Jennifer Cashman and her employment team at Ronan Daly Jermyn, Cork and Galway, have written a comprehensive guide to the Agency Work Act and the practical implications for business. This is a complex piece of legislation, with several changes made to the December 2011 draft, and we would urge our readers to carefully consider the content of this article from RDJ.


1. Introduction

Yesterday, the President signed into law The Protection of Employees (Temporary Agency Work) Act, 2012, (“the Act”).

Since the publication of the Bill on 16th December last, some of the provisions of the proposed legislation have been the source of considerable debate.
In particular, the proposed retrospective nature of the legislation, to 5th December, 2011, caused much confusion and concern to all sides of the debate.

In that regard, the Bill as originally published provided that, with the exception of the provisions relating to offences or the instigation of legal proceedings, all other provisions of the legislation would be deemed to have come into effect on 5th December, 2011.

In light of the resulting debate on this issue, the Minister considered the matter further with the Attorney General and the result is that the Act restricts the application of retrospection to pay only and not to any of the other basic working and employment conditions which come within the scope of the legislation. While any limitation on retrospection is welcome, it would have been preferable if the Minister had deleted the concept entirely from the legislation.

There are other welcome changes to the Act as originally published, such as that the concept of a comparator has now been entirely excluded from the legislation, as discussed below.

Therefore, what we have is an Act that is far from perfect for any side of the debate about agency workers’ entitlements, but which is a vast improvement on the original Bill published in December.

The Minister also intends shortly to publish Implementation Guidelines which should be a useful aid in interpreting the legislation.

This article addresses the more important provisions of the Act and what it means for you – whether you supply or hire the workers protected by the legislation.


2. What Does the Act Actually Do?

The Act confers rights to equal treatment on temporary agency workers. In this regard, such workers will have day one rights to access to collective facilities and information about permanent vacancies in the hiring organisation (“the Hirer”) along with the right to be treated no less favourably in terms of basic working and employment conditions, to include pay, than if they had been directly recruited by the Hirer.

The Act also places obligations on the Hirer to furnish information to the agency which supplied the worker (“the Agency”) and sets out the remedies available for workers whose rights under the legislation are breached.


3. Scope of the Act

“Agency workers” are defined in the Act as individuals employed by an employment agency (“the Agency”) under a contract of employment by virtue of which the individual may be assigned to work for and under the direction and supervision of a person other than the employment agency (“the Hirer”).

During the debates on the Bill in both Houses of the Oireachtas, the Minister confirmed that employees of contractor companies and limited liability companies, where the worker is the beneficial owner, who are placed by the Agency are outside the scope of the Act. It also seems clear that those who are employed under a Managed Service Contract are excluded.

A managed service contract is based on a contract for services that sets out certain service level arrangements. The managed service contractor has responsibility for managing and delivering the service, (often catering or cleaning services), and employs, rather than supplies, the workers. The managed service contractor must be genuinely engaged in supervising and directing its workers on site on a day to day basis and must determine how and when the work is done. Therefore, having an on-site presence would not necessarily be sufficient to meet the definition of a managed service contractor.

An “Employment Agency” is defined under the Act as an entity engaged in economic activity that employs an individual under a contract of employment by virtue of which the individual may be assigned to work for, and under the direction and supervision of, a person other than the Agency.

The Hirer is defined as an entity engaged in an economic activity for whom, and under the direction and supervision of whom, an agency worker carries out work pursuant to an agreement (whether in writing or not) between the employment agency, who employs the worker, and the Agency.

It is important for all parties to keep in mind that the labels placed on a particular relationship may not reflect the reality of the day to day workings and it is the latter which will determine whether an arrangement really falls within the scope of the Act.


4. Placements Outside the Scope of the Act

The following placements are not caught by the Act;

* Work placements administered by FAS.
* National Internship Scheme.
* Any vocational training, integration or retraining scheme, financed out of public moneys, as specified by Ministerial Order.


5. Agency Worker Entitlements

The Act provides that agency workers are entitled to the same basic working and employment conditions as if they had been hired directly by the Hirer under a contract of employment. This is a significant improvement on the position as set out in the Bill originally published in December which referred to the concept of a “comparable employee”.

During the debates in both Houses of the Oireachtas, concerns were raised about the inclusion of the notion of a comparable employee given the potential difficulties to which this notion could give rise in practice. Arsing from these concerns, it was decided to remove from the legislation the notion of the comparable employee and to defer to the wording of the Directive from which our legislation is derived.

The main problem with the “comparable employee” notion was that such persons might have been employed when conditions in the labour market were more favourable. Therefore, as a result of the modifications to the legislation, what the Hirer must show now is that the agency worker is in receipt of no less favourable terms and conditions, as defined above, than if the employer went out to the labour market on the same day and directly recruited for the role. This is a fairer approach all round and will provide more certainty and will, in our view, result in less claims under the Act, which is a welcome outcome.


6. How Basic Working and Employment Conditions are Defined

The concept of “basic working and employment conditions” is defined in the Act as follows;

* Pay (as further defined below)
* Working time;
* Rest periods;
* Rest breaks;
* Night work;
* Annual leave;
* Public holidays

“Pay” is defined in the Act as comprising the following;

* Basic pay;
* Shift Premium
* Piece Work
* Overtime
* Unsocial hours worked
* Hours worked on a Sunday.

This list is exhaustive and therefore anything not included in this list falls outside the definition of “pay” for the purposes of the Act. Therefore, occupational pension schemes, financial participation schemes, sick pay schemes, BIK. Bonuses, maternity/adoptive leave pay and redundancy payments are all outside the definition of pay.

The right to equal pay only has effect as and from the 5th December, 2011 and therefore agency workers are entitled to this right backdated to 5th December last, but no earlier.


7. Permitted Pay Exemption

In respect of pay only, if the agency worker is employed under a permanent contract of employment with the Agency, and is paid between assignments, the principle of equal treatment does not apply. There are, however, certain minimum requirements that must be met in order for this exception to apply and therefore careful drafting and scrutiny of the contractual documentation between the agency and the agency worker will be necessary to ensure that such requirements are in fact met.

This is referred to as “The Swedish Derogation”. It is not a model which has been widely used in the past and has proven to be a controversial concept during the debates on the Bill. However, the exemption has made it to the Act and will undoubtedly prove to be a popular concept with the Hirer.


8. Anti Avoidance Provisions

Section 7 of the Act is entirely new and prevents the use of successive assignments of agency workers designed to circumvent and override the entitlements conferred on them. Agency workers on assignment with the same hirer, in a series of assignments, cannot be reverted to the starting point each time a new assignment commences. In this regard, a three month break, or more, will operate to break a series of assignments.

The Act defines what constitutes a series of relevant assignments which is that the Hirer is the same person, or a person connected with the Hirer; the agency worker is the same person and works in whole or in part at the same place of work; his/her work is directed and supervised from the same place and the work done is the same or of a similar nature, and undertaken in the same or similar conditions, with any differences being of minor significance.

Essentially, this new provision ensures that agency workers will properly accumulate service and other entitlements under employment law, thus the first assignment in a relevant series is treated as the objective starting point for determining the commencement of the assignment.


9. Access to Collective Facilities

The Act provides that agency workers must be treated no less favourably with regard to access to collective facilities and/or amenities, unless less favourable treatment can be justified on objective grounds.

The concept of collective facilities/amenities is not defined in the Act but will include canteen facilities, car parking facilities, child care facilities (such as an on-site crèche), transport facilities, workplace gyms, vending machines, shower facilities and common rooms. It is not anticipated that the entitlement to transport facilities will extend to company car allowances but will instead be limited to local pick up and drop offs and transport between sites.

This is the only element of the Act where there can be “objective justification” for treating the agency worker less favourably. In other words, there must be a good reason for treating the agency worker differently in this regard. The justification test is far from straightforward. Cost is unlikely to suffice on its own and practical and organisational considerations will also have to be advanced to justify less favourable treatment.
Agency workers do not have an entitlement to enhanced rights. Therefore, for example, if there is a waiting list for a crèche facility, an agency worker is entitled only to join the waiting list.

Agency workers are also entitled to the same access to information on job vacancies in the Hirer as permanent employees. The Hirer will therefore need to ensure that agency workers are made aware of where such vacancies will appear (e.g. company intranet/notice boards etc).


10. Duty to Provide Information

The Hirer has a duty to provide the Agency with all such information, in the Hirer’s possession, as the Agency reasonably requires to enable the Agency to comply with its obligations. The Act provides am statutory indemnity for the Agency from the Hirer where contravention of the Act is attributable to the failure of the Hirer to provide the information.

The Act does not contain a list of the information required in this regard and therefore it will be a matter for interpretation in each case as to what information the agency reasonably requires to meet their obligations in this regard.

The flow of information between the Hirer and the Agency is therefore a key element of this Act and many agencies have already written to Hirers seeking information to meet their obligations in this regard. Agencies and hirers must now work together to set up appropriate systems for the flow of information in this regard, ensuring that all data protection issues and confidentiality issues are adequately addressed.


11. Liability under the Act

The Agency has liability for failure to provide equal treatment in respect of pay and/or basic working and employment conditions. The Hirer has liability for failure to provide access to collective facilities and/or access to information on vacancies.


12. Remedies

Agency workers, or a trade union representative on their behalf, who allege contravention of their rights under the Act must furnish their complaint to the Rights Commissioner Service of the Labour Relations Commission within 6 months of the date of the alleged breach (or 12 months of the worker can show reasonable cause for the delay). A maximum of 2 year’s gross remuneration can be awarded by way of compensation under the Act.


13. Practical Advice

A. Advice for Agencies

If not already completed, agencies should urgently review their contract documentation with hirers. Agencies should now look at drafting indemnities/warranties for that contractual documentation.

Agencies will need to include an obligation on the Hirers to provide information about pay and basic working conditions in order to ensure that its temporary workers are being treated in accordance with the Act and have been paid in accordance with the Act as and from the 5th December 2011. Agencies should seek information from their Hirers in writing in relation to what the Hirer is/would be paying a directly recruited employee. The request should be documented and retained on file. Should the information not be forthcoming, the Agency should take reasonable steps to follow up and obtain the information from the Hirer. Such documentation will be necessary to limit the Agency’s liability under the legislation.

Agencies should also look at what information they will be required to furnish to the Hirers about how individual agency workers are retained by them. Hirers will need this information in order that they can determine who exactly in their organisation is caught by the provisions of the Act.

Furthermore, agencies should prepare themselves for queries from hirers on the “Swedish Derogation” and should review what additional safeguards and protections the Agency will require from the Hirer to take on the liability of employing temporary workers and paying them between assignments.


B. Advice for Hirers

Hirers should equally review their contractual documentation with the Agency and may also wish to seek appropriate contractual protections from the Agency in respect of that Agency’s compliance and confirmation as to how agency workers are retained by the agency. Hirers should also seek information from the Agency about how individual agency workers are retained (i.e. are they retained through a limited liability company or otherwise) as this information will enable the Hirer to determine who in their organisation is caught by the Act.

Hirers should undertake an immediate workforce audit in order that they can group workers together and determine who exactly is caught by the Act.

Hirers then need to give consideration to what a directly recruited employee would have been paid as and from the 5th December 2011. This information, where appropriate, will need to be furnished to the Agency in relation to the specific workers caught by the definition of agency worker as outlined above.

Hirers also need to give consideration as to who in their organisation has responsibility for liaising with the Agency and coordinating the flow of information to ensure the organisation is legally protected in so far as practicable.

The Agency and Hirer alike should obtain assistance from their legal advisors in drafting the appropriate contractual protections that can now be inserted into existing arrangements.


14. The UK Experience

It is now over six months since the UK introduced its equivalent legislation, the Agency Workers Regulations 2010 (“the Regulations”). At the end of April, two press releases were issued on the same day from both sides of the agency worker fence. In this regard, the Professional Contractors Group (PCG) and the Recruitment and Employment Confederation (REC) both issued survey findings.

The PCG findings suggested that the Regulations have been something of a non-event in the UK with 77% of respondents stating they had not been affected by the Regulations in the slightest. Of those affected, 16.3% reported being affected a little and only 6.7% reported being affected a lot. This is comforting for businesses in Ireland who must now begin to grapple with the new law.

On the other hand, the REC findings suggested that the Regulations have resulted in a reduction of the use of agency staff. Anecdotally, it appears that many UK employers are utilising the “Swedish Derogation” model and many more are terminating agency assignments before the 12 week threshold provided for in the Regulations.

Interestingly, the UK Government has confirmed that it intends to review the paperwork obligations of the Regulations to expose any unnecessary and burdensome paperwork obligations which are not required by law, with a view to removing them.


15. Conclusion

The Act was a long time coming. Now that it is here, it is going too far to suggest that it will make the use of agency workers uneconomic or burdensome in the future. However, the Act contains significant changes to our existing legislation and it is vitally important that hirers, agencies and workers alike are familiar with these changes. It is also important to remember that the Act operates alongside existing rights and current law governing agency workers.

We in RDJ are committed and well placed to support the agencies and hirers alike in interpreting the legislation and adjusting your business for the changes required.