employment because that would be the case had the contract between worker and hirer been direct and the worker is then subject to extra taxes to compensate the government in that regard, yet he still has no apparent employment entitlements. This is partly because the Tax Commissioners and the Employment Tribunals, and Tax and Employment Law, respectively allow for different treatments.

Securing equal pay and hours

Even if agency workers had any of the entitlements under the Employment Rights Act 1996

Employment Rights Act 1996

, there would still exist no requirement of equal pay for agency workers who do work of equal value compared to a permanent employer. An agency worker can be treated less favourably in his or her pay and conditions than someone doing exactly the same job, simply because they come through an agency. A proposed Temporary and Agency Workers (Equal Treatment) Bill

Temporary and Agency Workers (Equal Treatment) Bill

sought to adjust this position, joining another ten pieces of employment discrimination law in the UK (on gender, race, disability, religion, sexuality, age, part time work, fixed time work and trade union membership). After the Bill's second reading, the proposal was dropped and an older draft of a European Union Directive

European Union directive

A directive is a legislative act of the European Union, which requires member states to achieve a particular result without dictating the means of achieving that result. It can be distinguished from regulations which are self-executing and do not require any implementing measures. Directives...

, the Temporary and Agency Workers Directive was revived, and passed by the European Parliament

European Parliament

The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...

. This was possible for the first time in 2008 because the United Kingdom

United Kingdom

government dropped its opposition. In fact, the directive and the Bill are almost identical. It is understood that the law will be passed, but with a 12 week wait before agency workers will be eligible for equal pay and hours.

Scope

European Directives have to be implemented by a UK law before they take effect in the country. This will mean that the UK government will either introduce an Act of Parliament

Act of Parliament

An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...

or create a statutory instrument

Statutory Instrument

A Statutory Instrument is the principal form in which delegated or secondary legislation is made in Great Britain.Statutory Instruments are governed by the Statutory Instruments Act 1946. They replaced Statutory Rules and Orders, made under the Rules Publication Act 1893, in 1948.Most delegated...

under the European Communities Act 1972

European Communities Act 1972

European Communities Act 1972 can refer to:*European Communities Act 1972 * European Communities Act 1972...

which puts the directive's required rules in place. In fact, the proposed 2008 Bill was based on the directive, and serves as a very good guide indeed as to what any implementation will look like. All the essentials are identical. The core of the new law is to oblige employers to treat agency workers and permanent staff equally in their contract terms, but only regarding,

Hours and holiday time
Pay, including sick pay
Time off for parenting (for women only)
Discrimination law (though this is unnecessary because agency workers are already explicitly covered in existing laws)

The Bill does not protect agency workers from being fired at the will of the employer. The courts are in two minds about whether agency workers should be considered "employees" (under s 230 ERA

Employment Rights Act 1996

) and importantly who they should be considered "employees" of. Confusion in the courts has encouraged more claims, and has prevented the enforcement of clear rights. Agency workers have almost none of the main entitlements under the Employment Rights Act 1996

Employment Rights Act 1996

. None of this is covered in the directive. That means agency workers may potentially be left without the following rights.

Right to reasonable notice before dismissal (s 86 ERA)
Right to written statement of contract (s 1 ERA, these two rights form the bedrock of individual labour law, since they were the first national minimum standards to be introduced in the Contracts of Employment Act 1963
Contracts of Employment Act 1963
The Contracts of Employment Act 1963 was an Act of the Parliament of the United Kingdom which introduced the requirement to give reasonable notice before dismissal and written particulars of a contract of employment...

)
Right to request flexible working time (s 80F)
Right to parental and paternity leave (in Part VIII)
Right to redundancy payments (s 135)
Compensation from the government for lost earnings when an employer goes insolvent (s 182)

In cl 4(1) the Bill created a right to have access to an Employment Tribunal

Employment tribunal

Employment Tribunals are tribunal non-departmental public bodies in England and Wales and Scotland which have statutory jurisdiction to hear many kinds of disputes between employers and employees. The most common disputes are concerned with unfair dismissal, redundancy payments and employment...

under s 111 ERA 1996. This gives any person the right to bring an unfair dismissal

Unfair dismissal

Unfair dismissal is the term used in UK labour law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996...

claim against an "employer", and the Bill expressly provided in cl 4(2) that for this purpose both the agency and the end-user are employers. However, in an action for unfair dismissal

Unfair dismissal

Unfair dismissal is the term used in UK labour law to describe an employer's action when terminating an employee's employment contrary to the requirements of the Employment Rights Act 1996...

, the claimant would need to show that an employer had (unsurprisingly) in some way acted "unfairly" (s 98 ERA 1996). The way people demonstrate "unfairness" is to show that some pre-existing right has been breached. If an agency worker is not considered an "employee" then he will probably not be able to rely on the ERA 1996 rights which require it. So while the rights to equal treatment in the directive be effective, agency workers would remain unprotected by almost every right in the ERA 1996.

Background

The Bill is modelled, more or less directly, on the proposals put forward by the European Commission for a draft Temporary and Agency Worker Directive (COD 2002/0149). This proposal was itself shelved, because of the UK government's consistent opposition to agency regulation, in the interests of labour market flexibility

Labour market flexibility

. According to newspaper reports, the UK got the backing of Germany to torpedo the draft Directive in return for the UK to help sink the Takeover Directive (Germany has comprehensive agency work regulation under its Arbeitnehmerüberlassungsgesetz and its Civil Code

Bürgerliches Gesetzbuch

The Bürgerliches Gesetzbuch is the civil code of Germany. In development since 1881, it became effective on January 1, 1900, and was considered a massive and groundbreaking project....

, esp §622, and the UK has strong Takeover Regulation, especially Rule 21 of the City Code). The significant difference between the proposed Directive and the Bill is that the former UK government managed to insert a 6 week qualification period in the Directive before the equal treatment rights click in (Art. 5(4)). The Bill has no proposed qualification period, though voices in the City have been calling for this to be one year. The latest reports suggest a 12 week qualifying period has been agreed between the private MP backers and the government, meaning a significant step back from the protection the Directive would offer. The Directive included equal treatment only for pay, hours, parental rights and anti-discrimination (Art. 3(1)(d)). A significant omission therefore was any regulation on reasonable notice before dismissal (in the UK, ERA

Employment Rights Act 1996

s.86).

Before the United Kingdom general election, 2005

United Kingdom general election, 2005

The United Kingdom general election of 2005 was held on Thursday, 5 May 2005 to elect 646 members to the British House of Commons. The Labour Party under Tony Blair won its third consecutive victory, but with a majority of 66, reduced from 160....

, the trade unions and the government made the so called Warwick Agreement

Warwick Agreement

The Warwick Agreement is the name of a document agreed in July 2004 to the 2005 General Election between many of Britain's main trade unions and the Labour Party, which helped form Labour's 2005 election manifesto....

(after its signing place, the University of Warwick

University of Warwick

The University of Warwick is a public research university located in Coventry, United Kingdom...

). This included a promise on the government's part to reverse its opposition to the European Directive. But by 2007, the government was yet to deliver, and Paul Farrelly MP introduced the Temporary and Agency Workers (Prevention of Less Favourable Treatment) Bill. It mirrored the Directive in all respects, save that there would be no 6 week qualifying period. In that period's climate, the Bill did not gain enough attention and was talked out of time. In the Court of Appeal case James v Greenwich LBC
James v Greenwich LBC
James v Greenwich London Borough Council [2008] is a UK labour law case, concerning implied contracts for workers who work through employment agencies...

which further entrenched the subordinate position of agency workers, Mummery LJ pronounced it "doomed to failure for lack of support from the Government". But no sooner as that had been said, almost exactly the same Bill was reintroduced by Andrew Miller MP, with a small title change to emphasise "Equal Treatment" rather than "Prevention of Less Favourable Treatment". Identical in every way, save a tighter definition of employment agency and more provision for regulatory enforcement, it won the support of almost the whole Labour bench in the House of Commons. It was being heard in Committee each Wednesday morning as from May 7. As of May 21, the government has signalled that it will allow something similar to the Bill, but not the Bill itself, to be passed. It will incorporate a 12 week waiting period before the right to equal pay and time off begins, or 6 weeks less protection than the original 2002 Directive.

External links

Proposed Agency Workers Directive
Agency Workers Directive
The EU Temporary and Agency Workers Directive is an EU Directive agreed in November 2008 which seeks to guarantee those working through employment agencies equal pay and conditions with employees in the same business who do the same work...

COD 2002/0149
- Temporary and Agency Workers (Equal Treatment) Bill 2007, a proposal which has currently (13/3/2008) passed its second reading. Here is the Bill in a pdf file The Bill was withdrawn at the committee stage and is now being succeeded by an implementation of the EU Directive based on an agreement reached between the CBI, TUC and government.

Directive 97/81/EC on Part time workers
- Implemented under Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
  Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
  The Part-time Workers Regulations 2000 is a UK labour law measure which requires that employers give people on part time contracts equal pay to people on full time contracts who do the same jobs. It implements EU Directive 97/81/EC, and forms part of the European Unions programme to combat...
  
  , SI 2000/1551

Directive 99/70/EC on Fixed term workers
- Implemented under Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
  Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
  Fixed Term Employees Regulations 2002 form a UK statutory instrument aimed to protect employees who have fixed term contracts...
  
  , SI 2002/2034
Powerpoint presentation on the state of the EU market from the European Confederation of Private Recruitment Agencies.

Directive 91/383/EEC of 25 June 1991 supplementing the measures to encourage improvements in the safety and health at work of workers with a fixed- duration employment relationship or a temporary employment relationship.
Agency Workers Regulations 2010, implementing the Directive in UK labour law

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Employment agency regulation

Common law

Securing equal pay and hours

Scope

Background

See also

External links