Select Committee on European Scrutiny Twenty-Eighth Report



The European Scrutiny Committee has agreed to the following Report:—








Draft Directive on working conditions for temporary workers.

Legal base:

Article 137(2)EC; co-decision; qualified majority voting


Document originated:

20 March 2002

Deposited in Parliament:

11 April 2002


Trade and Industry

Basis of consideration:

EM of 29 April 2002

Previous Committee Report:


To be discussed in Council:

Date not set

Committee's assessment:

Legally and politically important

Committee's decision:

For debate in European Standing Committee C




  1.1  As long ago as 1990, the Commission proposed three Directives on "a-typical" employment to cover part-time work, fixed-term contracts and temporary work. The first two of these were adopted in 1997[1] and 1999[2] respectively on the basis of Framework Agreements negotiated by the European social partners.

  1.2  In May 2001, negotiations on temporary work between the European social partners broke down. As a result, the Commission has now brought forward the current proposal — the first time it has been called upon to make a proposal on an interprofessional issue, owing to the failure of social partner negotiations.

The document

  1.3  In its explanatory memorandum, the Commission reports that, although the social partners could not agree on the concept of the "comparable worker" (the workers' representatives asserting that the comparison should be with a worker in the user company, while the employers held that it should be with a worker in the same temporary work agency), they reached a consensus on a many other points, on which the current proposal has been able to build.

  1.4  The proposal applies to workers employed by temporary work agencies and placed in client companies to work under the supervision of those client companies. It aims to ensure that an agency worker assigned to work under the control of a client company would not be given less favourable basic working and employment conditions than a similar permanent worker in that client company, unless this could be objectively justified. The proposal contains three limited derogations from this principle:

where temporary agency workers have a permanent contract of employment with the agency and therefore continue to be paid when they are between postings;

where temporary agency workers are already covered by collective agreements (either at the agency or at the user company) which provide an adequate level of protection;

 where the agency expects the worker's posting at the user company to be less than six weeks in duration.

  1.5  The draft Directive covers pay, as well as other basic working and employment conditions relating to the duration of working time, rest periods, night work, paid holidays and public holidays; work done by pregnant women and nursing mothers, children and young people; and action taken to combat discrimination on the grounds of sex, race or ethnic origin, religion or beliefs, disabilities, age or sexual orientation. It requires Member States to take action to ensure the ending of practices that prevent agency workers from taking up permanent positions in the user company, and to improve access to training both in the temporary agencies and in the user companies.

The Government's view

  1.6  The Minister for Employment Relations and the Regions (Mr Alan Johnson) comments on several aspects of the proposal.

  1.7  With regard to subsidiarity, he tells us that the Commission considers that extending the equal treatment principle to agency workers at EU level would harmonise the position for agency workers posted at a national level as well as those posted transnationally. He continues:

"The Government intends to examine this case further and seek certain clarifications from the Commission. In particular, it is not clear that the objectives in question cannot be sufficiently achieved by Member States' action. Directive 96/71 concerning the posting of workers covers transnational posting of temporary agency workers. Temporary work agencies that wish to post their workers to client companies established in other Member States must give them the minimum statutory employment rights in force in the host country."

  1.8  He also tells us that there is an issue as to whether the proposed legal base allows the draft Directive to cover pay, saying:

"The proposal applies an equal treatment principle to certain 'basic working conditions'..., including 'pay'. However, Article 137(6) provides that, 'the provisions of this article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs'. In the light of this, the Government took the view when agreeing to directives 97/81/EC and 99/70/EC on part-time work and fixed term work respectively, that these directives, which also have article 137 as a legal base, could not cover pay. This view was recorded in the council minutes when both directives were agreed. Unlike the proposal on agency workers, the fixed term and part time directives do not specifically state which employment conditions they apply to and do not mention pay. On the face of it, it seems difficult to reconcile the specific inclusion of pay in the directive with the provision in Article 137(6)."

  1.9  With regard to policy implications, the Minister comments:

"The Government believes that temporary agency workers deserve adequate protections, which is why the national minimum wage and working time legislation make specific provisions to cover them. Agency work can provide a useful way in to the labour market, particularly permanent jobs, for workers. It can increase labour market flexibility in ways which benefit both business and workers. It can also offer workers who want to control or vary their patterns of work greater choice than permanent work. The Commission claims that the proposal would make temporary agency work more attractive to those looking for work and increase its status. However, there is a risk that the proposal could decrease the attractiveness of agency workers to user companies, which might reduce the number of jobs available. The Commission assessment does not adequately address whether introducing a complex equal treatment requirement could discourage employers from making use of temporary agency workers and what the impact of this may be on employment levels.

"Nine Member States already apply an equal treatment requirement as between agency workers and similar workers in the client company[3]. In these Member States, wage levels and other employment conditions covering entire sectors are often fixed by collective agreements. It is therefore easy for an agency to be aware of the employment terms its clients' workers have and apply them to their own workers. In the UK, collective bargaining is more likely to take place at workplace level and is not universal. It would therefore be difficult for agencies to find out what terms their clients gave workers and therefore to comply with the regulations — this could impose significant administrative burdens. Agency workers could also find their employment terms and conditions changed significantly between assignments. The derogations from this equal treatment principle — for agency workers on assignments that can be accomplished in six weeks or less, agency workers employed on permanent contracts or where a collective agreement allows — would not always be applicable in the UK context. In particular, the derogation for collective agreements could only be used if more agency workers wished to join trades unions. Additional flexibility in the directive would be necessary to make it more compatible with the situation in the UK."

  1.10  The Minister tells us that implementing legislation would be required to provide for equal treatment for agency workers and permanent workers as laid down in the draft Directive.

  1.11  The Minister provides us with a detailed Regulatory Impact Assessment (RIA). It estimates that about 700,000 people are working as temporary agency workers in the UK at any particular time, with the transport and health sectors containing a relatively high percentage of agency workers. The data suggests that agency workers tend to be in relatively low-skilled occupations, where the expectation might be that they would not earn that much less than permanent employees. (However, there is also anecdotal evidence that some agency workers, including nurses and teachers, already earn more than their comparators.)

  1.12  The RIA explores a number of non-quantifiable issues. It also summarises the policy costs and benefits. Broadly speaking, for agency workers there could be benefits in terms of increased wages and training. For user companies, benefits could include increased productivity of agency workers, improved vacancy filling and savings on "temp-to-perm" fees[4], but these need to be weighed against the costs of training, and the higher fees agencies are likely to charge. For agencies, improved vacancy filling would not outweigh increased wage and training costs and reduced revenue on "temp-to-perm fees". The taxpayer would benefit from the higher tax income resulting from higher agency employee pay.

  1.13  The RIA does not come to any overall conclusions. It reports that it cannot predict the overall effect on the labour market for agency workers, and emphasises that a number of its assessments are provisional. It reports that, while no formal consultation has been held, the Trade Unions have welcomed the proposal but organisations representing user companies and employment agencies have expressed serious concerns about it.


  1.14  We thank the Minister for his Explanatory Memorandum and Regulatory Impact Assessment. While we recognise that the proposal is in the early stages of its legislative progress, it has already been the subject of substantial, if unsuccessful, negotiation, and is clearly a controversial measure, the costs and benefits of which are difficult to assess objectively.

  1.15  We therefore recommend the document for debate in European Standing Committee C. In our view, the debate could usefully consider:

 the impact of the proposal on employment levels;

The implications of the Government's position that the draft Directive cannot cover pay;

the "additional flexibility" sought by the Government;

the costs and benefits of the proposal to temporary workers, employment agencies and user companies.


1  Council Directive 97/81/EC of 15 December 1997. Back

2  Council Directive 1999/70/EC of 28 June 1999. Back

3  The exceptions are Denmark, Sweden, Finland, Germany, Ireland and the UK. Back

4  Transfer fees payable in the event of a user company taking on a temp previously supplied after the contract for hire has ceased. Back

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