Address by Minister Kelleher in the debate on the Private Members’ motion on Agency Workers, Dáil Éireann

Committed to employment standards

As Minister for Labour Affairs, I am glad to have the opportunity of debating the important issue of temporary agency workers. There has been a lot of public comment about this issue in recent times.

Before getting into the detail of the issues, I wish to place on record that this Government is deeply committed to decent standards of employment. I believe that any objective analysis of this Government’s record – and that of the previous Governments led by our Taoiseach, Bertie Ahern – will show that over the last ten years or so, significant and substantial measures have been taken to underpin employment standards which has surpassed that of any other administration.

An extensive range of employment rights has been extended to cover the protection of working conditions of temporary workers including agency workers in the past decade. I am speaking here about core standards and employment rights which workers can vindicate.

Furthermore this period has also seen the introduction of the National Minimum Wage – a groundbreaking measure that for the first time secured a wage floor for workers. Developments have included:

• Improvements across a wide spectrum of conditions of employment from daily to weekly rest periods as well as annual and public holiday entitlements which are a feature of the Organisation of Working Time Act 1997.
• Comprehensive legislative measures to protect temporary workers employed under fixed-term contracts and in respect of part-time work.

• Fundamentally, Section 20 of the Part-Time Work Act 2001, which has transposed into Irish legislation the EU Directive on the Posting of Workers provides that employee protection legislation applies to migrant workers in the same way as to Irish nationals, which includes agency workers assigned by an overseas agency, as employer, to work under the control and direction of an and-user enterprise in Ireland who may obtain the benefits and protection of Irish labour law.

• Agency workers also fall within the ambit of protection under employment equality legislation with its focus on non-discrimination.

In addition, this Government have delivered a further range of measures in support of improved and enhanced employment standards arising from commitments agreed in Towards 2016, including:

• The protection of Employment (Exceptional Collective Redundancies and related Matters Act 2007 has been enacted; and
• the National Employment Rights Authority has been established, has commenced operations with significant management resources and, will have a full complement of 90 labour Inspectors, including ten with specific foreign language skills

The nature of Agency work

I would now like to provide some context to today’s debate by endeavouring to correctly site issues of concern which are an aspect of this evening’s debate in this House. I propose to outline some key features and attributes of temporary agency sector including, the main activities of the employment agency sector and the nature of employment and contractual arrangements in the sector.

Tentative data would suggest that temporary agency working comprises a relatively small sub-set of our total employment, perhaps as low as 2%. Agency workers operate across the full spectrum of our economy and are beyond the two particular sectors which are the focus of the current private members motion which are focussed solely on the construction and hotel sectors.

Many sectors where temporary or agency workers are employed are in higher-paid sectors of the economy where recruitment agencies successfully match and place workers in highly skilled jobs – such as in many of the more advanced sectors of the economy including, banking and finance, accountancy, information and computer technology and pharmaceuticals, where pay and conditions of employment are not an issue.

The issues in today’s debate before this House primarily concern the supply by an employment agency, as employer, of a temporary agency worker who is assigned to work under the control of an end-user enterprise. Thus the discussion over temporary workers is at its most acute in the case of temporary agency workers as this form of employment is uniquely differentiated and complicated by the triangular nature of the relationship between the worker, agency and end-user.

The kernel of the matters under discussion relate to the potential exploitation of foreign agency workers in terms of their pay and conditions of employment compared to Irish nationals in the same sector of employment.

Core concerns relate to employment agencies as employers who operate outside the State and assign workers to this jurisdiction. These concerns relate to the potential use of foreign agency workers by employers to circumnavigate the employment rights of such agency workers, or to allow employers evade their responsibilities who would be better protected as permanent employees.

Employment Rights Apply to Agency Workers

Despite frequent assertions to the contrary, I wish to advise Deputies that Ireland’s comprehensive body of employment rights legislation provides that employee protection does apply to migrant workers and to agency workers in Ireland who have entered into a contract of employment that provides for him or her being employed in the State, or who works in the State under a contract of employment.

Let me be quite clear here, this means that irrespective of nationality or place of residence, such persons have the same rights under employment rights legislation as Irish employees. As I have already indicated, we vested migrant workers with the same rights as can be vindicated by Irish employees. Indeed, this was acknowledged by SIPTU which has included a full listing of such employment right entitlements in an information leaflet on agency workers, of June 2007.

Our legislative framework is backed-up with effective and strong new supports where all workers, including migrant workers and foreign agency workers can vindicate their rights with the dispute settlement machinery of the State. Here again, under commitments in Towards 2016, we have committed to and delivered on core elements, including a major upgrading of resources in the Labour Inspectorate and have given it a decentralised and regional structure.

NERA are processing the last of their appointments to bring them to their full complement and when completed the resources of the labour inspectorate will have trebled, to 90 inspectors, including 10 with specialist language skills. NERA is now playing a very active, vital and substantive role in tackling potential abuses and will respond to breaches of employment rights legislation by seeking redress in the first instance and, where appropriate, prosecution.

In this regard, and I have said it in my recent replies on this matter to this House, I urge anyone who has evidence of the mistreatment of agency workers to furnish all the relevant details and any related materials to the Inspectorate with a view to pursuing the matter.

New Legislation

Employment rights, employment protection and concerns about the operation of some employment agencies was the subject of consideration at the most recent partnership discussions. This is in recognition of the need to review current legislation in this area – the Employment Agency Act 1971 – which is now more than thirty years in place. During this period our employment market has been transformed with substantial annual economic growth, which has fuelled a demand from employers for migrant workers to meet the needs of the manufacturing and services sectors of our economy. Employment agencies have responded by developing their services to meet the needs of employers and potential employees. The Government accepts that arrangements put in place several decades ago, under the 1971 Act, to regulate a much quieter and far less complex labour and recruitment market need to be overhauled to meet the demands of a much larger and rapidly changing employment environment.

We have seen, however, the emergence of new forms of recruitment and employment that can pose problems in terms of customer protection and quality control. Recognising this, an initial review of the sector resulted in the Department of Enterprise, Trade and Employment issuing a White Paper, in June 2005, on the Review of the Employment Agency Act 1971. The White Paper took account of a range of submissions received as part of a consultation process, including submissions from Irish Congress of Trade Unions, IBEC, the National Recruitment Federation and the Immigrant Council of Ireland.

The main problems reflected in the review related to agencies as employers rather than to agencies as “matchmakers” and related in the main to agencies based outside the State but placing workers in this jurisdiction. It was acknowledged that any attempt to enforce an extra-territorial dimension in a statutory licensing framework would present a challenge and it remains a challenge, not least in the context of obligations under the single market.

Subsequently, issues arising in this debate became subsumed into the broader social partnership discussions in early 2006 and formed part of the Government’s commitments under Towards 2016. In this context, my colleague Minister Martin and I are currently considering the final elements of proposals for the draft Scheme of a Bill to regulate the employment agency sector which will be presented for consideration by the Government very shortly, with a view to having the Bill drafted by the Parliamentary Counsel to the Government.

The Bill as drafted will reflect the commitment, in Towards 2016, to a licensing system where, to be licensed, employment agencies will be required to comply with the terms of a Statutory Code of Practice which will set out the practices and standards which employment agencies would be expected to follow. It is envisaged that a Monitoring and Advisory Committee will advise on the Code of Practice and on other matters related to this sector of our economy. This Committee would include representatives of the Social Partners. Other elements in the Bill are being finalised with a view to further strengthening and enhancing the effective enforcement of the employment rights of agency workers.

Equal Treatment

In the course of consultations on the proposed Bill other matters were raised which were not agreed under Towards 2016, including pay parity from the commencement of employment.

There have been strong assertions from trade unions that agency workers are being used increasingly to undermine basic labour standards and are precipitating a “race to the bottom”. However, the Department has not been provided with nor has been able to find specific evidence supporting such assertions.

Similarly, it has been alleged that Ireland is one of only three EU Member States which has failed to legislate for equal treatment for agency workers in terms of pay and conditions of employment. However, the situation is far more complex than that portrayed. For example, in those Member States where legislation is complemented by collective agreements, deviation from the equal wage clause in legislation may be permitted. There is also wide variation in the nature and extent of wider employment rights and working conditions available to agency workers in collective agreements such as in the case of statutory sick pay and pension rights. In addition, in some Member States various restrictions and prohibitions are in place in which agency working is excluded from whole sectors of economic activity. This, of course, also reduces opportunities for agency workers.

Draft EU Directive

The regulation of temporary work has been a contentious issue at European level for over a quarter of a century since the European Commission first placed proposals on the table in 1982.

The transformation of the product and labour markets since then has only intensified debate about how best to balance employment creation and flexibility on the one hand with employment protection and security on the other. Thus on the one hand, trade unions fears are that temporary workers would suffer lower pay and benefits than regular workers. Employers on the other hand contest this and point to the value of temporary work to certain groups in society and to the potential benefits which temporary work and agency work provides as a stepping stone for certain persons into employment as well as the competitive advantages offered to employers. The above forms the background and situates the current debate and discussions on the proposed EU Directive on Temporary Agency Work.

In the context of these European Union negotiations on the proposed Directive, Ireland will continue to adopt a constructive approach in these discussions. However, Ireland considers that the proposal for consideration, as currently drafted, is somewhat imbalanced. We have concerns about exemptions, or derogations, which would be to the benefit or advantage of some Member States and not others. The European Foundation in their recent Report on EU Temporary Agency Working confirms that, in those Member States where equal pay legislation is complemented by collective agreements, deviation from the equal pay clause in legislation may be permitted. In this regard, Ireland has, with other Member States, indicated that if permanent derogations through collective agreements are to be allowed - then other means providing for derogations should also be allowed in those Member States without legally enforceable collective agreements.

In particular, Ireland considers that the proposed “six-week maximum” derogation from equal treatment provided for in the draft Directive in respect of short-duration temporary agency assignments is too short. This is particularly so in comparison to the derogation available to those Member States with collective agreements which can and do deviate from equal treatment in pay levels and in the areas of wider working and employment conditions, under the terms of Article 5.3 of the proposed Directive. In some cases these derogations can be for six months, or longer.

The shorter time period currently on offer could damage future job creation prospects and could deter the legitimate use of temporary agency working which would be to the detriment of our economy. This is particularly the case as agency work can provide, in certain circumstances, a useful stepping- stone for some persons to enter the labour market. The opportunities available to agency workers in Ireland should not be reduced as a result of any new arrangements. Any Directive in this area would ideally provide a balance between employment creation and flexibility, on the one hand, and employment protection and security on the other. The Government will continue to adopt a constructive approach to these discussions at EU level.

Ireland supports the three objectives that the original proposal sought to address:

• To protect temporary workers;
• To recognise that temporary employment agencies exercise a legitimate role in the labour market and provide a suitable framework for the creation of jobs;
• To review prohibitions and remove unwarranted restrictions.

At the very least, provision might be made to take account of the tradition of social dialogue which applies in various countries, including Ireland, as recognised in the arrangements for National Reform Partnerships in the implementation of the Lisbon Strategy. In this way the different traditions and practices at the national level can be fully recognised and respected.

December 2007 Council

As you will be aware the Portuguese Presidency considered that there would be added value in working on a simultaneous and integrated solution on two sensitive dossiers, the Temporary Agency Work Directive and the Organisation of Working Time Directive, given previous difficulties in finding solutions on each legislative proposal in isolation.

In the event, however, the Portuguese Presidency was unable to progress these dossiers to a successful conclusion at Council and concluded that the best option was to postpone a final decision on these matters. This decision had regard to the nature of the discussion at Council on these proposals, to the range of outstanding difficulties and to the clear desire of Member States to reach a consensus rather than seek to push matters to a divisive and perhaps damaging vote. Undoubtedly, given the history of these two dossiers and the hopes raised in advance of our discussions, the outcome is disappointing.

For our part, Ireland adopted a consistent and constructive approach in the discussions at Council. We fully supported the Portuguese Presidency in its efforts to fashion an overall compromise solution by way of an integrated approach to these two sensitive dossiers, for the benefit of all EU Member States. As regards the proposed Directive on the Organisation of Working Time, the proposal from the Portuguese Presidency represented a significant effort at finding a compromise solution and one to which Ireland was able to lend its support.

On the proposed Directive on Temporary Agency Work, I was clear and unequivocal in explaining our position at Council when I indicated that Ireland fully supported the thrust of the objectives of the proposed Directive. I also indicated that any such instrument must be balanced and be to the benefit of all parties concerned - employees and enterprises alike. I informed my ministerial colleagues, however, that I was concerned that the latest proposals on the table did not contain all the necessary elements of balance. Thus, permitted exemptions provided for in the proposed Directive would be to the advantage, or benefit, of some Member States and not others. This would be the case for those Member States where equal pay legislation is complemented by collective agreements and where deviation from the equal pay clause in legislation may be permitted. This would not work for Member States with different legal and industrial relations frameworks.

Finally I indicated to Ministers that Ireland considered the exemption proposed for short duration temporary agency assignments (under Article 5.4 of the proposed Directive) - i.e. a maximum of six weeks – to be such as not to provide the required flexibility. It could damage future job creation prospects and could deter the use of a legitimate form of employment, which would be to the detriment of our economy and agency workers.

Regrettably, having identified the remaining issues of concern to various Member States, the Presidency decided not to pursue the search for a solution at the Council. Ireland was fully prepared to assist in trying to resolve outstanding issues at the Council rather than postpone addressing these to a later date.

In their Council Declaration, the Portuguese Presidency urged forthcoming presidencies, together with the European Commission, to proceed with efforts to achieve a positive and final outcome on both Directives, based on the integrated approach, which received positive support as a way forward. I consider that this represents the best means of obtaining the necessary overall balance in Community legal instruments of this nature. The Government will continue to be constructive in our approach to further negotiations on these two legislative instruments.

In conclusion, I am confident that the Government’s position in relation to the proposed EU Directive has been consistent with our commitments under social partnership and I look forward to the discussions in this House of the forthcoming legislation relating to Regulation of Employment Agencies.

ENDS/LA269