John Perry (Sligo-North Leitrim, Fine Gael)

I thank the Senator for his timely and pertinent comments and observations on the proposed Protection of Employees (Temporary Agency Work) Bill 2011, which is aimed at fulfilling Ireland's EU obligations to transpose the terms of the EU directive on temporary agency work. As such, the Bill represents the last piece of a three-part matrix of employment rights protection geared towards employees engaged in non-typical work patterns, such as in the case of part-time and fixed-term employees.

The Bill is designed to give effect to the EU directive on temporary agency work that was finally adopted in 2008 after several years of discussion. The directive has a transposition date of 5 December 2011. At its core, the directive aims to establish in all member states of the European Union a legal framework in which agency workers are afforded equal treatment in respect of their basic working and employment conditions as if they were directly recruited by a hirer to the same job. In Ireland's transposition legislation, equal treatment is being afforded to agency workers as if they were recruited directly by a hirer to occupy the same job, in respect of basic pay, and any pay in excess of basic pay in the case of shift work, piece work, overtime, unsocial hours worked and hours worked on a Sunday. This is an exhaustive list of those "pay" components that come within the scope of the equal treatment entitlement of agency workers under the transposition legislation and are entitlements directly linked to the work undertaken by the agency worker while on an assignment. This excludes other elements of remuneration that are provided in recognition of the long-term relationship between an employer and a permanent employee, such as bonuses, profit sharing schemes, occupational pension and sick pay schemes, as well as maternity top-up payments and similar benefits.

In short, the directive established a set of minimum rules to be applied by all EU member states having regard to national law, custom and practices in force in each jurisdiction. This is geared towards improving the operation of the temporary agency work sector by promoting job creation and by making agency work more attractive and more amenable to employers' need for flexibility in the labour market. The underlying rationale for the directive, as explained by the European Commission at the time the proposal was first tabled in 2002, was that by extending the equal treatment provision to agency workers at the EU level and by creating a common framework for agency working, this would promote agency work. In the context of its analysis at the time, the Commission pointed to the main difference in terms of intrinsic quality of agency working compared with the terms and conditions enjoyed by employees on open-ended contracts as being related to pay.

The Bill, to give effect to the terms of the EU directive in Ireland, aims to strike the right balance between further protections and a fairer treatment of agency workers while respecting the flexibility for which this work form is known to provide to employers and hirers of agency workers in meeting business needs. In giving effect to the directive, the proposed Bill aims to respect the objective of ensuring fair treatment for agency workers while at the same time striking a balance with the need to ensure the necessary level of labour market flexibility that the employment of agency workers affords for workers and employers alike.

Agency work has a legitimate and valuable role to play in the economy and is the option of choice of some people who benefit from the flexibility, personal freedom and income it provides. It can often keep people in the labour market at times in their careers or lives when they might otherwise be unemployed. It serves the business needs of employers in that this type of atypical working can be used as a complementary workforce to assist in managing the peaks and troughs encountered in the normal business cycle.

In the preparation of the current legislation, my Department conducted a public consultation and obtained the views and observations of a range of key stakeholders, including employers, unions, the recruitment sector and other interested parties, including hirers of agency workers. The outcome of the consultation helped inform core elements of the published Bill. Simultaneously, a regulatory impact analysis was undertaken. This provided an overview by way of qualitative analysis of the potential impact on industry costs and on employment of transposition of the directive into Irish law.

The background to this approach is that it is very difficult to obtain an accurate profile of the agency work sector in Ireland as established statistical sources do not capture this type of atypical work. In general, estimates based on surveys conducted by private employment agencies suggest temporary agency workers represent approximately 2% of the total working population, which amounts to 35,000 agency workers operating in the private and public sector. The majority of agency workers are engaged in the private sector across a diversity of sectors ranging from security, manufacturing, services and ICT. In the public sector, agency working features predominantly in the health sector which employs significant levels of workers on an ongoing basis, a fact that is now more pronounced with the public sector recruitment moratorium. A key message from the impact analysis is that implementation of the directive brings agency workers and directly recruited staff closer together in terms of equal treatment in basic working and employment conditions. It has the potential, therefore, to increase the cost of employment in terms of payroll, holidays and the extension of amenities such as crèches and canteens.

It has been represented that the directive could have an adverse effect on employment, especially in the absence of any derogation facility under Article 5.4, in that for short-term assignments, employers simply will not take on short-term temporary agency workers and instead provide cover with existing employees through overtime or otherwise, with potential for making the black economy attractive. Furthermore, the case has been articulated that job losses could arise from the loss of future investment projects in Ireland due to a perception of the loss of labour market flexibility if a derogation facility under Article 5.4 is not available.

The Department of Health points also to increased costs in terms of Exchequer funding for the employment of agency staff in the health sector following transposition. This will arise as a result of changes that were made to the contracts of agency staff last year which placed agency staff on one of two points of a pay scale that will have to be rolled back given the requirement for equal treatment with direct employees after the directive is transposed. Furthermore, agency staff currently afforded only statutory annual leave will, after 5 December, be entitled to parity with direct employees which will have an incremental cost to the Exchequer in terms of employing agency staff.

The Bill, which was published in December, has the balanced approach required to meet the full and proper transposition of the EU directive. The Government will continue to ensure the necessary balanced approach is achieved in the proposed legislation as it proceeds through the Houses. In the current challenging economic times, growth and employment are necessary prerequisites of a well-functioning economy that can retain and grow employment.