EMPLOYMENT: TEMPORARY AGENCY WORKERS (7430/02;
Letter from the Chairman to Mr Alan Johnson
MP Minister of State for Employment Relations and the Regions
Department of Trade & Industry to the Chairman
Thank you for your Explanatory Memorandum regarding
the Directive on temporary agency workers and the detailed Regulatory
Impact Assessment (RIA) which accompanied it. Sub-Committee F
(Social Affairs, Education and Home Affairs) found it helpful
when it examined the proposal at its meeting on 19 June.
In the Committee's view, it is in principle
highly desirable that temporary workers should be treated equally
with their permanent colleagues, regardless of the nature of the
employment relationship. The Directive is a welcome extension
to temporary workers of the principle of non-discrimination and,
as demonstrated by the impact assessment of both the Government
and the Commission, could be beneficial to both workers and user
We note that there is no clear evidence from
your RIA that the Directive would result in disproportionate costs
for enterprises. Nevertheless the Explanatory Memorandum refers
to a "complex equal treatment requirement". There is
no explanation of why the provisions of the Directive, which seem
mostly straightforward, are regarded as "complex" and
for whom. We would be grateful for clarification of this point.
The Government also calls for additional flexibility despite the
already extensive derogations to the Directive. Bearing in mind
that the scope of the Directive is already considerably limited,
we would welcome your comments on what such flexibility could
An issue of major legal and political importance
is the inclusion within the scope of the Directive of non-discrimination
regarding pay. The Committee acknowledges the legal difficulties
of extending EC competence under Article 137 TEC to include pay;
and it recognises that equal pay could have an important effect
on the employment of temporary workers if as a result of agency
fees it made them significantly more expensive to employ than
permanent staff. However, the Committee believes that its exclusion
would significantly weaken the protection provided by the Directive.
We would be grateful if you could inform the Committee of the
progress of negotiations in this matter. If pay is not specifically
included in the Directive, would the Government consider its inclusion
in national implementing legislation? You mention in your EM the
precedent of the fixed term and part time Directives. Has pay
been covered in their implementation in the UK?
The Committee would also be grateful for clarification
of two points of detail in Directive. First, it is not clear what
constitutes an "objective reason" justifying difference
in treatment (Article 5(1)) and which authority is responsible
for assessing whether one exists. There is a danger of interpreting
the provision broadly in order to narrow the scope of the Directive.
Secondly it is also unclear what is meant by clauses "preventing
the conclusion of a contract of employment" between the user
undertaking and the temporary worker (which should be declared
null and voidArticle 6(2)). It would be helpful if some
examples were givenwould this include for instance the
prohibition of "temp-to-perm" fees?
20 June 2002
Letter from Alan Johnson
Thank you for your letter of 20 June 2002 concerning
the draft Directive on the working conditions of temporary agency
workers, in which you asked for clarification of some of the points
in the Explanatory Memorandum and Regulatory Impact Assessment
(RIA) on the proposal.
The Government wishes to ensure high rates of
labour market participation by a diverse range of people. Temporary
agency work helps individuals participate in the labour market
and benefits user enterprises by providing flexible labour solutions
that can help increase productivity and foster high-performance
workplaces. I am concerned that the imposition of an equal treatment
requirement could discourage user companies from employing temporary
agency workers, in which case the directive would have the opposite
effect of that intended. I accept that the RIA does not demonstrate
that there shall definitely be negative effects, but neither does
it conclude that there will be positive effects. It is also worth
bearing in mind that the Commission failed to demonstrate in its
regulatory impact assessment that this would be the case either.
The better regulation taskforce has stated that
greater emphasis should be placed on alternative approaches to
blanket regulation. We shall be considering whether an alternative
approach could provide for the protection of temporary agency
workers while making sure that this is achieved in a way that
is compatible with UK practice.
I am not convinced that temporary agency workers
should always receive equal treatment after 6 weeks. Agency workers
should be protected and that is why they are specifically included
in the Working Time and National Minimum Wage Regulations. It
would seem appropriate that temporary agency workers are entitled
to be treated the same as comparable permanent workers at a point
when they more likely to be undertaking the work of a permanent
worker, for example after a period of 12 months, as is the case
It is true that on paper applying the equal
treatment principle appears straightforward, however due to the
triangular employment relationship we are concerned that it could
pose real practical difficulties. This type of comparison is unprecedented
in UK law, as it would provide for a comparison of workers whose
pay and conditions could not be attributed to the same source.
Where the non-discrimination principle exists in other member
states, employers appear to ensure that agency workers receive
equal treatment by comparing their agency workers' conditions
against those set out for a hypothetical worker in the sector's
collective agreement. The UK however, does not have extensive
collective bargaining agreements, so we believe it would not be
easy for agencies to obtain details of the employment terms its
clients' workers have and apply them to their own workers. The
comparison could be complicated further as individual workers'
terms and conditions may be confidential and some workers may
not want their employment particulars disclosed to outside parties.
We are consulting on the proposal and will be looking carefully
at practitioners' comments on the comparison.
When the Part-Time and Fixed Term Work Directives
were implemented, we decided for domestic policy reasons to cover
pay by way of primary legislation, although the UK view was that
the directives could not extend to pay, because of the wording
of Article 137(6). The part-time directive was implemented under
the power in section 19 of the Employment Rights Act. The Employment
Bill currently before Parliament contains a similar power in respect
of fixed term work. We shall keep you informed on the progress
of our discussions with the Commission over pay.
In your letter you queried the use of the term
"objective reason" justifying different treatment in
Article 5(1) of the proposal. The text does not give examples
of what might constitute objective justification for giving a
temporary agency worker less favourable treatment than a comparable
permanent worker, though we believe that it is most likely that
this term means the same as it does in other pieces of Community
legislation. It would provide for less favourable treatment to
be objectively justified if that treatment was in order to achieve
a legitimate aim, it was necessary to achieve that aim and it
was an appropriate way to achieve it. Both the Part-Time and Fixed
Term Directives contain similar wording and make specific provision
for less favourable treatment where objectively justified.
We are still examining what the likely effect
of Article 6(2) would be on UK practice. However, we believe that
the intention of the provision is to limit situations where it
is possible for agencies to charge "temp to perm" fees.
We shall seek clarification in negotiations on how this particular
part of the proposal will work, as currently it is possible for
agencies to charge user enterprises "temp to perm" fees.
We are currently modernising the legislation governing employment
agencies and employment businesses, in order to restrict the use
of these fees.
8 July 2002
Letter from the Chairman to Mr Alan Johnson
Thank you for your letter of 8 July, which Sub-Committee
F (Social Affairs, Education and Home Affairs) considered at its
meeting on 24 July.
The Committee was grateful for the additional
information that you provided. It accepts that it is important
that measures to safeguard temporary workers should not have the
opposite effect of that intended by discouraging companies from
employing them. It is, I think, common ground that the regulatory
impact assessment is inconclusive on this point.
The Committee also accepts that there is room
for argument about the period after which temporary agency workers
should receive equal treatment. Six weeks may be too short a period,
but the Committee is clear that twelve months, which you say is
the practice in Germany, is far too long, and it would undermine
the purpose of the Directive.
You suggest that it would be particularly difficult
for the UK to establish the comparison required by the Directive
because of its lack of extensive collective bargaining agreements
and the confidentiality of workers' terms and conditions. The
Committee finds it difficult to believe that the UK is unique
in these respects. If the principle of equal treatment was agreed,
it would not be acceptable for it to be frustrated by an inability
to overcome the practical difficulties of establishing appropriate
comparisons. The Committee looks forward to receiving the results
of the Department's consultation on this point.
The Committee was pleased to note that the Employment
Bill contains provisions covering pay in respect of fixed-term
work and is grateful for your undertaking to keep informed of
Needless to say, in view of the importance of
this proposal, the Committee would like to be kept informed promptly
of further developments, and will keep the document under scrutiny
in the meantime.
25 July 2002
Letter from the Chairman to Alan Johnson
Thank you for your Explanatory Memorandum regarding
this proposal, and the accompanying documents (summary of the
Consultation responses and the detailed Regulatory Impact Assessment
(RIA)). They were most helpful to Sub-Committee F (Social Affairs,
Education and Home Affairs) in examination of the proposal on
12 February, when the Sub-Committee also considered a submission
from the Engineering Employers' Federation.
The Government continue to have concerns that
the Directive risks decreasing the attractiveness of agency workers
to user companies, which might reduce the number of jobs available.
We note, however that, like the earlier version, the updated RIA
is inconclusive on the effects of the Directive on labour markets,
and we remain of the view that in principle the draft provides
a sound basis for establishing equal treatment for temporary workers.
The text itself has been improved, both on the
method of comparison and the scope of the derogations. However,
you say that you would like to clarify how new Article 5 would
work in practice. What exactly are your concerns?
Also on Article 5, we note that, despite divisions
between Member States, the period after which temporary agency
workers should receive equal treatment remains 6 weeksdoes
this mean that a measure of consensus has been reached on this
As regards the legal base, we understand that
the "appropriateness" of Article 137(6) TEC to cover
pay for the purposes of the Directive has also been endorsed by
the Council Legal Service. We would be grateful if you could provide
us with a copy of the CLS Opinion.
The Committee decided to retain document 15098/02
COM (02)701 under scrutiny. Document 7430/02 COM (02) 149 has
14 February 2003
Letter from Alan Johnson MP, Minister
of State for Employment Relations, Industry & the Regions,
to the Chairman
Thank you for your letter of 14 February 2003
about the amended EU proposal for a Directive on temporary agency
You asked about our concerns on Article 5 of
the directive. The proposal now requires the comparison to be
made by reference to what would have been given to a directly
recruited worker, according collective agreements, pay scales,
other general company provisions or, in the absence of this, legislation
(for example, the national minimum wage). We are seeking greater
clarity on what would happen if for example a directly recruited
worker could enter the pay scale at various points depending on
a negotiation with the employer.
On Article 5, you also ask whether there is
a consensus in the Council of Ministers working group as to the
length of the derogation period. There is no consensus in the
Council on the Commission's proposal for a derogation in article
5.4 for assignments lasting less than six weeks. Some member states
oppose it, others want to extend it.
We are unable to provide Sub-Committee F with
a copy of the Council Legal Service (CLS) opinion on pay. We are
advised that CLS opinions fall within the provisions of the Access
to Documents Regulation protecting confidentiality of legal advice.