RMT response: Implementation of the Agency Workers Directive

The National Union of Rail Maritime and Transport Workers (RMT) welcomes the opportunity to contribute to the Government’s consultation into the implementation of the Agency Workers Directive. The RMT is Britain’s largest specialist transport union representing around 80,000 members in the UK.

Natural justice demands that individuals performing the same work with the same responsibilities should be paid the same wages and benefit from the same employment terms and conditions and this is why the legislation for equal treatment for agency workers is so essential. The Government’s proposals to increase protections for agency workers are an important step in this direction and are broadly welcomed. However it remains a cause of real concern that agency workers must wait twelve weeks before qualifying for equal treatment and the exclusion of agency workers from a number of key protections is perverse; going against the Government’s logic of ‘equal treatment’. Agency workers will effectively still be left as a lower grade of workers.

On the basis that the intention of this legislation is to provide vital protections for agency workers, it is imperative that the regulations be drafted to ensure the broadest possible applications for agency workers. The Government must resist attempts by the business community to undermine the concept of equal treatment for all workers. This legislation should be introduced without delay.

The need for legislation
It is estimated that there are 1.3m agency workers on temporary assignments in the UK. The huge scale of unfair treatment and injustice suffered by agency workers is well known. It has been comprehensively documented in the TUC Commission on Vulnerable Employment’s report Hard Work, Hidden Lives, by the Department for Business, Innovation and Skill’s own Vulnerable Workers Enforcement Forum and others. The RMT has first- hand knowledge of the widespread abuses and problems of agency workers on the railways and in the maritime sector.

The TUC has reported that 62% of Citizens Advice Bureaux and 81% of law centres see agency workers with work-related problems frequently or very frequently. The 2009 TUC’s YouGov survey of agency workers found high levels of workplace dissatisfaction; 28% of workers had changed employment agency because they did not feel they had been getting a good deal. Those in lower-paid jobs expressed greater dissatisfaction with employment agencies.

Under these circumstances, the Government is right to act to improve protections for agency workers in the form of equal treatment and it has also injected money into a new publicity campaign to advise agency workers of their rights.

However, concerns must be expressed that the Government has again attempted to marry a discredited belief in labour market ‘flexibility’ (read ‘limited rights’) with increased protection for agency workers.

Why companies like to employ agency staff
The use of agency staff has been attractive for companies because they are cheaper than directly employed workers; legally they can be paid lower rates of pay and other forms of remuneration. Employers’ liabilities in terms of workplace training and health and safety obligations are also affected. It is important to counter the Government’s assertion that for some workers agency work is a positive choice. The reality is that for the overwhelming majority, it is no choice at all and these workers have no other options but to enrol in an agency to obtain work.

The RMT has collated evidence of the abuses of agency workers on the railways. For instance, by last summer East Midland Trains had increased agency work to the extent that at some home stations, it comprised up to 50% of onboard train staff. This included one individual who had worked for the Company for two years, yet was employed through an agency all this time. Therefore, use of agency workers in this instance was not a reaction to short-term business contingencies or emergency cover. Examining the rates of pay, the attraction for the Company is obvious; agency workers at East Midlands Trains in this grade earned £5.70 per hour compared to the £8.40 per hour earned by directly employed staff and they are only paid for hours worked, rather than receive a fixed salary. This discrimination against agency workers in terms of rates of pay is supported by the findings of the 2009 TUC/YouGov Survey of agency workers.

Implementation in the maritime industry
The RMT makes special mention of the legislation in regard to its application in the maritime sector. The Agency Workers Directive does not exclude seafarers and the RMT would make the strongest representation to Government that in the forthcoming domestic legislation, shipping companies should be prevented from escaping their obligations to agency workers after the 12 week qualifying period by employing non-EU nationals, flagging the ship outside the EU and moves to offshore contracts.

Again, we reiterate that if the concept of equal treatment has been accepted in bringing this legislation forward, equal treatment for agency workers must be properly enforced in the maritime sector too and effective protections must be in force to combat the actions described above.

As with the coverage of other key employment legislation for seafarers, the RMT campaigns for the widest possible application and believes that EU legislation should apply to seafarers regardless of their nationalities, aboard seagoing ships which are registered in the territory of any Member State, or are regularly trading between two EU ports and are ordinarily engaged in commercial maritime operations.

Scope of agency worker rights; definitions of ‘agency’ and ‘worker’
The new agency workers rights must be broadly defined to prevent unscrupulous agencies and employers avoiding their obligations and continuing to discriminate against agency workers. For instance, the existing statutory definition of an ‘employment business’ used in the Employment Agencies Act 1973 should be strengthened to reflect the requirements of EU law and to remove any potential legal loopholes.

With regard to the proposed definition of an ‘agency worker’ for the purposes of this legislation, there are weaknesses with the definition of ‘worker’ as used in the Employment Rights Act 1996 and the Working Time Regulations 1998. Employers have also been able to avoid their obligations by devising bogus self-employment arrangements which fall outside the definition and deprive workers of their employment rights. These low-paid workers are not genuine entrepreneurs and they have none of the autonomy of genuine self-employment. The alarming trend of pushing workers into false self-employment is something that RMT members have witnessed first-hand in the road transport sector. The Government should instead use the existing definition of agency workers contained in the Sex Discrimination Act (section 9).

The definition of an agency worker should be primarily based on the existence of a triangular relationship between the agency, the agency worker and the contract employer, as opposed to the nature of the contract or employment relationship which exists between the agency worker and the agency.

No exemptions should be permitted for umbrella companies, limited company contractors, personal service companies or managed service companies. Neither should exemptions be provided for Government training or vocational schemes. Such an exemption would contradict the Government’s approach of ensuring that Government training schemes offer good quality training and career options for individuals.

Equal treatment for agency workers

Pay should be defined broadly in the legislation for the purposes of equal treatment so as to include all forms of remuneration: basic pay, bonuses, including performance related pay, overtime, unsocial hours’ payments, holiday pay, redundancy pay and maternity, paternity and adoption pay.

The RMT was extremely disappointed that occupational pensions and occupational sick pay were excluded from the agreement between the Government, the CBI and the TUC. As far as this Union is concerned, if the concept of equal treatment is accepted with bringing forward this legislation, both pensions and sick pay should be included automatically. Agency workers must not be afforded second-class status in these areas.

It is only fair that once an agency employee fulfils the 12 weeks qualifying period, they should be entitled to backdated equal treatment on pay as well as hours and holidays from day one of the assignment with the employer (see below). Backdating entitlement to day one once a qualifying period of two years has been served is the current practice with the regulations on statutory redundancy payment rights for all workers.

In light of the Pensions Act 2008, we are not aware of any specific areas of concern regarding Agency Workers, however, on a point of principle we believe that all workers should have access to occupational pension schemes so as to provide an adequate income in retirement. The very nature of agency working results in numerous short term periods of employment without access to favourable conditions and benefits enjoyed by full time employees or indeed, employment protection. This is unacceptable and inclusion of Agency Workers within the Pensions Act 2008 is a welcome provision.

Employers should not be permitted to avoid pension contributions for any employees, including Agency Workers.

Holiday entitlements
The consultation document acknowledges that under the Directive agency workers are entitled to no less favourable treatment on all aspects of holiday entitlements than directly employed staff. This means they are entitled to equal treatment on statutory holiday rights and also to equal treatment on more generous holiday entitlements provided for in a particular workplace.

The RMT believes in day 1 rights at work and therefore under the concept of equal treatment they should receive the equal amount of leave to colleagues in the undertaking with the same role and responsibilities. However, since the 12-week qualifying period is the final position about which there will be no further negotiation, the RMT restricts its comments to the Government’s proposals.

The Government’s suggestion that agency workers may receive any additional leave entitlement above the statutory minimum as a one-off payment at the end of the assignment or as part of the hourly or daily pay rate is wholly unacceptable and contradicts the concept of equal treatment. Holidays are a health and safety issue and agency workers, like directly employed workers, should be able to take their leave as their due rest and recuperation time. The primary concern of the Government in the application of equal treatment for holiday entitlement should not be about simplifying administration for employers.

As the TUC has stated, the Government’s proposal is reminiscent of the practice of rolled-up holiday pay, already rejected by the courts; albeit the judgement only applied to statutory holiday pay. Neither is it consistent with the Temporary Agency Worker Directive which provides agency workers the right to equal treatment on both holiday pay and the right to take holiday.

Due to the short term and indeterminate length of some assignments, it may be more difficult for agency workers to benefit in practice from the same holiday entitlements as directly employed staff. However, legislation, supported by statutory guidance, must protect agency workers’ rights to equal treatment.

Agency workers are often reluctant to request or to take significant periods of leave for fear that if they turn down the offer of work from an agency they will not be offered future assignments. It should be unlawful for an agency worker to suffer detriment on the grounds that they have requested or taken holiday leave. If they do suffer detriment, Employment Tribunals should be able to make compensation awards at such a level which dissuades employers from future breaches.

There should be an obligation on agencies and employers to keep a record of the amount of holiday leave taken by an agency worker each year to ensure that they both receive and can take their statutory and earned leave.

Equal treatment on working time
The Government consultation fails to mention that the Directive provides for the right for agency workers not to be treated less favourably over the allocation of shift patterns. The Directive also provides for equal treatment for agency workers in relation to access to overtime and the requirement to work or to take leave on public holidays. This must be clearly stated in the legislation. The Government must also act to strengthen the enforcement of working time rights.

Anti-avoidance measures

Defining the 12-week qualifying period
The RMT disagrees with the need for a qualifying period of 12 weeks, believing instead in the principle of day 1 rights at work. The CBI has said that half of agency placements are less than 12 weeks in duration and the Government proposal would obviously permit discrimination against agency workers prior to the completion of 12 weeks employment. The worst employers could utilise short-term contracts of 3 months minus 1 day, thus dismissing people on the day before they would receive enhanced employment protection.

By contrast, ‘day 1’ rights at work would guarantee important rights for everyone in the workplace, ending the exploitation of agency workers and diminishing the attraction for disreputable employers of using agency workers to undermine the wages, conditions and security of directly employed, permanent labour. We also note that equal treatment after 6 weeks (including pensions and sick pay) was proposed in the EU Directive on Agency Workers.

Nevertheless, now that the Government intends to legislate for a 12 week qualifying period, effective anti-avoidance measures protecting agency workers are essential. The qualifying period needs to be tightly defined so that employers could not get round the law simply by hiring temps on a series of short-term contracts. Unease at administrative burdens on business should not be the main concern here; this legislation is meant to protect agency workers and the truth is, an employer should not be regularly utilising using agency workers for long periods of 12 weeks or more, rather these individuals should be directly employed. There are also real business benefits to companies of direct employment instead of a heavy reliance on agency labour.

12 weeks ought to be defined as 12 calendar weeks, regardless of the number of hours or days worked during that period, i.e. any work in any week counts as that week’s work. If the approach was taken of the 12 week period being comprised by adding together the amount of hours worked by an agency worker in any given week, many workers, particularly part time workers would lose out on equal treatment rights. This would disproportionally discriminate against female workers.

The Government has suggested two possible approaches to anti-avoidance measures. The first uses a reference period during which any assignments carried out by agency worker would count towards the qualifying period. The second involves a minimum break between assignments after which the 12 week qualifying period would recommence.

The trade unions support a reference period rather than a minimum break on the basis that more agency workers are likely to be covered, which is of course an aim of the legislation. In order to be properly effective, the reference period should not be shorter than 2 years in length. If the Government insists on proceeding with the minimum break approach, the break too, should not be shorter than 2 years in length.

Change of responsibilities during an assignment
When calculating the minimum break or the relevant reference period, any work done by an agency worker in any assignment for the user undertaking or group of undertakings in any location must be taken into account and not only work done in a particular assignment or type of assignment. The Regulations should include a broad definition of user undertakings.

It should be unlawful for an agency worker to be dismissed or removed from an assignment where the reason for the dismissal or reassignment is to avoid equal treatment rights. In such cases, compensation awards should be set at a level which penalises an employer and acts as a deterrent to further breaches of the law.

Use of permanent contracts
The RMT does not support the use of a derogation from equal pay where an agency worker is employed on a permanent contract of employment and is paid between assignments.

Role of collective bargaining
There is no scope for the use of workplace agreements in the implementation of this legislation. Of course, following implementation, trade unions have every right to negotiate voluntary collective agreements which provide more favourable terms and conditions than those contained in the Directive.

Pregnant workers and new mothers
The extension of these provisions is appropriate and necessary to ensure the health, safety and wellbeing of pregnant or new mothers. The protection of the health and safety of new or expectant mothers should not be predicated on what their employment status is but what is appropriate and necessary to protect them from harmful risks.

The offer of suitable alternative work to remove any risk to the health and safety of a woman who is pregnant, a new mother or breastfeeding must be on the same basis as Section 67 of the Employment Rights Act 1996.

It would be wrong for the proposed protections only to be triggered by being in a given job for 12 weeks. On this basis, it would be possible for a woman to have a series of jobs throughout her pregnancy and never have the benefit of these important health and safety measures. To ensure the health and safety of this particular group, it is essential that all the provisions of the Pregnant Workers’ Directive must apply from day one of each placement. This is especially so as there is a striking omission in the consultation document to extend the right of statutory maternity leave to all agency workers. Nor is there a proposal to extend the protection of Compulsory Maternity Leave to agency workers.

RMT supports the contention made by the TUC in their submission that in order to prevent avoidance measures by hirers and agencies, the protections afforded by the Pregnant Workers’ Directive and Sex Discrimination Act should apply to agency workers from day one.

Access to employment, collective facilities and training
The RMT agrees with the Government’s proposals regarding making agency workers aware of job vacancies and proposals relating to the redeployment of staff. Employers should be required to notify agency workers of employment opportunities. Agency workers should be given access to and encouraged to use any existing systems of communicating job vacancies, including noticeboards and employer websites. Employers should also consider notifying agency workers of vacancies where they are working off-site.

The RMT agrees with the proposal that in redundancy situations employers should be able to redeploy directly employed staff into vacant posts before offering such posts to agency workers.

It is only fair that agency workers be granted equal access to workplace facilities such as workplace canteens, transport loans and childcare etc. and the regulations should specify that employers should not be able to use the defence of financial constraints for refusing agency workers access to these, but must instead demonstrate that it was objectively justified not to provide such services.

The Government has acknowledged that agency workers frequently miss out on a key benefit of permanent employment, namely in-work training. It should consider providing agency workers with a right to equal access to in-house training programmes.

Representing agency workers
Agency workers should be provided with statutory rights to representation within the agency, whatever its size. The legislation should provide for this representation on collective redundancies, TUPE transfers, pensions and information and consultation rights amongst other issues.

Where unions are recognised, employers should be required to provide union representatives with full information about the use and terms and conditions of agency workers in any workplace.

Delivering equal treatment
In determining whether they have received equal treatment, agency workers should be able to draw comparisons with a comparable directly employed worker doing broadly similar work, in the same workplace or in other locations which are owned by the same employer. To allow for this, there should be a duty on employers to disclose pay rates and bonus structures etc. of permanent staff prior to the assignment of an agency worker, so that agency workers should also be able to refer to existing pay scales, relevant collective agreements and the terms and conditions of other workers employed directly by the user employer in different locations or workplaces, and market conditions.

If agency workers suspect that they have been the victim of unequal treatment, they should have a statutory right to ask for a written statement relating to that from both the agency and from the user employer. The statement should be admissible as evidence at an employment tribunal. The Regulations should make clear that an employment tribunal can draw an inference of non-equal treatment where a user employer fails to respond.

Who is liable and dispute resolution
In legislating to protect agency workers, it is essential that there should be a strong and effective enforcement mechanism through the Employment Tribunal system. The RMT joins with the TUC in recommending that agencies and user employers should be jointly liable for breaches of agency workers rights.

Compensation levels for breaches of equal treatment rights for agency workers should be set at a level which deters future breaches by agencies and user employers and does not simply compensate agency workers for any loss incurred.

Prior to the start of each assignment, agency workers should be provided with details relating to all entitlements covered by this legislation and confirming that they will receive their full entitlement to equal treatment while on assignment. From the beginning of any assignment, agency workers should be notified of all relevant workplace facilities within a user undertaking and where and when they will be entitled to use them. Agency workers must also be advised in writing of any changes in their terms and conditions which may take effect once they have met the 12 week qualifying period, including accrued holiday or pay rights.

Delivering fairness for agency workers in the UK

Trade unions will continue to press for the extension of licensing arrangements to all agencies.

August 2009