Protection of Employees (Temporary Agency Workers) Act, 2012

What is the Temporary Agency Work Act which was published on 16th December 2011?

The Protection of Employees (Temporary Agency Work) Act 2012 was signed into Irish law on 16th May, 2012. It arises from EU legislation – the Temporary Agency Workers Directive – which is an EU Directive.

It is the third piece of legislation in the European Union’s employment law package to protect “atypical” working. The other two pieces are the Part Time Workers Directive and the Fixed Term Contractors Directive. Both of these Directives have been enacted into Irish legislation already.

The main purpose of the Temporary Agency Worker Directive of the EU is to ensure the protection of temporary agency workers through the application of the principle of equal treatment, which already applies to fixed-term and part-time workers, and which, through this Directive is extended to agency workers.

The EU Temporary Agency Workers Directive (2008/104/EC), published in November, 2008, was to be implemented into Irish law by the 5th December, 2011. However, the social partners in Ireland failed to agree terms to enable its enactment by this deadline, but the new Act will be retrospective to the 5th December, 2011 in some respects.

This briefing notes sets out the overall contents of the Act, who it affects and how.

What Does the Act Actually Do?

The Act provides rights to equal pay and equal treatment of temporary agency workers.

Thus, temporary agency workers will have day one rights to be treated no less favourably in terms of basic working and employment conditions, to include pay, and access to collective facilities and information about permanent vacancies in the hiring organisation (“the Hirer”) as 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”).

The Act also sets out the remedies available for workers whose rights under the legislation are breached.

Is there a Qualification Period?

The Act does not provide any qualification period for these rights. Each agency worker is entitled to these rights from the first day of his or her assignment to a hirer.

Definitions of ‘Agency Worker’ and ‘Employment Agency’

The following definitions of ‘agency worker’ and ‘employment agency’ are important to understand, as those who fall within the scope and outside of the scope of the Act will largely be determined by these two definitions.

What is an Agency Worker?

According to the Act, an ‘agency worker’ is a person “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”).”

The key words here are ‘under the direction and supervision of, a person other than the employment agency’.

What is an Employment Agency?

An ‘Employment Agency’ according to the Act is “an entity engaged in an economic activity who 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 definition of ‘Employment Agency’ above may encompass certain companies which are not registered as employment agencies but which are effectively acting as employment agencies under this Act.

Who is a Hirer?

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.

Who does the Act apply to?

It applies to temporary agency workers who are employed by an ‘employment agency’ under a contract of employment and are assigned to work temporarily for, and under the direction and supervision, of another firm.

Who does the Act not apply to?

During the debates on the Act 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 as 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, and employs and manages, 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.

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.

What does it mean for Agency Workers?

With effect from 5th December, 2011, all temporary agency workers are entitled to equal pay as if they were directly recruited to the same job by the Hirer company.

With effect from 16th May, 2012, all temporary agency workers are entitled to equal treatment in terms of a variety of working conditions, facilities and access to vacancies as if they were directly recruited to the same job by the Hirer company.

Equal Pay and Treatment to Direct Hired Workers

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.

Therefore, what the Hirer must show now is that the agency worker is in receipt of no less favourable terms and conditions than if the employer went out to the labour market on the same day and directly recruited for the role.

What does ‘equal pay’ mean?

Equal pay includes:

• Basic pay, and
• Any pay in excess of basic pay in respect of:
o Shift work
o Piece work
o Overtime
o Unsocial hours worked
o Sunday work

This is the definitive list of ‘pay’ items included in the Act. Everything that is not specifically included in the definition of pay above is excluded from the definition of pay.

Thus, elements of pay which are excluded from any calculation of equal pay include:

• Sick pay,
• Bonuses,
• Maternity/adoptive leave top-ups,
• Medical insurance,
• BIK,
• Ex-gratia redundancy payments,
• Permanent health insurance,
• Occupational Pension schemes, and
• Financial participation schemes e.g. share options

What does ‘Equal Treatment’ mean?

The Act provides for equal treatment of temporary agency workers in respect of the following terms and conditions of employment:

• Working time
• Rest periods
• Rest breaks
• Night work
• Annual leave, and
• Public holidays

Is there anything else included in the meaning of ‘Equal Treatment’?

The Act also provides that temporary agency workers will have access to the facilities of the hirer company, unless less favourable treatment can be justified on objective grounds. This includes facilities such as canteen, car park, or other similar facilities, childcare facilities and transport services (local pick up and drop offs and transport between sites), workplace gyms, vending machines, shower facilities and common rooms.

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.

What else is included in ‘equal treatment’?

The Act also provides that temporary agency workers should be informed about job vacancies in the Hirer company as permanent employees are so informed.

Who should the ‘equal pay’ and ‘equal treatment’ be ‘equal’ to?

The agency worker is to be provided with equal pay, and equal treatment, to a directly hired employee.

The wording in the Act is as follows:

“… [a]n agency worker shall, for the duration of his or her assignment with a hirer, be entitled to the same basic working and employment conditions as the basic working and employment conditions to which he or she would be entitled if he or she were employed by the hirer under a contract of employment to do work that is the same as, or similar to, the work that he or she is required to do during that assignment.”

This means that an agency worker is entitled to the basic working and employment conditions which he or she would have been entitled if he or she had been hired directly to do the same or a similar job.

Exceptions and Limitations

A number of exceptions and limitations apply to the general principle of equal treatment of agency workers.

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”.

The following is not an exhaustive list.

• The equal treatment‖ provisions in the Act do not have any practical effect where there are no generally applicable terms and conditions of employment in the hirer. Generally applicable terms include contractual terms set out in collective agreements or company handbooks, as well as standard company practices. They do not include individually-negotiated terms. So, for example, where an agency worker is hired to fill a unique role in a hirer company – in respect of which there is no established rate of pay – the agency worker does not have a right under the Act to any particular rate of pay.

• Employment agencies may exclude the provisions of the Act that relate to pay by using a new type of contract, described as a permanent contract of employment. To avail of this exception certain conditions must be met, including the following.

• Permanent in this case means a contract of indefinite duration, terminable in the normal way.

• The permanent agency worker must be notified in writing prior to signing the permanent contract that by signing the contract he or she is giving up his or her right to equal pay.

• The permanent agency worker must receive pay between assignments while he or she is not actually working. This must amount to at least 50% of the pay during his or her most recent assignment and is subject to other provisions which may further increase the amount payable.

Permanent agency workers are included in all other provisions of the Act e.g. working conditions, access to facilities, and information on vacancies.

A permanent agency worker is a person employed by an employment agency under a ‘permanent’ contract of employment (contract of indefinite duration), and who is assigned to work for, and under the direction and supervision, of another firm.

Anti-avoidance Provisions in the Act

The Act prevents the use of successive assignments of agency workers designed to circumvent and override the entitlements conferred on them. This will regulate situations where agency workers receive a series of assignments with the same Hirer company with short breaks (of up to three months) between assignments. The effect of the new provision is to aggregate the different periods of assignment. This would be of relevance where a Hirer operates an incremental scale of pay, whereby direct recruits receive a fixed pay rise after each year of service.

In such a case, where an agency worker is assigned to that hirer for a year; leaves for a month; and is re-assigned to that Hirer, the agency worker would not start the second assignment on a “day one” basis but instead returns for the second assignment on the second point in the pay scale.

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.

Aggregation of Periods of Service

The Act makes special provision for any agency worker who is engaged by the same hirer on a series of assignments provided that these assignments are separated by periods of time of not more than three months each. In such a case, the aggregate period of service of all such assignments (though excluding the breaks between assignments) is to be counted for the purpose of determining the agency worker’s ―basic working and employment conditions.

Who is the Employer?

The Act provides clarity that the employment agency, not the Hirer company, will be deemed to be the “employer” of the agency worker.

The primary redress therefore for an agency worker will be against the agency which employs them, not the Hirer company.

However, in the event that any fault lies with the Hirer company (such as where it may have inadvertently provided incorrect details of the pay of comparators) then liability will pass to the Hirer company.

How is an employment agency to know what the applicable terms and conditions in the Hirer company are?

The employment agency should request of the Hirer company information in relation to the pay and relevant working conditions of comparable employees to the agency worker.

The Act proposes that this is retrospective to the 5th December, 2011.

What must the Hirer company tell the Agency?

The Hirer company must provide the agency with:

“all such information in the possession of the Hirer as the employment agency reasonably requires to enable the employment agency to comply with its obligations under this Act in relation to the agency worker.”

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.

Who has 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. This includes working conditions which are under the control of the Hirer such as rest breaks, annual leave and public holidays, and working time, is provided to the agency worker. This is the case notwithstanding the fact that they are not under the control of the agency.

The Hirer has liability for failure to provide access to collective facilities.
The Hirer is also responsible in relation to the provision of information on vacancies.

What are the Remedies and Redress Mechanisms for the Agency Worker?

Agency workers 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 if 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.

The employment courts also have options such as recommending a course of action, re-instatement or re-engagement (where there has been a dismissal). This is in addition to making good any difference in pay and working conditions.

What if Hirer doesn’t Provide the Information or doesn’t Provide the Correct Information?