I thank the Chairman. We welcome this opportunity. The examination of proposed legislation from Europe is a new process and one we regard as a good development that will lead to transparency. We will all know where everyone stands in regard to various issues. We believe this is worthwhile and appreciate the opportunity to put our position. We have given the committee a fairly detailed document and I will explain why we consider the directive to be so important.
As the Department representative said, the current position of a person in temporary employment can come under a number of headings. Different language is used in the European context for somebody who does not have a permanent position as we understand it. There has never been any restriction on an employer recruiting somebody on a temporary basis. Europe is proposing two forms of regulation of temporary workers; one type is the fixed-term contract, which refers to one who is in employment for a specific period of time, be it 12 months, five years or whatever, and the second type covers a specific issue such as replacing somebody or employment for a particular project, which will still be allowed under the European proposal.
While the development of temporary agency work is new to Ireland, it has been in existence in many member states as the only way in which temporary workers could be recruited, so there is a difference. In changing from the current situation we are concerned that the regulation could actually allow employers to discriminate. Under industrial relations legislation there is a union representing agency workers or those who are in temporary employment and a case can be made through the Labour Court or the LRC about what should be the level of pay. There is no legal restriction on that. They are also covered, and still will be under this legislation, by employment equality legislation, which is relevant and kicks in as soon as somebody is employed. There could be a change here that would allow employers to discriminate in the first six weeks of employment, as currently proposed, or if the Department, IBEC and the Government have their way, for 12 months, within the legal framework. That is why we are so concerned in regard to this.
Some temporary agency workers are well able to look after themselves. They may be IT professionals who wish to work on a temporary basis but most people are in a precarious position and are hesitant about insisting on their rights. Currently in Ireland many such workers are migrant workers and we are concerned that they would be excluded from any improvement on basic legal minimum rights in any employment.
It is also important to put it in the context of the European development which was as a result of the Essen and Lisbon strategies to allow flexibility in the recruitment of temporary workers, which existed in Ireland but did not in many member states. In some way that provided security and protection for people.
In that context there were a number of legislative proposals made, one which related to part-time work, which has been transposed into Irish legislation under the Protection of Employees (Part-Time Work) Act, and the fixed-term contract, which is the one to which I referred earlier. In negotiating the fixed-term contract at European level it was recognised that there was a difference in the relationship between a temporary agency worker who gets to the employer through an agency. In some European states he or she may actually be employed by the agency. In Ireland that would be unusual and the agency usually acts merely as a recruitment agency and places the person in what is described as the user-undertaking. The fixed-term contract legislation has not yet been transposed into Irish law, despite it being almost four years since its enactment. Ireland is, therefore, in breach in that regard. That legislation provides for protection where people cannot be discriminated against unless there are objective grounds. For instance, if a person was employed for a three or four week period, an employer would argue that there are objective grounds for them not joining a pension scheme. We support this because it would not really benefit the employee. The situation has changed with the introduction of PRSAs. Part of the motivation behind the fixed-term contract was to exclude temporary agency workers with a view to negotiating a specific agreement around them. The social partners endeavoured to do this but failed to reach agreement in 2000. There was a basic disagreement about whether the comparison would be made within an agency or within a user-company. In the Irish context there would not be a comparator for this. One could have a situation whereby a plumber who was being appointed by an agency would only have agency clerical staff with which to compare implying no real comparator, which I know is an extreme example.
In our submission we identified the growth in licensed agencies, which is fairly significant. In 2001 there were 778, which is amazing, and currently there are 453. There has been great lobbying by the agencies and the employers against the provisions of this directive. Clearly people see this as a way of circumventing and pulling back on the protections that were given to temporary workers in the fixed-term contract. We are concerned that the outcome of the legislation, if it comes from Europe in this term, would make the situation worse for agency workers. They could be excluded for six weeks or, as I said, 12 months, if the Irish proposal is agreed to. Pay would be excluded during that period. There is provision for exemptions, derogations and alternative arrangements which are not defined and which do not have to provide adequate or equal protection to people.
It is important to identify the significant difference between the two types of temporary agency workers which exist. In the Netherlands, people are employed by the agency and collective agreements with legal status cover them. In Ireland, as I said, that is not the case in that people are not normally employed by the agency and are placed by the agency in a user company. A question was raised in the Commission's original document on the status of such employees because they are not employed by the agency. A study was done by the Commission before the draft directive emerged and it showed that, on average, agency workers received lower pay than those in the user companies. Even Germany, which has a very regulated and restricted industrial relations regime, identified that the gap in pay was between 22% and 40% less than that which would apply in the user company.
We are concerned about two areas, although there are a number of technical issues. The areas we should identify for the purposes of today's session relate to definition. The Commission proposes to introduce new definitions about basic pay and we are concerned that there will be confusion. For example, if a part-time worker is a temporary agency worker, which legislation will cover him or her? If a temporary agency worker is also covered by the fixed-term work directive, which language applies? The title of the basic Article 5 has changed from the principle of non-discrimination, which applied in the other two directives, to the principle of equal treatment. Is there a difference? If there is, what is the extent?
Our basic problem is with Article 5. The one good development in what emerged from Europe is that the comparison is now in the user company, and we acknowledge that. There is provision in the current draft for a hypothetical comparator. Ireland, in the document we received from the Commission, identifies a problem where there is no hypothetical worker. The purpose of having a hypothetical comparator is because there is no worker who is exactly similar. For example, if there is no plumber with whom to compare, one must look at what a plumber would be paid by the company if employed directly.
There are also proposals to exclude paid holidays if the agency proposes paid holidays. In that situation, we are concerned people would fall between two stools. Vulnerable categories, such a migrant workers, may finish up without receiving the equivalent level of paid holidays. They would be covered by the organisation of working time, irrespective of who was making the payment. These are issues the company and the agency supplying the worker should resolve in the contract, that is, who is actually paying.
In the Netherlands people are paid between paid assignments because they are employed by the agency. Exemptions have been suggested where that happens, in that people are excluded from the provisions and protections of the directive. That raises two issues for us. That does not happen in Ireland but there could be arguments that where somebody gets a €10 retainer, he or she is being paid. In that situation, he or she would be excluded from the protections provided in the directive. We see that as a problem. It would not be transparent. Only where there is a collective agreement whereby people are paid between assignments and are effectively the employees of the agency might it be reasonable.
There is also a proposal in Article 4 where there can be alternative arrangements at member state level. There are no criteria or requirement that it be equal or adequate protection. That is a concern.
In regard to the six weeks exclusion to which I referred, there has been an improvement whereby this is to relate to pay only. Even in that situation, we see no need for a period of exclusion because what one is really saying is that in that period, it would be okay to discriminate against people. We have legislation which provides nine grounds on which there can be no discrimination. Effectively, people would have to use that legislation to prove they are being discriminated against rather than resolving the issue appropriately in the context of this.
The other concern we have is that it would encourage even more precarious employment with employers not wanting to recruit or retain anybody for longer than six weeks. In that situation, one would have a mobile workforce and nobody would be in the same user company for more than six weeks. We are concerned about that.
It is important to highlight that agency work has never been used in Ireland to create jobs or to assist unemployed people to access the workforce. There are a number of active labour market policies in place which the Government has agreed with ourselves, IBEC and the other social partners. They are aimed at the unemployed and the long-term unemployed. Thankfully, Ireland does not have the problem of large numbers of unemployed people at the moment but employment agencies have never been the way to resolve that. The user company creates the job. There is no restriction under the fixed-term contract. If a user company proposes a new production line and needs to recruit somebody on a temporary basis to see how it works, it can do that under the fixed-term contract and does not need to use an employment agency.
A suggestion from other countries, which is supported by Ireland and the UK, is that there should be a phasing in of the provisions of the directive. Again, there is no need for that. In the Irish context and in regard to the fixed-term contract, it looks as if it will take up to four years to transpose that directive. If there was a similar period of transposition in this case and a phasing in period, one could be talking about six years in which an employer would know this legislation was coming and could prepare for it. There is no need for a phasing-in period.
The other specific exclusions covered by the directive are occupational pensions, sick pay and financial participation. We see these as ways around the protection under pay but it is fair to say that if there are objective grounds - all the previous legislation provides for that - why somebody should not be covered by the occupational pension scheme or the sick pay scheme, then that can be argued. If, for example, a sick pay scheme did not click in until somebody had 12 months employment in the company, which is often the case in that a person on probation might not qualify for access to the sick pay scheme, that would also apply in the case of a temporary worker.
In the case of occupational pensions there is a problem for Ireland given the lack of coverage for such pensions. Only yesterday, a number of organisations were approved to provide PRSAs, a specifically portable Irish pension scheme. This proposal would mean that if a temporary worker had his or her own personal occupational pension scheme and arrived at work in company X in which there was an occupational pension scheme and where the comparator worker had 6% or 10% paid into that pension, he or she would be excluded from that and his or her pay would be 10% less to start with. If a person has an occupational pension scheme in the agency, that is fine and if he or she brings the portable pension, that is where the payment should be made. If there is no pension in the user company, then there is no question of a pension scheme for the temporary agency worker.
Similarly, it is only where an occupational sick pay scheme exists that the comparison arises. Even financial participation schemes may be part of the pay package, depending on how they are structured. In that situation yet another way would be found to exclude temporary agency workers. I have outlined the key issues, which all relate to Article 5, and there is no point in elaborating on the other issues at this stage.
