Willie O'Dea (Limerick City, Fianna Fail)

I am extremely relieved with regard to the final statement by the Minister, namely, that he intends to bring forward amendments on Committee Stage. Unfortunately, the Bill bears all the hallmarks of being hastily drafted. Essentially, what we are doing here - albeit we are being compelled to take action on foot of an EU directive - is adding to the difficulties faced by employers in the context of taking on employees. The last thing required in respect of such a move, particularly in light of our current position, is uncertainty.

Temporary agency work is essential to the smooth functioning of a modern economy. As the Minister pointed out, this type of work is not a private sector phenomenon because it also obtains in the public sector, particularly in the context of the HSE. Agency workers sometimes manage to obtain full-time positions out of placements they obtain. However, many of those to whom I refer are involved in this type of work on foot of a lifestyle choice. It suits them to work in a temporary capacity. It is difficult to identify the number of agency workers here at present but the best estimate is that there are between 35,000 and 45,000 of them.

The availability of the facility of agency work is especially important to the multinationals which invest in this country and on which a great deal of our economic well-being currently depends. If, for example, a multinational decides to establish operations here, while it is carrying out a proper recruitment process, and so on, and building up its workforce it can take on agency workers and commence production immediately. There are various other reasons the facility of agency work is particularly attractive to multinationals. In that context, the Minister referred to peaks and valleys in production. If such companies wish to commence operations in a new area of production, they sometimes take on agency workers to carry out the work.

Ireland is noted worldwide for its highly-skilled and flexible workforce. We must, therefore, avoid at all costs any measures which impact not just negatively on the engagement of temporary agency workers but which would jeopardise investment, whether local or foreign. Such an outcome would have catastrophic consequences in light of the current position regarding unemployment in Ireland. I do not know the motivation of those who put forward the relevant EU directive. I am sure it did not revolve around making agency work not viable.

Approximately 3,000 temporary agency workers are employed in the recruitment industry here. Globally, the use of agency workers has increased significantly in recent times. In that context, it is estimated that the number of agency workers, or their full-time equivalents, increased from 5.2 million to 8.9 million between 1999 and 2009. The numbers in this regard remain strong in recent years despite the recession. There is a notion abroad that agency workers are concentrated exclusively at the lower end of the labour market but that perception is changing. The opposite appears to be the case. Studies carried out by the CBI in the United Kingdom show that in sectors such as energy and water, 7% of employees are agency workers, that in the manufacturing sector the figure is 5% and that the figure for lower-paid and lower-skilled areas such as retail is approximately 1%. This would tend to dispel the idea that agency workers fall into the same category as those whose terms of employment are governed by JLCs. The difference between these two categories is vast.

As the Minister indicated, in the past, agency workers were treated, to use Kipling's phrase, as "lesser breeds without the law". In 1970, the English High Court found that a temporary agency contract is not a contract for services but a contract sui generis - in other words, a contract exclusive to itself - a different kind of contract from either of the familiar two, namely, an employment contract or a contract for services. This decision was cited with approval in several decisions subsequently handed down in the Irish superior courts. Under successive Governments during the past two decades, almost every item of labour protection legislation passed by the Irish Legislature has conferred on agency and temporary agency workers protection equal to that conferred on their full-time counterparts. As the Minister pointed out, agency workers now enjoy legislative protection in the context of equality, health and safety, working time, payment of wages, redundancy, maternity, minimum notice and unfair dismissal.

I will make a couple of general points in respect of this legislation. In the first instance, it is retrospective. This must be one of the few occasions - it may be the only such occasion - in the history of the State where detailed benefits are being conferred on employees and detailed obligations are being imposed on employers in the absence of the legislation which makes provision for such benefits and obligations. The edict from the Department of Jobs, Enterprise and Innovation states that the directive effectively came into law on 5 December. For the purposes of legislation, in most cases the agency is the employer. If the agency is to confer on a worker his or her rights under the directive to which I refer, then it will be obliged to consult the hirer company to ascertain how it deals with workers who hold comparable positions. The obligation to convey this information from the hirer company to the agency will, under section 14, only kick in when the Bill is signed into law by the President. The obligation in this regard will have existed from 5 December last but it will only be enshrined in law at some future date. That is curious, to say the least, and it will give rise to a further element of uncertainty in an area where certainty is required.

The Bill bears all the hallmarks of being hastily drafted. I suspect that the Government tried to negotiate in respect of a derogation clause but was unsuccessful and waited until the very last moment before it drew up the legislation. It could easily have drafted the legislation at any time during the past ten months and then waited to see if a derogation clause were forthcoming. The inclusion of a clause would only have added one line to the text of the Bill in any event.

The courts have, naturally and traditionally, been suspicious of retrospective legislation. In the Supreme Court decision relating to the Health (Amendment) (No. 2) Bill 2004, the test applied is outlined in the context of a decision handed down by the late Chief Justice O'Higgins in the case of Hamilton v. Hamilton in 1982 when he stated, "Retrospective legislation, since it necessarily affects vested rights, has always been regarded as being prima facie unjust." The Bill before the House is the first item of labour legislation - transposed from EU law or otherwise - that is being made retrospective. I do not know why that is the case.

The practical difficulty that arises appears to be that employers have issued serious threats to the effect that they will challenge the legislation in the courts. If they do so, not only will the country suffer but employees and temporary agency workers will also suffer in several ways. First, they will not obtain that to which they may be entitled under the legislation until the legal process has been exhausted and that might take years. Second, there will be a marked reluctance on the part of employers to take on agency workers as a result of the uncertainty surrounding this entire area. Third, the uncertainty to which I refer will have an impact on possible investment by multinationals.

Under Article 5 of the EU directive, the Government could have obtained a derogation if it had been able to agree such with the social partners. The Minister referred to negotiations conducted by the previous Government. As I understand it, those negotiations were only in the very early stages when the general election was called. The 5 December deadline had been approaching for ten months while the Government was in office and before it was compelled to bring in the legislation it was incumbent on the Government to agree a derogation period with the social partners but it failed to do so. In the United Kingdom the Government has managed to negotiate a derogation period of 12 weeks but the Confederation of British Industry, CBI, has calculated that, even with a derogation of 12 weeks, some 25% of temporary agency jobs could be lost as a result of the application of the directive. That would equate to approximately 10,000 jobs here with a 12 week derogation but here we have no derogation; the extra obligations on employers kick in from day one.

I am all in favour of equal rights for all workers whether temporary agency workers, casual workers or whatever but we should remember that we are implementing this directive and transposing it into law in a particular context. Everything has a context. The context here is that 450,000 people are unemployed officially and, depending on who one believes, perhaps up to 2,000 people per week are emigrating. Another part of the context is that the country is heavily dependent on multinational investment, especially from the United States, at a time when American investment in Europe is dropping proportionally; they are moving more towards the Far East.

I deplore the failure of the Government to get a derogation. As the Minister rightly recognised in his speech, we are at a competitive disadvantage vis-À-vis our nearest neighbours, those in the United Kingdom. The same applies with even greater force with regard to other European countries. Article 5.3 of the directive states that if a country already has a collective agreement which provides for not so much a derogation but lesser treatment of temporary agency workers, it stands despite the directive. Germany, the Netherlands and several other countries are in the happy position of having such a collective agreement as we speak but we do not. Even with these lesser rights, the Dutch enjoy a six month derogation and the Germans a six week derogation. It is no exaggeration to suggest that we are probably in the worst position of all in Europe and we will be in the worst position when this legislation goes through without derogation. Nevertheless, we support it because it transposes an EU directive and I do not propose to oppose that. I am simply pointing out the obvious. The Minister would agree because in September 2011 in a letter to the leadership of the Irish Congress of Trade Unions, ICTU, the Minister indicated that the provision of a day one equal treatment for agency workers could have implications for jobs. He stated that "without the benefit of some leeway in transposing the directive in the shape of a framework agreement, Ireland will be in a position of significant competitive disadvantage vis-a-vis our European trading partners". He went on to state:

This would be particularly keenly felt given that our immediate and major trading partner, the UK, has already secured agreement for a waiting period of 12 weeks, an arrangement I understand extends also to Northern Ireland. In the current climate and with the significant challenges that face us on the road to economic recovery, we must avail of the flexibilities afforded by the directive.

This is the major flexibility afforded by the directive and apparently we are not in a position to avail of it.

Temporary agency workers in Ireland are already subject to a good deal of the legislation protecting employees rights. However, the directive and the legislation which will transpose it takes the matter further. Thus, the task of the Oireachtas is to make up the difference or shortfall. However, we must do so in a way that minimises the effect of the directive on flexibility and on potential investment, especially multinational investment.

An unduly burdensome transposition could have devastating consequences for employment. This applies not only to agency workers, to which the Minister referred, but to current and potential employees of multinationals. Competitiveness is not only about wages and prices. Flexibility in the labour market is a key element of competitiveness in this country and one we cannot afford to undermine. I refer not only to potential investment but to current investment. We are unusually reliant on foreign direct investment as anyone who read the recent IDA report would readily conclude. The respected economist Mr. Jim Power carried out a study for IBEC on the potential effects of this directive and it is worthwhile to consider the conclusions he reached. For example, from talking to several multinationals he established that the three major attractions for investment in this country were the skill of the Irish workforce, the 12.5% corporation tax and the fact that we have a flexible workforce. It is worthwhile to quote what Mr. Power stated in his report. He stated, "Based on interviews with a number of employers who utilize agency workers and on a considerable body of research, it is very clear that employers in Ireland, be they foreign-owned or domestic employers, regard the proposed introduction of the Directive on Temporary Agency Work as a development that will damage the flexibility of the labour market and ultimately undermine employment in the economy." These are strong words. I understand he researched the matter intensively and spoke to many people. He goes on to state that, "For the multi-national sector, where there is a significant reliance on agency workers due to the flexibility that they give rise to, the Directive as it stands with no qualifying period, is viewed as a development that would undermine flexibility and competitiveness." His conclusion from speaking to those who employ people is that, "The clear view is that a statutory regime that is overly restrictive will act as a major disincentive to employers to engage the services of agency workers."

The Government has stated that everything it is doing centres around job creation. The Taoiseach said as much again today and stated that the Government would pursue job creation relentlessly. In an interview yesterday, the Minister, Deputy Bruton, said that we should be obsessed with job creation. If this is true, then the Government is obliged to interpret this directive in a way that does not hamper job creation or that does so to the smallest extent possible. To do this, the Government should produce legislation that is clear, certain and readily understood and it must retain flexibility to the greatest possible extent.

An unduly burdensome transposition of the legislation would undermine the principle contained at recital 11 of the directive which states, "Temporary agency work meets not only undertakings' needs for flexibility but also the need of employees to reconcile their working and private lives. It thus contributes to job creation and to participation and integration in the labour market." Apart from the disincentive, especially for multinationals, to invest generally, a more immediate consequence would be that employers would simply stop using agency workers. Given that in the majority of cases agency workers are taken on only because the employer has decided for one reason or another not to recruit directly for the jobs, the immediate consequences of a burdensome or legally uncertain transposition would include job losses. This would mean the State had failed in its obligation, set out in Article 2 of the directive, for member states to take into account "the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working."

I have no wish to be personally offensive to the officials but the Bill is rather poorly drafted and I am glad the Minister has proposed to introduce amendments. The last thing we need is uncertainty. If we are to add to employers' burdens and make it more difficult, especially because of the interests of multinationals and large native investors in this area, the least we can do is to make it as simple as possible with the least possible burden.

There are different categories of agency workers listed in the Bill, subject to different limitations and exceptions. I presume it is necessary to do it that way, but it certainly makes the Bill pretty complex. Section 2 defines "agency worker" and "employment agency". The definition of "agency" in section 2(1) may cover certain workers who are contracted by companies that are not registered employment agencies, but are simply in a position of acting in a way that is defined as doing what an employment agency does under the appropriate definition. Is that the intention? Is this to be confined to registered employment agencies that are in the business of providing employees on a temporary agency basis, or is it intended that it be extended to other types of agencies?

The direction and supervision is new. Existing employment statutes use different terminology. I presume the reasons for the new test is the reference to it in the directive, but I am not sure if it was necessary to transpose it into national law. I am sure the matter could have been covered by the well used phrases of the past which have been interpreted and which we all clearly understand by now.

Section 6 deals with the principle of equal treatment. This is unclear to me because it does not seem to distinguish between agency workers and direct recruits where there is a genuine distinction between them. I am not talking here about a notional distinction. For example, a company could take on agency workers to do work which is already being done by experienced recruits who have been working for ten years in the business. This could be the first time the agency workers did this sort of work. I notice there is an attempt in section 2(5) which defines the term "comparable worker" in order to overcome that situation. I would ask the draftsman to have a look at this before the Bill comes to Committee Stage. It does not deal with the problem.

Section 6(1)(b) envisages a situation where there is no flesh and blood comparable employee. In this case, the agency worker is entitled to what a hypothetical employee could be entitled to if one was employed. What about the situation where there is not a comparable employee? What about the situation where the company in question has never had an employee doing that sort of work? What about the situation where a company had comparable employees three or four years ago? We could hardly go back. We are now living in a different country. What is an employer to do in a situation like that in the real world? Is he supposed to look at the pay scales in the industry generally and try to make a comparison from those? It is quite unclear.

Section 6(1) seems to rule out a situation where agency workers could have terms that are different, but in the aggregate, no less favourable than comparable direct recruits. The not less favourable formula is used in the Protection of Employees (Fixed-Term Work) Act 2003 to provide flexibility for employees while still protecting the rights of the workers. The wording of the directive seems sufficiently flexible to allow that concept to be imported into this legislation, yet it is not being done. Why?

Section 2(5) proposes to define "comparable employee". Are paragraphs (c), (d) and (e) of section 2(5) cumulative or are they simply alternatives? If they are cumulative, it would be best to say that. I hope that will be the subject of one of the Minister's amendments. What categories of temporary employees are excluded from the Bill? For example, a situation might arise where a person is to all intents and purposes self-employed, but has incorporated as a company. If that company is contracted by an agency, it may just have the one employee who will work under the direction and supervision of a third party. Is that person a temporary agency worker within the definition set out in the Bill? In other words, is the one man corporate entity a temporary employment agency for the purposes of the Bill? There are many arrangements like that where it is difficult to define a category.

Section 7 allows people to opt out by way of collective agreement. It states that they can opt out provided that the Labour Court is satisfied about a number of things, one of which is that their rights are protected under article 5(3) of the directive. I have examined article 5(3) and I do not think there is any great guidance as to what the Labour Court has to look at when it is deciding, so we should to clarify that.

The definition of "pay" is a bit curious. It sets out what is included, but it specifically excludes payments under financial participation schemes, sick pay and pensions. It does not rule out things like bonus payments and maternity top-up payments, which are presumably excluded. If they are to be excluded, let us make that clear. If we are expressly excluding certain things, then we might as well expressly exclude anything we want to exclude.

I have difficulty with the redress provisions. I can understand that in an unfair dismissals case, it is the hirer who does the dismissing and he is the defendant. However, it seems that in most cases, the employment agency will be the party that is liable, so if a temporary agency worker is not getting what he or she is entitled to under the legislation, then he or she has to take action in the various fora against the temporary agency. The temporary agency has to defend the case and lose it. In the vast majority of cases, the reason the agency worker is not getting what he or she is entitled to is because the temporary agency got incorrect information from the hiring company. However, the agency has to serve as the defendant in the case, lose the case and then go against the hiring company. That seems extraordinarily complex. Surely there should be some provision whereby the Labour Court should have discretion as to who should be the proper defendant if a case is brought.

Where an agency worker has successive assignments in different hiring companies and when different annual leave arrangements apply to each company, to which is the agency worker entitled? He or she could have accrued leave by working for a succession of hiring companies.

There are many more issues that can be dealt with on Committee Stage, but I am making these points to illustrate that the legislation is pretty unclear. I am extremely disappointed that we are bringing this in without a derogation, thereby putting ourselves competitively at a huge disadvantage vis-À-vis not only our nearest neighbour, which is assiduously competing with us at the moment for mobile investment, but also with other European countries, which have been pushing very hard for this directive when they themselves were protected by internal collective agreements.

It will be quite difficult for somebody to interpret this legislation properly, so we need to bring simplicity and certainty to the legislation. We need to transpose it in such a way that it will have a minimum disruptive effect on employment. We will put forward amendments on Committee Stage to secure those objectives. I look forward to seeing the Minister's amendments. He appears to agree largely with what I have said about the derogation. I hope his amendments will reflect that and I hope he will be sympathetic to our amendments.

See this speech in context