Working Conditions for Temporary Workers

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Stephen Hesford: I understood the Minister to say—I am sure that the Committee accepts this—that the directive does not concern pay. I am not sure what point the hon. Gentleman is making, because the directive relates to other working conditions that temporary workers may face.

Mr. Hammond: If the hon. Gentleman had done his homework and read his papers, he would know that that is one of the main problems with which the Government are having to wrestle. The directive includes pay. The Minister tells us that there is no legal base for the inclusion of pay, but having asserted that the Commission is proposing to act illegally, he pointedly refused to promise that, if the Commission introduces the directive, the Government will challenge it in the European Court on the basis of article 137 for a directive that includes pay.

The last time that a Minister insisted that the Commission had incorrectly interpreted European law, the Government maintained that position all the way to the steps of the European Court, where they then expensively settled with the Trades Union Congress, represented by one Ms Booth QC. Although I was promised it, I have not yet received information from the Minister's Department about how much that escapade cost the taxpayer. It is helpful of the hon. Member for Wirral, West (Stephen Hesford) to have reminded me; I shall write to the permanent secretary again.

The directive is an example of the European Commission at its worst. There is no evidence of a problem, and the reasons behind its proposed introduction are dogmatic rather than practical. Any such issues could be properly and adequately addressed by national legislation, as the Minister suggested in his contribution to the Scrutiny Committee. The Commission could not achieve a consensus or agreement between the social partners—there you are, Mr. O'Brien, I said it—so it is now imposing what is essentially the trades union position in the form of a directive.

The legal basis of the directive is shaky. Although Labour Members do not like it when I mention this, we would not be in this mess and having this discussion if the Government had not decided to adhere to the social chapter. They would have been able to make a unilateral decision about whether pay or other aspects should be included in UK legislation.

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The Government now have to deal with a problem without any real negotiating strength.

It is an ill-thought out proposal in intellectual terms. Why exclude the payment of temp-to-perm fees, but not the payment of fees to agencies placing permanent workers? As I understand the directive, member states would be required to remove any fee impediments to temporary workers moving into permanent work with the same employer. However, if that temporary worker asked an agency to place him in permanent work with another employer, the agency could charge that employer a fee. It is illogical.

Although the Government's submission to the Scrutiny Committee is couched in diplomatic language, their position is fairly robust. In summary it is as follows: first, it is not necessary for the EU to legislate at all; secondly, if it is, it is not clear that it needs to be done at European level; thirdly, it is not possible to introduce the directive on the legal base of article 137. If the Government are prepared to stand firm, to argue their corner and to use all avenues open to them, I can assure the Minister that he will have the Opposition's support. Unfortunately, I cannot speak for the minor parties. [Hon. Members: ''Where are they?''] Once again the Liberal Democrats are not participating in these discussions. Perhaps they do not think that the interests of British temporary workers, employers and agencies are significant.

The Government do not have a tremendous track record of standing firm in the face of the European Commission and other European partners. We have seen that on environmental directives. I had the pleasure of debating the waste directive with the Minister's colleague just a couple of weeks ago. The Government's initial position and instincts were entirely correct. They took a robust, commonsense view, which we would have been more than happy to support, but unfortunately they did not have any negotiating power. Increasingly the Government's manoeuvres at the Council of Ministers are simply long-term retreats from a sensible starting point to whatever they are forced to accept in the end.

What is the position of Labour Members of the European Parliament? Mr. Stephen Hughes is on record as saying that he wholeheartedly supports this directive. Has the Minister any assurances from other Labour MEPs that they will not wholeheartedly support the directive in the form that is currently being talked about, because it is clear that the Minister has reservations about it?

The Minister has recognised the benefits of temporary work, both for workers and for employers. It will not benefit agency workers to have their terms and pay varied from assignment to assignment. If the Government are not successful in robustly resisting the Commission in imposing this directive, I hope that they will try to negotiate maximum flexibility. First, there is the selection of the comparator, and much of the debate in the early conciliation stage was about that. Should it be a fellow agency worker or should it be a permanent employee in the workplace where the agency worker is placed? There are strong arguments for it being a fellow employee working for the agency that has made the

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placement, not least because I cannot conceive that it will enhance the flexibility of the work force and encourage people to use temporary work as a way of managing people's work-life preferences if, every time they receive an assignment, they find that the rate of pay and conditions under which they are working vary. It is self-evident that people doing temporary work from choice, as opposed to using it as a stepping stone to permanent work, would want to know that under successive assignments they would be employed on the same pay and under the same conditions, conferring a reasonably stable expectation. The only issue for them to consider would be whether they wanted to work that week or not.

I have spoken to many agency nurses and know that they do not work primarily for the higher pay—though agency nurses tend to earn more—but because they have greater control over when and where they work. They choose which department and which hospital they want to work in and they are not subject to posting at will by the employer—the fate of many permanently employed national health service nurses under permanent rotation systems within hospitals.

In the UK context, the directive is likely to be harmful. The Minister has recognised that, and I acknowledge that he is focused on the issues that need attention. I want to press him on derogation for collective agreements. As he said, it is unlikely to have any practical effect in the UK, but it is a fairly common derogation in EU employment-related directives. It has the simple effect of removing from the argument the weight of member states where collective agreements are the norm, particularly Germany. It therefore removes the German Government from our potential list of allies in doing battle within the Community on this issue. Has the Minister reflected on whether the UK should, as a matter of routine, oppose the collective agreement derogation, which puts us in a different position from several other major EU member states? We often have to fight battles on our own that we could otherwise fight with allies.

National collective agreements are still the prevalent form of bargaining in Germany, but 4 million people unemployed is still the prevalent level of unemployment there and no one in this country would want us to move closer to the German system to escape via derogation for collective agreements at that price.

The regulatory impact assessment was thin when it came to identifying benefits from the proposed directive. One claim was that the Exchequer would benefit from the higher tax that agency workers would pay on their higher wages. If that is the best that the Government can provide as a perceived advantage, that is pretty thin gruel.

The trades unions have welcomed the Commission's draft proposal and they are hostile to most types of atypical work for the obvious self-interest that atypical workers are difficult to unionise. If I were running a trade union, I would be hostile to

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such workers. Employers' organisations and organisations representing employment agencies have been deeply and universally hostile to the measure.

In summary, it is not clear that there is a problem or a case in equity. In some labour markets, workers desire flexibility and it is not obvious that they should be given equal pay for undertaking a more desirable form of employment that they have chosen to undertake. Even if a problem is acknowledged, it is not clear that it should be addressed at European level. If it is to be addressed at European level, it is not clear that there is a legal base as long as pay is included. It is clear, however, that there would be serious problems in relation to non-pay aspects. The abolition of the temp-to-perm fee will cause chaos in the UK employment agency market. The requirement for the training of temporary workers is likely to create problems because it is not clear that employers hiring people on short-term assignments will be willing to undertake training. If temp-to-perm fees are abolished, it is not clear that agencies will be able to continue to train workers.

It would be preferable to forget the whole thing. If the Government had not signed up to the social chapter, they would have the option of saying about the proposal, ''We think that this is a bad idea and we are not going to do it. We will have some domestic legislation to address any issues that need to be tackled.'' The European Union tends to work as a ratchet, and once something like this proposal has been fed into the system, the bureaucratic machinery of Brussels ensures that it is unlikely to go away.

I urge the Minister to tell the Committee that he will advance the subsidiarity argument in the strongest possible terms and make the case for there being no adequate legal base for the inclusion of pay. If he is ultimately unsuccessful in those endeavours, he should argue for maximum flexibility in the directive, which must include a minimum threshold of 18 months for application of its terms, and national discretion in the choice of comparator, to avoid fluctuating rates of pay for individual agency workers as they move between assignments. The complexities of the UK agency market must be recognised. There must be substantial national flexibility on the temp-to-perm fee to avoid the disaster that would arise for employment agencies and workers seeking temporary work if large numbers of employment agencies were to become non-viable as a result of the directive. I hope that the Minister will address those specific matters in his concluding remarks.

11.27 am

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