Government massively gold plating AWD says IoD

The Financial Times has today reported on
concerns by the Institute of Directors (IoD) that the government is
proposing to gold plate the Agency Workers Directive. See article Business warns on agency workers directive.

This follows work undertaken by Lawspeed, with the Association of Recruitment Consultancies
and the IoD. The orginal article submitted by the IoD to the FT and
posted on the IoD website was as set out below. Much of the information
relied upon by the IoD has been obtained or instigated by ARC towards
the IoD and ARC’s joint aim of protecting hirers, agencies and workers
alike from a damaging implementation of the Directive.

ARC’s work in this area in conjunction with various
stakeholders including the IoD and Federation of Small Businesses is
continuing.

The IoD article is as follows:

Government massively gold-plating Agency Workers Directive, says IoD and ARC

Research we have undertaken in conjunction with the recruiter
trade body the Association of Recruitment Consultancies (ARC) reveals
the following:

• The Government has been saying for months to
  business that it intends to implement the Agency Workers Directive in a
  balanced way. But the Government’s chosen approach imposes far greater
  burdens on business than that required by the Directive. This has now
  been confirmed in letters that have been received from the European
  Commission over the last couple of days which demonstrate that the
  Government is gold-plating.
• Cost of gold-plating over 10 years:
  £12 billion – based on data taken from the Government’s impact
  assessment we and ARC estimate that businesses are going to be hit with
  an unnecessary bill of nearly £1.2 billion a year bill. The big losers
  are small and medium sized businesses because they could be excluded.
• Why is the Government doing this? We suspect that in
  the run up to the election ministers are being pressurised to go well
  beyond the letter of the Directive. Ministers were no doubt hoping that
  businesses and recruitment agencies wouldn’t notice and that we would
  all be satisfied with a few concessions.  

What has the European Commission said?

The Government will argue that what it is doing is necessary
because of the Directive, but we’ve just obtained an opinion from the
European Commission which demonstrates our long held suspicion that the
Government’s approach will unnecessarily apply to the vast majority of
the UK’s small and medium-sized firms.

The European Commission has told us that the Directive
requires an agency worker to be given the same “basic working and
employment conditions” in relation to pay and holiday as a permanent
employee of the hirer taken on to do the same job.

However, the Commission defines “basic working and employment
conditions” on pay and holiday as only what is set down in a country’s
laws, collective agreements and other “binding general provisions.” What
does this mean?

As an example, a “binding general provision” is basically a
company level collective agreement or a pay scale. So if you are a firm
hiring a temp and you have a pay scale, the temp would have to be given
pay and holiday that is in line with how their job relates to an
equivalent permanent employee on that pay scale.  

Why does this matter?

Pay arrangements in the vast majority of the UK’s private
sector are set by individual negotiation. Only the largest employers
have binding pay scales or operate under collective agreements. This
means that if a firm hires a temp and its pay arrangements are set by
individual negotiations the Directive should have no impact.

The Commission makes this point crystal clear in its letter:
“On the contrary, discretionary individual pay arrangements used in the
user undertaking [i.e. the hirer] would be outside the scope of the
principle of equal treatment”.

What are the Government doing then?

Presumably hoping that no one would notice, Ministers intend
to give all agency workers equal treatment after 12 weeks in an
assignment, irrespective of whether they are on assignment with a hirer
that has a collective agreement, etc. This could hardly be further from
what the Directive requires.

Costs

The Government has said in its impact assessment that its
proposal for all agency workers to get equal treatment after 12 weeks in
an assignment will cost employers £1.935 billion a year. Given that 30
per cent of temps work in the public sector where collective binding pay
scales are widespread and we estimate that 10 per cent of temps working
for the private sector are covered by collective agreements and binding
pay scales, we believe that 60 per cent of the £1.935 billion could be
saved if the Government implemented in line with the opinion of the
European Commission’s position. This means that £1.16 billion could be
saved each year, or nearly £12 billion over 10 years.

Commenting, Alistair Tebbit, head of EU and Employment policy at the Institute of Directors, said:

“The Government is planning to gold-plate the Directive on a
huge scale. But you don’t have to take our word for it, even the
European Commission agrees. The Commission has told us that the vast
majority of small and medium-sized firms in the UK could be exempted.”

“Instead of following the advice of the Commission the
Government plans to drop a £1.2 billion bill every year on the doorstep
of British business, with small firms being particularly hard hit.
Anyone with an interest in the future of the UK’s flexible labour market
needs to start asking why the Government plans to make such a terrible
mistake.” 

Commenting, Adrian Marlowe, chair of the recruiter trade body, the Association of Recruitment Consultancies, said:

“This approach will affect the willingness of hirers to use
agency workers, and damage the flexibility of the labour market. It is
seriously bad news for hirers, recruitment agencies and workers alike,
leading to significant job losses across the temporary recruitment
sector.”