NEWS FROM LABOUR: Labour’s plan to crack down on cowboy employment agencies who exploit workers

Ed Miliband promises that the next Labour government will halt the exploitation of Britain’s million-strong army of agency workers.

The next Labour government will:

• Close loopholes which allow employment agencies to undercut wages of permanent staff
• Ban employment agencies recruiting only from abroad
• Force rogue agencies illegally exploiting their workers to clean up their act through measures such as the introduction of a licensing system.

Mr Miliband will say:

“The next election is not just a choice between parties, it is a choice about whether we have a recovery which works for most people or a recovery that works just for a privileged few, it is a choice about what kind of country we want to be.

“The Government will tell you the economy is fixed, but the British people know it is not delivering for them. The Government wants Britain to compete in a race to bottom with low wages, low skills and less security - but together we know can win a race to the top with higher wages, higher skills and greater security at work. The Government sees nothing wrong with growing inequality and unfairness, but I know Britain can do better than that.

“I believe the basic bargain of our country is that hard work should be rewarded. But too many people face insecurity, exploitation and unfairness at work. It will be the mission of the next government to change this.

“We will not tolerate a zero-zero economy where hundreds of thousands are kept on zero hour contracts while a tiny privileged minority pay zero tax. 

“And nor will we tolerate a world of work that is becoming more brutal because of the way some cowboy employment agencies have been allowed to operate. They are undermining dignity at work, driving down standards and creating greater insecurity for families.

“There has been a huge increase in temporary agency work in recent years. Many employment agencies play their part in supporting businesses, as well as workers, who want flexibility.

“But there is now overwhelming evidence that some are operating in the shadows of our economy and on the margins of law, damaging the basic fabric of British life that hard work should be properly paid.

“Even the industry itself is expressing concern that the number of rogue agencies have increased in recent years. They are breaking the law on the minimum wage, failing to pay their taxes, and exploiting workers to undercut the wages of permanent staff, 

“These rogue agencies need to know their time is up and we will act.

“We will close the legal loophole which allows some to undercut the wages of permanent staff.

“We will stop them from recruiting exclusively from abroad.

“And we will serve notice on the rogue agencies that they must clean up their act.

“We will begin consultations now, even before the next election, on the different ways this can happen such as through a licensing system so we can be sure that agencies are complying with basic standards.” 

Ends

Editor’s Notes:

1. The number of people engaged on a temporary contract by an agency is currently at the highest level since records began in 1997. The latest quarterly data (July-September 2014) shows an increase of 36 per cent in the number of temporary agency workers when compared to the same period in 2009 and an increase of more than 20 per cent on last year. On any given day the recruitment industry estimates that there are more than a million people working on jobs secured by agencies. Employment agencies, some of whom recruit exclusively from abroad, are also a driver of low skilled migration. ONS figures show that the proportion of low skilled jobs in the economy filled by workers from outside the UK has doubled over the last decade.
2. Regulatory bodies including the Employment Agency Standards Inspectorate and HMRC have found evidence of non-payment of wages and tax avoidance schemes. The main industry body for the recruitment industry has warned that the number of rogue agencies has increased over the past three years, exploiting workers with unfair and illegal charges for travel, accommodation and unexplained fees, in some cases leading to non-payment of the minimum wage. These fees can take the form of salary deductions for personal accident insurance even though they are already covered or indecipherable charges for services supposedly being provided by agencies including accommodation and transport to work.
3. A legal loophole known as the ‘Swedish Derogation’ allows agency workers to be paid a lower rate than permanent employees, if they are paid between assignments. However, in practice agency workers are sometimes paid the lower rate even though they work regular shifts. There is also anecdotal evidence that they may be offered work in a remote location or unsuited to their abilities, and then denied the full rate of pay on the basis that they have declined a “suitable” offer of work.
4. A recent report by Liverpool City Council found that some rogue employment agencies are marketing the loophole as a way of reducing costs, and that some employers in the area have subsequently replaced their employees with agency workers paid at a lower rate. The report found that agency workers were increasingly being used for relatively long periods of time, and not just as a stop-gap or seasonal solution.
5. Most other EU countries operate a licencing system which means that when agencies are found guilty of misconduct or breaching the law, authorities have the power to revoke their licence to trade.