On behalf of IBEC, we appreciate the opportunity to make a presentation to the select sub-committee on our principal issues of concern arising from Bill. I am joined by my colleagues Mr. Loughlin Deegan, solicitor and senior employment policy adviser, Ms Rhona Murphy, head of employment law services, and Ms Avril McDermott, head of our HR and social policy committee and HR director with Hewlett-Packard in Ireland.
From IBEC's analysis it is clear to us that the Bill contains a number of very serious deficiencies. There is an urgent need for considerable amendment as it proceeds through the Oireachtas in order to preserve the viability of agency work in the Irish economy. The National Recruitment Federation has described some of the characteristics in terms of the importance of agency work. There is a misnomer that this is a narrow issue which only impacts a small number of sectors. It impacts across the economy, regardless of whether one is in the services sector, manufacturing or further afield. In particular, this is a huge issue of concern to the multinational exporting sector on which much of our forecast recovery is dependent. It sees this issue as a key barometer of labour market flexibility. As we know, companies use agency staff for a variety of reasons, but the primary reason is flexibility. They need to be able to flex their numbers according to business demands and to meet production surges when they arise. The key barometer is that they are retaining a degree of flexibility around their staffing requirements as a means of maintaining competitiveness and their wider jobs complement.
In terms of the directive, we welcome the fact that, within its makeup and formulation, it formally recognises that temporary agency work has to reflect the undertakings' need for flexibility as well as the employees' need to reconcile working and private life. The directive was not intended to render temporary agency work unviable, which is our concern. The Oireachtas, as the sub-committee would appreciate, over many years has provided temporary agency workers with equal statutory rights to those of direct recruits, something acknowledged by Mr. Collins.
In the appendix to our principal submission, we list all the various statutes that are applicable in that regard. At the current time of national crisis, it is important that we retain a flexible agency work regime, principally to support employment opportunities in the economy. If it becomes so heavily regulated as to become unviable the net effect will not better the conditions of agency workers but render unemployed people who do not need to be.
The Bill goes much further than is required by the directive and will have the effect of rendering agency work unviable. That effect would be felt not only by the thousands of agency workers but will also have an effect on dampening direct recruitment. This is an issue that plays in the international space, in terms not only of our troika commitments and reputation for retaining a flexible labour market regime, but also plays into the positioning of Ireland by the IDA and others with potential investors about what it is like to operate in Ireland in terms of our flexibility and labour market response. Firms need to know they can flex their workforce up and down, using agency work as needed. If agency work is rendered unviable, clearly it does impact on the decisions firms will make on these sort of issues.
I will summarise some of the main issues. In our detailed submission we laid out, in a fair amount of detail, some of the technical issues. One of the principal issues that is of huge concern is that relative to how other countries have moved to transpose the directive, this Bill will place us at a competitive disadvantage, not least relative to the UK, our nearest neighbours.
As the sub-committee knows, we have engaged with the Irish Congress of Trade Unions about the potential of a national framework agreement to agree derogation from the terms of the directive. It was not willing to agree to the introduction of a qualifying period for coverage under the Bill. In the UK agency workers must be in a placement for 12 weeks before they are covered. In Ireland coverage under the terms of the Bill will apply from the first day of assignment. That means employers will not want to take on short-term agency workers because the increased cost, bureaucracy, paperwork and risk of litigation that will potentially arise under the Bill will have a discouraging effect.
Another key issue we believe deserves the most thorough examination by the Oireachtas and sub-committee is an extraordinary provision contained in the Bill, which is unprecedented in the framing of Irish employment law. The Bill purports to have retrospective effect to 5 December 2011, which raises some serious constitutional questions. It creates an incredible situation where employment agencies have an obligation to make back payments to some agency workers based on wages paid by hire companies to direct recruits. Those agencies have no way of knowing how much the payments will be. That regime is fundamentally at odds with basic constitutional principles and may expose the Bill to a constitutional challenge by an injured party. That is in nobody's interest. There is no European legal justification for a retrospective effect. There are serious questions to be asked relative to the protections that are otherwise afforded under Article 29.4.10 of the Constitution.
The Bill also contains a number of key drafting issues which need to be remedied on Committee Stage. The most serious relates to the question of who an agency worker can claim equal pay against. Principally, this relates to who the comparator might be. As drafted, the Bill is not limited to allowing an agency worker to claim equal pay against a comparable direct recruit who joined the hire company on the same day as an agency worker. That would be right and proper and in accordance with the directive. The Bill appears to allow an agency worker to ignore the comparator who started on the same day and instead gain equal pay with a direct recruit who has ten years of service and may be at the top of the pay scale. The causal effect of the Bill, as laid out, is that agency workers could be put in a better position than if they were hired directly, which is bizarre and clearly not the intention of the directive. That provision needs to be amended urgently because it will simply make agency work completely unviable and lead, in many cases, to prolonged litigation and uncertainty for all parties involved.
A key element is work of equal value and is a concept that should be removed from the definition of "comparable employee." For example and for comparative purposes, that definition is not used in the UK. We have prepared a fairly detailed list of changes that are required to try to render this Bill fit for purpose. We believe that if the Oireachtas and the Government do not accept the proposals we are making, there is a serious risk thousands of jobs could be lost to the Irish economy because agency work will be unviable.
Various numbers have been proposed in terms of the scale of impact in this regard. We know that prior to 5 December there were up to 40,000 agency workers in Ireland. We believe the uncertainty this legislation creates raises fundamental questions over the viability of those jobs. For example, comparative analysis of the numbers in the UK shows that about 24% of the jobs of temporary agency workers in the UK were immediately at risk, and, on a like-for-like basis, that straightforwardly computes to approximately 8,000 jobs in a Republic of Ireland context.
To summarise the key issues for us, we are proposing, first, to remove the proposed retrospective effect from section 1 of the Bill. We believe that is a fundamental mistake and raises fundamental constitutional issues that need to be considered very seriously by this committee. We believe the issue could be readily addressed and the alternative is to provide for its application in terms of the principle of equal treatment to all of those who commence an assignment from 5 December on. The effect would be that, on a rolling basis, given the nature of temporary agency work, the vast majority of people would come under coverage within a relatively short period.
Second, we strongly advocate the view that the provisions of section 6 regarding the principle of equal treatment need to be radically restructured to ensure that agency workers are entitled to the same basic and working conditions as if they had been hired as a direct recruit at the time of their assignment, and also to avoid a situation where they can use an appropriate comparator such as that they are better off than a comparable direct recruit would have been who might have been hired some years previously.
Third, we believe, from a fairness and equity point of view, there is a compelling case to be made to allow reasonable defences for employers, including to allow employers to demonstrate that there were grounds other than a person's status as an agency worker which justify a difference in basic working and employment conditions. Fourth, we believe the provision of outwork of equal value needs to be removed from the definition of a comparable employee, which arises in section 2(5). There are a number of refinements to definitions in the Bill that we believe require serious review to exclude unintended application, particularly to limited liability contractors, managed service contractors and outsourced contracts because the current definitions leave some grey areas open as to the definition of what ultimately constitutes an agency for the purposes of this Bill. As it is currently drafted, section 15 actually alters the current definitional arrangements that are in place.
We are also concerned that the redress mechanisms need to be rendered fairer to all concerned. For example, there is a punitive provision in our mind that somebody could potentially be at risk of an award of up to two years remuneration even in circumstances where there has been a very minor or administrative breach. We strongly advocate that, other than in respect of pay issues, compensation should be limited to four weeks rather than the current provisions that are set out.
We have set out a detailed position on all of these matters as well as other matters of significance. With the indulgence of the Chairman, I would ask that my colleague, Ms Avril McDermott who is chair of our HR and social policy committee and who has direct experience of this issue from a Hewlett Packard perspective, would briefly indicate from a multinational perspective in general terms what are the principal concerns in that community.
