Employment Law and Employment Agencies: A Case for Legislation?

Two articles caught my eye this morning, this harrowing account in the Guardian, of a Chinese migrant worker who collapsed and died after working a 24 hour shift in a plastics plant in Teeside providing parts for Samsung, and this BBC article about the TUC's campaign on the rights of migrant workers. The problem is widespread in Ireland also, and numerous article in the papers have detailed the problem in Ireland.

One should also remember that, despite an almost total media blackout, the UK and Ireland managed to block an EU directive to force employers to grant equal rights in the workplace to non-permanent workers. This would have, for example, ended the "dirty" practice of subtracting public holidays from statutory minimum holidays (a practice widely operated by agencies) and denial of rights to long term temporary workers. Although this was widely covered in the UK media, in Ireland there was a near media blackout on the subject. Ireland continues to pretent to be a friend of the employee. And not a squeak from the Irish trade union quango, who continue to butter up their elite of public sector and spoilt brat unionised private sector workers at the expense of a large and growing minority of unrepresented private sector workers whose working conditions are rapidly deteriorating in comparison to their pampered public sector colleagues.

Another directive which Britain and Ireland blocked was an entitlement to sick pay schemes. At present sick pay schemes are not compulsory and a growing number of employers, particularly in Britain, have no occupational sick pay scheme. In Ireland, it is common practice by many employers to run an occupational scheme but deduct the different between the state scheme and its scheme, thus forcing the employee to claim statutory sick pay - which effectively means that tax payers are subsidising their schemes. At least they have such a scheme - when I worked in London in the first half of 2001, sick pay was nothing but a pipe dream, and the gap between the statutory rate (about £53 or so per week) and a normal weeks pay made being sick a worrying concern. You simply cannot afford to be sick if you are not being paid. This forces people to attend work while ill, which both spreads infections and damages productivity.

On top of this its important to realise that contrary to popular opinion, temporary workers are not better paid than their permie counterparts. Quite the opposite. An extremely high proportion of vulnerable low paid workers in the UK in particular are coming from this area, and a huge number work in once well paid and protected public sector jobs. In Ireland, the highly pampered life of the public sector worker is increasingly incensing the private sector, which may well give rise to public pressure for the sort of employment system that has developed in the UK in recent years.

One of the key cornerstones of this system is the employment agency. Agencies are now routinely used to prevent the additional expense of having to pay employee benefits such as pensions, sick pay, etc. I'm not even talking about perks like health insurance, a canteen or a company gym, I'm talking about staples like sick pay and employers contribution to a pension scheme.

Its no surprise that both the UK and Ireland have created a new pension scam to protect "mean" employers who will not provide pensions for their employees. Both the UK Stakeholder pension and the Irish PRSA have one thing in common - they both remove the requirement for an employer to make a "meaningful contribution" to the company pension in order for it to be state recognised. So now, the governments are basically creating pension schemes, for free, for employers too stingy to create proper occupational schemes. (Even the meanest of the multinationals make contributions to their employees pension schemes. This new system means that employers get a free ride). Basically the only difference between a standard PRSA and a traditional defined contribution pension is that the employer doesn't have to contribute to the PRSA. Not that it costs the employer much to do so - an employer making a contribution can receive up to a 80% tax rebate on their contribution, making even small contributions highly cost effective.

According to the TUC study above, over 80% of all temporary workers work directly for an employer and more than 50% receive the same pay and benefits as a permanent staff member. However, the figures for full inequality - lower pay, no pension, no sick pay - 14%, almost exactly matches the rates of temporary workers working for agencies - 16%. This would suggest that cut-price employment terms are almost exclusively associated with working for an agency. Also as many as 50% of all agency workers do so because they could not get a permanent job.

The Chinese case is particularly chilling, and typical of what is happening in Ireland also. As the wages are too low to attract local staff, the migrant worker system is being cynically manipulated in order to keep wages at a minimal level. An agency is hiring (and effectively employing) foreign workers, many with false identities and permits, most being paid cash in hand. The "agent" is not only hiring and employing, he (or she) is also providing cattle-like hostel accomodation, and transport, for which a premium is deducted from the workers wage packet. They often also charge a placement fee to the worker on top of this. In Ireland the situation is even more serious as migrant workers permits are held by the employer, leaving the worker entirely at the mercy of the manipulative and exlpoitative worker.

In Ireland last year, one particular employer was convicted for withholding no less than €50,000 from two workers from South America that they were entitled to. The employer was also fined, and immediately decalred herself bankrupt, therefore leaving them entirely in the lurch. Ireland's work permit system is effectively a slavery charter for many migrant workers, whose entire lives can be at their mercy.

In the UK, as many as one third of all agencies open or close their doors in any calendar year. Unlike continental europe, where agencies are carefully regulated, agencies can open up and shut down ad lib, and are often just a cynical means to prevent a company from directly employing anybody. In fact many contract companies have virtually no real employees, hiring through exploitative agencies in order to cut costs to and through the bone. Another practice which is widespread in the UK is "baiting." This is where false jobs (or jobs already filled) are advertised in order to get cvs. These are then kept for presentation to employers, and the employee is basically left hanging loose. Another sharp practice is where employers use multiple agencies to hire, and therefore a single "job" may be advertised by several different agency, making it appear that there are several times the number of vacancies. One company in Dublin who uses this practice advertises through at least 20 different agencies, which gives a false impression by multiplying its vacancies several times.

Another, particularly notorious practice, which was particularly used by Chamberlain Scott UK (though I confess I found their Dublin office quite good and they got me several interviews in 2000), was to advertise for a non-existent role and then demand referees contacts. The agency then went on to contact the referee, not for a reference, but to see if they could get business!

I would suggest that regulation be enacted to prevent abuse:
- Agencies should be prevented from charging prospective workers
- Agencies should be disallowed from charging "introduction fees" for temporary workers who subsequently are hired by the company they are placed in (this is in addition to ongoing temp fees)
- Agencies should be prevented from discounting employers where employees are fired or leave, thus discouraging them from placing multiple employees in unsuitable positions in the hope that a few will work out
- Employers should be forced to offer the same pay and conditions to employees after no more than 6 months continuous work, regardless of contractual agreements
- It should be ABSOLUTELY ILLEGAL for an employer to "ask" (i.e. compell) their employees to sign away statutory entitlements such as holiday pay
- Also it should be against the law to include bank holidays in holiday entitlements unless permanent employees are treated the same


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