After a long delay and much debate, the Protection of Employees (Temporary Agency Work) Act 2012 (the “Act”) was signed into law on 16 May 2012.

This Act transposes into law the EU Temporary Agency Workers Directive (Directive 2008/104/EC). The Act confers rights to equal treatment on temporary agency workers versus directly recruited employees in respect of basic terms and conditions of employment.

The Act is relevant for a significant number of people and businesses. It is estimated that there are approximately 40,000 temporary agency workers and approximately 340 employment agencies in Ireland. Agency workers are thought to amount to almost 2% of the country’s total workforce.

In comparison to the UK, the Act does not include a qualifying period which means the Act applies from day one of an agency assignment. Nor do any pre-existing collective agreements apply as they do in other EU countries. These factors may in due course have a negative impact on Ireland’s competitiveness as a place to do business versus other EU countries as a flexible workforce is high on the agenda of many employers.

Changes to the Bill

The Act is significantly different from the original draft bill (the “Bill”). The changes were largely brought about as a result of feedback from stakeholders and Oireachtas debates on the subject. Most see it as a huge improvement on the Bill but far from an ideal situation.

In particular, the concept of a comparator has been removed from the legislation. This aspect of the Bill was extremely controversial. For instance, it was likely to present serious difficulties for agencies who would have had to provide the same benefits to an agency worker who had just commenced work as to an employee of the hirer who had considerable service or who may have had more beneficial terms due to commencing employment during better economic times. The Act now requires that the agency worker be treated no less favourably than if they had been directly recruited by the hirer. Despite being much more favourable than the concept of a comparator, it may be difficult to show compliance with this provision in practice.

In addition, the controversial issue of retrospective effect from 5 December 2011 (the date required by the EU Directive) now only applies in relation to pay and not other benefits.

Who is covered by the Act?

Agency Worker” is defined as “an individual employed by an employment 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”.

It appears from Oireachtas debates on the issue that employees engaged by managed service contractors providing a service (e.g. cleaners and caterers) are excluded from the provisions of the Act.

Employment Agency” is defined as “a person (including a temporary work agency) 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 first mentioned person”.

Therefore, the concept of an employment agency is very wide and does not have to be an employment agency in the traditional sense.

Hirer” is defined as “a person 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 by whom the agency worker is employed and the first-mentioned person or any other person”.

Main Provisions

Equal Treatment

The Act provides for equal treatment of temporary agency workers from day one of their assignment with the Hirer in relation to:-

  • Basic working and employment conditions,
  • Collective facilities, and
  • Information about permanent vacancies.

Basic working and employment conditions are defined as:-

  • Pay,
  • Working time,
  • Rest Periods,
  • Night work,
  • Annual leave, and
  • Public holidays.

Pay includes the following:-

  • Basic pay,
  • Shift premium,
  • Piece work,
  • Overtime,
  • Unsocial hours worked, and
  • Hours worked on Sunday.

Importantly, pay does not include occupational pension schemes, financial participation schemes, sick pay, bonuses, benefit in kind, contractual maternity/ adoptive leave pay and redundancy payments.

The Act imposes liability on the Agency for equal treatment in respect of pay and basic working conditions. The Act imposes an obligation on the Hirer to furnish such information to the Agency as is reasonably required in order for the Agency to comply with its obligations under the Act. There is a statutory indemnity imposed on the Hirer in favour of the Agency if they fail to provide the requisite information to the Agency.

The defence of objective justification can be employed in relation to access to collective facilities but not in relation to equal pay or access to information. Objective justification will likely be interpreted as it is under the Protection of Employees (Fixed Term Work) Act 2003 as good reasons unrelated to the status of the employee as an agency worker.

The retrospective nature of the Act, which was a controversial issue on the publishing of the Bill, has been limited to pay only. Therefore Agency Workers are entitled to equal pay from 5 December 2011.

Exceptions to equal pay

There is a permitted exception to the equal pay requirements in the Act (dubbed the “Swedish Derogation”). This provides that if an Agency Worker is employed under a permanent contract of employment with the Agency and is paid between assignments, the principle of equal treatment in respect of any assignments will not apply. Certain requirements must be met to avail of this exemption.

Successive assignments

The Act prevents successive assignments of Agency Workers designed to circumvent the entitlements conferred by the Act. Assignments of the same Agency Worker to the same Hirer or an associated Hirer, at the same place of work and directed from the same place of work, carrying out the same or similar work under similar conditions will be seen as a continuous assignment unless broken by a period of 3 months or more.

Remedies

The Act sets out the remedies available to workers whose rights under the Act are breached. A complaint may be made to the Rights Commissioner within 6 months of the alleged breach (or 12 months if the worker can show reasonable cause for the delay). A maximum award of 2 years remuneration can be made to an Agency Worker by way of compensation.

Practical Steps

It is advisable for Hirers to take the following practical steps if they have not done so already:

  • Undertake an audit of the temporary agency workers engaged by them and their terms and conditions of engagement.
  • Consider every term and condition they offer their employees, identify whether it needs to be matched for temporary agency workers and quantify the potential cost.
  • Furnish such information as the employment agency reasonably requires to comply with the equal treatment requirements.
  • Review their contractual documentation with the employment agency and obtain legal assistance in drafting appropriate indemnities and warranties for insertion into new or revised contracts.

It is advisable for Agencies to take the following steps:

  • Agencies will need to draw a Hirer’s attention to the necessity to provide information about pay and basic working conditions to the Agency in order to ensure that equal treatment is maintained between Agency Workers and the Hirer’s staff. The request should be documented and retained on file and should the information not be forthcoming, the Agency should take reasonable steps to follow up and obtain the information from the Hirer. Such documentation may be necessary to limit the Agency’s liability under the legislation.
  • Agencies should review their contractual documentation with their Hirers and obtain legal assistance in drafting appropriate indemnities and warranties for insertion into new or revised contracts and/or to emphasise indemnities provided for in the Act. Article written by Terence McCrannMary Brassil and Natasha Canniffe of McCann FitzGerald