Department for Business, Innovation and Skills. Reforming the regulatory framework for employment agencies and employment businesses
Thompsons Response (April 2013)
Thompsons is the most experienced trade union, employment rights and personal injury law firm in the country with 29 offices across the UK. On employment and industrial relations issues, it acts only for trade unions and their members.
Thompsons represents the majority of UK trade unions and advises on the full range of employment rights issues through its specialist employment rights department.
Question 1: Do you agree with the four outcomes that the Government believe should be achieved by new recruitment sector legislation?
- Employment businesses and employment agencies are restricted from charging fees to work-seeker
- There is clarity on who is responsible for paying temporary workers for the work they have done
- The contracts people have with recruitment firms should not hinder their movement between jobs and temp-to-perm transfer fees are reasonable
- Work-seekers have the confidence to use the recruitment sector and are able to assert their rights
a) Yes, but see our reasons below.
b) We agree with the four outcomes sought insofar as they are uncontroversial. But they do nothing but reinforce the status quo.
We do not understand why BIS is conducting a consultation on matters about which the Conduct of Employment Businesses Regulations are already clear: agencies cannot charge fees to work-seekers; clarity exists on responsibility for paying temporary workers; temps can already move between jobs; work-seekers have little choice but to use the recruitment sector.
Instead of giving the impression of strengthening temporary workers’ rights where no real improvement is proposed, the government should be seeking to underpin the four outcomes with sanctions with teeth on agencies which breach the regulations.
For example, while temporary workers are free, under the regulations, to move between jobs and from temp-to-perm, the proposals do not include measures to prevent victimisation of workers who do. It is not enough to say that recruitment firms should not hinder such movement, when the reality is that they often do without penalty.
While few could disagree with the aim of giving work-seekers the confidence to use the sector and to be able to assert their rights, the reality in this economic climate is that someone who loses their job is unlikely to consider that they have much choice but to sign up with an employment agency.
Being able to “assert their rights” is a meaningless outcome. Work-seekers can already do so. It is the only way to mitigate their losses. However, most won’t because of fear of victimisation or simply because they lack support and advice.
The suggestion would appear to be that civil enforcement such as employment tribunal rights would be more effective than the current criminal enforcement regime.
In our view, it is unlikely that an individual whose rights are breached would feel able to assert their rights unless they had the benefit of trade union membership. And even if they did feel able to pursue a claim – even after the government has introduced fees in employment tribunals which will severely reduce access to justice in tribunals - is it really for individuals to be responsible for ensuring that government regulations on a sector are enforced?
At a time when the government is reforming employment laws to reduce tribunal claims, including introducing deterrent fees for claimants, it makes little sense to us that BIS appears to be trying to encourage greater assertion of rights through employment tribunal claims rather than seeking to prevent breaches of the regulations by agencies.
Question 2: Are there any other outcomes that you think should be achieved by the new legislation?
New legislation should at the very least provide sanctions with teeth against agencies which breach the regulations, so that work-seekers are not entirely reliant on the courts and tribunals to enforce their rights, particularly at a time when other employment law reforms, including the imposition of fees, will discourage claims.
This is not a time to dismantle the regulatory system.
Outcomes should include:
- Prevention of victimisation of workers who move between jobs through tough sanctions on agencies which breach the Conduct of Employment Agencies Regulations including fines and striking off.
- Strengthening of the powers of the Employment Agency Standards Inspectorate (EASI), which is currently a toothless body, to ensure that the regulations are enforced and breaches effectively penalised.
- Strong and effective action against agencies which breach the rules about providing labour to break strikes. In addition to the regulatory penalty in this regard, there should be a civil remedy so that unions and workers can pursue an effective remedy, including an injunction and a tribunal award.
Question 3: Do you think there are circumstances, outside of the entertainment and modelling sector, where agencies should be allowed to charge fees? If yes, in what circumstances do you think agencies should be able to charge fees?
No. The experience of workers in the entertainment and modelling sectors, and the lessons learned from them, lead us to the conclusion that no agencies, including those in the entertainment and modelling, should be allowed to charge.
We refer specifically to agencies for actors. The fee charging exemption was introduced because the 1973 Act aligned employment agencies with directories such as Spotlight. There was an argument that Spotlight, which does not mediate between employers and work-seekers, would fold if it could not charge up-front fees to those wanting a listing.
The exemption has led to the creation of a great number of agencies in the sector, many of which demand up-front fees from “extras” for the promise of work which never materialises. Such workers are often exploited by multiple agencies. BIS should take the opportunity of this review to end such practices, rather than considering extending the ability of agencies to charge fees.
Question 4: Do you think that the current definition of ‘employment agency’ as set out in section 13 of the Employment Agencies Act 1973 could be improved?
No. The current definition is clear. BIS offers no explanation as to why it is considering amending it. Any attempt to change it will lead to uncertainty and may encourage attempts to circumvent the regulations.
Question 5: Do you think legislation should require employment agencies to give work-seekers a cooling off period in situations where fees can be charged?
We believe that agencies should not be allowed to charge fees. However, if they are, there should be a significant cooling off period – at least as long as that provided under the current legislation (30 days).
Question 6: Do you think there should be one standard cooling off period? What do you think the cooling off period should be?
Yes. See our response to Q5 above. .
Question 7: Do you think that it is necessary to legislate to ensure that there is clarity on who is responsible for paying a temporary worker for the
work they have done?
Yes. It is necessary to legislate because it is essential to know who to seek remedy against for a failure. The position is currently uncertain as it is based on common law and contract. Legislating would provide an agencies equivalent of Section 1 of the Employment Rights Act 1996.
Where there is an employment business, the business should have responsibility for paying the temporary worker and they should recoup any outlays from the end user. In the event that the employment business is insolvent, the end user should retain an obligation to pay.
Question 8: Regulation 6 restricts employment agencies and businesses from penalising a work-seeker for terminating or giving notice to terminate a contract. Do you think that the text of regulation 6 could be improved?
Yes. Regulation 6 should be strengthened, not diluted. Currently it is for the work-seeker to prove loss. In our view there should be a minimum award of at least two week’s pay.
The regulator should also be able to impose a fixed penalty.
Question 9: Regulation 10 has the effect of restricting employment businesses from charging unreasonable transfer fees to hirers. Do you think that regulation 10 could be improved?
Yes. Again, the concept should be retained and not diluted, and can be improved. Transfer fees constitute a restriction on employment, which is contrary to government policy. Any transfer fee greater than the notice provision within the contract should be considered unreasonable.
Question 10: Do you think employment agencies and businesses should publish information about their business?
Yes. In order to be consistent with outcome 4, agencies and businesses should be transparent and publish information about their success rates, worker and end user satisfaction, and complaints.
Question 11: What information do you think would be of most interest to: a) hirers and b) work-seekers?
We refer to our response to Q10. In addition, hirers should have to be very clear about the detail of any charges. Work-seekers also require information about any “salary sacrifice” arrangements, such as charges for ancillary services.
Question 12: Do you think it should be compulsory for employment agencies and businesses to publish information about their business? If you answered yes, what information do you think it should be compulsory to publish?
Yes. See answer to questions 10 and 11.
Question 13: Do you think trade association codes of practice help to maintain standards in the sector?
Yes, but this is no substitute for statutory regulation. Complaints should be published, in addition to effective fines and other sanctions.
Question 14: What other non-regulatory tools could be used to maintain standards in the recruitment sector? Please be as specific as you can in your response.
There are no non-regulatory tools that would be effective, other than readily available civil remedy in conjunction with clear regulation. We believe that EASI should have the same powers as the Gangmasters’ Licensing Authority and HMRC.
Question 15: Do you think it is necessary for the Government to enforce the recruitment sector legislation?
Yes. It is never appropriate for an industry to be self-regulated. This is particularly so given that some of the legislation imposes criminal sanctions. Who but the state is supposed to enforce those sanctions?
Reputable businesses have nothing to fear from regulation.
The ban on agencies providing labour to break strikes can only be enforced by EASI. In our experience, and in that of the trade unions which instruct us, the Inspectorate rarely uses its powers to enforce standards. It is not clear whether this is due to lack of resources or inclination, but clearly the government needs to act to ensure that EASI enforces the legislation and regulations.
There should be a remedy that can be sought by trade unions and workers, including injunction and a financial award.
It is not clear how, without government enforcement, agencies will be required to comply. Self-regulation is not appropriate for the recruitment sector and would inevitably lead to a reduction in individual rights.
Question 16: Do you think that Prohibition Orders should be included in the new enforcement regime?
Yes. This would provide the necessary sanctions on agencies which breach the regulations..
Question 17: Do you think individuals should be able to enforce their rights at an Employment Tribunal?
Yes. Individuals should be able to enforce their rights and there should be a minimum award of at least two week’s pay. Civil remedies alone are no substitute for effective regulation.
That said, individuals can already enforce their rights. But as we point out in our response to Q1, more often than not they feel unable to unless they are in a trade union. They lack information, support and resources and may fear victimisation.
At a time when the government is reforming employment laws to reduce tribunal claims, including by introducing fees, it makes little sense to us that BIS appears to be trying to encourage greater assertion of rights through employment tribunal claims, effectively making individuals responsible for enforcing government legislation on the sector.
We would also point out that where the breach has been the provision of labour to break a strike, the victim is not just the individual workers, but their trade union. If EASI is not able or prepared to act then unions should be able to sue the agency that provided the labour, such as by seeking a protective award against it.
Question 18: What guidance do you think individuals would need to be fully aware of their rights and how to enforce them?
Guidance will never enable individuals to be fully aware of their rights and how to enforce them. Guidance can only be an aid to improving awareness.
If draft guidance was prepared by BIS we would be happy to be consulted in relation to its content.
Question 19: Do you think that the Government should proactively publish the findings of investigations that have been carried out including the trading name of each employment agency/business and listing the infringements to the legislation?
Yes. How else will enforcement have teeth? The government should publish the names of all agencies that have been referred for investigation, just as the Solicitors Regulatory Authority publishes the names of all law firms referred to it.
By being able to identify which agencies are being regularly referred and investigated it will be possible to see which breaches are being dealt with and if there is a backlog.
This is consistent with the need for greater transparency. If findings of infringements of the legislation are not published, there is no reputational risk for rogue agencies.
Question 20: Do you think it is necessary to legislate to require employment agencies and businesses to keep records?
Question 21: What records do you think that employment agencies and employment businesses should be required to keep relating to:
c) other employment agencies/employment businesses?
There should be an obligation on employment agencies to keep records consistent with good business practice and for the purposes of investigation of legislative infringement and to facilitate enforcement and civil remedy.