THOMPSONS SOLICITORS’ RESPONSE - June 2009

About Thompsons

Thompsons is the UK’s largest firm of trade union, employment rights and personal injury lawyers. The firm has a network of offices, operating in England, Northern Ireland, Wales and Scotland. 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 Unit. We regularly advise unions in relation to specific conduct of employment agency issues.

Thompsons regularly contributes to government and other consultations and is pleased to have the opportunity to respond to this consultation.

The consultation

We do not intend to respond in detail to the questions on upfront fees, umbrella companies and suitability checks. We do however raise three issues which are causing difficulty in relation to Regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003.

The department has not sought views on this, but the difficulties being encountered are of major concern to Thompsons and our union clients and must be addressed. It is an issue that is fundamental to the conduct of employment agencies issue.

Regulation 7

There are three issues which are causing difficulty in relation to Regulation 7 and the use of agency workers to undertake duties where industrial action is taking place. This is a major concern to Thompsons and to our union clients and must be addressed in this consultation.

Regulation 7 prohibits the introduction or supply by an employment business of a work-seeker to a hirer to perform the duties normally performed either by a worker who is taking part in industrial action (a “striking worker”), or by a worker who is assigned to undertake the duties normally performed by such a worker (a “substitute worker”).

That prohibition is conditional upon the employment business knowing, or having reasonable grounds for knowing, that the striking worker is taking part in industrial action.

1. Where the hirer is using agency labour before industrial action starts

The first issue relates to the circumstance where, prior to the industrial action, the hirer (in relation to whom the industrial action is subsequently taken) is already using agency labour from an employment business.

There have been instances where such agency workers have then been allocated to perform the duties of a striking worker or a substitute worker. This has been in circumstances where the duties originally being performed by the agency worker, in advance of the industrial action, were not the duties they were subsequently required to undertake in substitution for a striking worker or a substitute worker during the period of the industrial action.

This practice, in our view, has the effect of subverting the purpose of Regulation 7 because it means that hirers in relation to whom industrial action is being taken are able to divert agency labour away from other previously undertaken duties to undertake duties not being performed during industrial action.

We are aware that at least one trade union has told BERR (now BIS) in the course of an investigation that Regulation 7(1)(a) is breached “where a worker-seeker is supplied to perform duties normally performed by a striking worker regardless of whether on other occasions such a work-seeker is normally supplied for other purposes”.

That assertion was resisted by BERR which replied that: “…[Regulation 7(1)(a)] is not breached “regardless of whether on other occasions such a work-seeker is normally supplied for other purposes””.

If that is the department’s formal position, then we invite it to consider the amendment of Regulation 7(1) to make it clear that work-seekers supplied or introduced originally for other purposes should not be used to perform the duties of a striking worker or a substitute worker. If that is indeed already the department’s formal position, then we invite it to consider issuing guidance to that effect.

2. The condition for the application of the prohibition

The second issue relates to the condition for the application of the prohibition: that the employment business must know or have reasonable grounds for knowing that the striking worker is participating in industrial action.

First, in many instances, there may be no reason why the employment business would know that the striking worker is participating in industrial action. Secondly, where the employment business has been supplying work-seekers before the industrial action, and particularly where the hirer seeks to redeploy the agency worker to perform other duties during industrial action as described above, there is again no reason why the employment business may be aware that work-seekers supplied by it are to be assigned to perform the duties of a striking worker or a substitute worker.

We propose that where a hirer hires, or continues to hire, work-seekers during a period of industrial action, and the work-seeker may be required to undertake the duties of a striking worker or a substitute worker, the hirer should be required to inform the employment business of that fact immediately.

3. Sanction

The third issue relates to one of sanction. The current procedure envisages a complaint being made to the department which will then be the subject of an investigation. This is unsatisfactory because it means that the union is not in practice able to seek redress during the course of the industrial action, save in the case of long-running disputes.

We invite the department to provide for an expedited initial investigation at the conclusion of which either a final determination can be given, or an indication as to whether there are grounds for believing that a breach may have occurred and as to the subsequent steps to be taken.

Case study

Thompsons acts for the GMB union. The GMB called a series of lawful one day strikes last year involving their members primarily working in street cleansing and refuse collection for Leeds City Council.

It became apparent during the industrial action that Leeds council was using agency workers to replace those employees who were on strike. Regulation 7 states that “an employment business may not supply a temporary worker to a hirer to replace an individual taking part in an official strike or any other official industrial dispute”.

Any agency found to be in breach of the regulations is liable to criminal prosecution with a fine of up to £5,000. Dozens of Leeds based employment agencies, including those specifically suspected of supplying workers to Leeds CC during the industrial action (including Hays, Brook Street and Taskmaster) were sent a letter by Thompsons reminding them of the regulations.

A complaint was made regarding the breaches by these firms to BERR in early May 2008. A formal reply was received six months later in November which stated that the information and evidence gathered did not prove "beyond all reasonable doubt" that regulation 7 had been breached.

The primary evidence this response was based on appears to be data regarding the numbers of agency workers supplied in the period before, during and after the industrial action. BERR advised that they had reminded some agencies as to the requirements of the legislation as "there is a suggestion that the agencies may have supplied additional temporary workers during the period of industrial dispute".

Following this Thompsons made a request under the Freedom Of Information Act for the evidence the decision not to prosecute was based upon and details of any previous prosecutions under the Regulations. BERR declined to provide us with the evidence citing exemptions under the Freedom Of Information Act but did confirm that there had been no prosecutions under Regulation 7 since it came into force in April 2004.

It is clear that the burden of proof required and the evidential basis upon which prosecutions are being considered under the regulations is hampering the successful enforcement of them and those with a legitimate interest in understanding why prosecutions are not being brought are prevented by the Freedom Of Information Act from getting a transparent and detailed rational as to why this is the case.

Response to consultation questions

Upfront fees

Thompsons supports the position of the trade union BECTU that unscrupulous practices have not been prevented by the seven day cooling off period since it came into force in April 2008. We believe that it was entirely unrealistic to expect such a short cooling off period to end the exploitation of vulnerable workers in the entertainment sector.

We support BECTU’s call for a complete ban on upfront fees for work finding services, other than by legitimate directory services as per option 1B. This would not damage legitimate firms working in the entertainment industry. Only rogue agencies will be damaged by such measures.

We also support BECTU’s call for a licensing system for agents in the entertainment sector and an enforcement system with teeth to underpin the regulations.

Temporary workers employed through umbrella companies

Thompsons believes that the opt out for umbrella companies must end. Therefore we support the repeal of Regulation 32. It should be an offence for any agency to say that work can only be found for an individual if they are prepared to go to an umbrella company.

In the current economic climate it is vital that employment rights are upheld. No worker should be able to opt out of certain employment rights and no job should depend on their being prepared to. It is inevitable that vulnerable workers will choose such opt outs in order to get work.

Any exemption to the regulations, whether or not intended only for a professional “elite”, will inevitably be exploited by unscrupulous agencies.