Draft Conduct of Employment Agencies and Employment Businesses (amendment) Regulations 2016

Nick Boles Excerpts

Wednesday 23rd March 2016 General Committees

[The Minister for Skills (Nick Boles)]

I beg to move,

That the Committee has considered the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016.

It is a pleasure to serve under your chairmanship, Mr Wilson.

We need a strong and efficient labour market—a market that gives people opportunities to find appropriate jobs and that gives employers access to the kind of labour that matches their skills needs—to maintain our economic growth and job creation. The recruitment sector plays an important role in making that happen by matching the demand for jobs to the demand for workers.

The sector is regulated by the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003—the conduct regulations. It is important that we reduce the regulatory burden on employment businesses and employment agencies as far as is possible, while increasing the opportunities for British workers to apply for British jobs.

Last year, the Government consulted on a package of measures, building on the previous consultation under the coalition Government, to remove a number of business-to-business regulations and to strengthen the existing legislation that prevents employment agencies and businesses from advertising jobs in other European economic area countries without advertising them in Great Britain and in English. I was inclined to skate over the specific deregulatory measures in the hope that the Committee would not be that interested in each of them, but I find myself facing the hon. Member for Cardiff West, who will have some very tricky questions for me, so I will detain the Committee with a little more detail on each of the deregulatory measures.

Regulation 9 of the conduct regulations, which is being removed, prevents employment agencies and employment businesses from claiming to be acting on one basis to the work-seeker, while stating something different to the hirer. There is little evidence that the regulation serves a useful purpose. We do not need free-standing regulations to underpin a standard that would be enforceable to some extent through contract law or, in cases of fraud, through general criminal law.

Regulation 11 ensures that employment agencies and employment businesses cannot enter into a contract with a hirer on behalf of a worker, and vice versa. The regulation applies to all agencies and businesses, but it is mainly relevant to those operating in the entertainment and modelling sectors. We are removing the regulation because there are sufficient protections in other parts of the conduct regulations, including regulation 16.

Regulation 17, which is also being removed from the conduct regulations, requires employment businesses to obtain agreement to terms with hirers. Although it is important for employment businesses to agree terms with hirers, we believe that it is a business-to-business arrangement and that the two parties should have more flexibility when agreeing such terms.

Regulation 23(1) of the conduct regulations covers situations in which more than one agency or employment business is involved in the supply of a work-seeker. We propose to remove the provision that requires agencies and employment businesses to make checks on one another. We also propose to remove the requirement for them to agree the capacity in which they are acting, which will be done as part of the business-to-business relationship, without the need for regulation.

We will keep the provisions in regulation 23(1) on sectors in which fees may be charged to work-seekers, which generally happens only in the entertainment and modelling sectors. However, we propose to amend the regulation to remove the references to employment businesses. Employment businesses—organisations that place workers on a temporary basis and continue to employ them while they are on assignments—are not widely used in those sectors. Additionally, if an agency in those sectors uses an employment business to supply a work-seeker, regulation 12 should ensure timely payment for the worker in any case.

We also propose to remove from schedule 4 to the conduct regulations the requirement to include certain particulars in the records kept by employment agencies and employment businesses relating to work-seekers. Those records will no longer need to include the date on which the application was received, details of any requirements specified by the work-seeker in relation to taking up employment, and the date on which the application was withdrawn or the contract terminated.

The final deregulatory measures that we are proposing will amend schedule 5 to the conduct regulations and remove schedule 6, thereby eradicating the requirements to include certain particulars in the records kept by agencies and businesses relating to the hirer. Those records will no longer need to include the date that the application was received; the hirer’s name, address and location of employment, if different; the terms offered in respect of the position the hirer seeks to fill; a copy of the terms between the employment agency or business and the hirer; and any document recording any variations, names of work-seekers introduced or supplied, and details of each resulting engagement and the date from which it takes effect.

Removing schedule 6 will eliminate the requirement for agencies and businesses to keep particulars relating to any other employment agency or business. The amendments proposed to schedules 4 and 5, and the removal of schedule 6, will remove the burden of unnecessary record-keeping on agencies and businesses, while having no detrimental impact on the protection of workers.

I turn to the banning of overseas-only recruitment. The current regulation 27A prevents employment agencies and businesses from advertising specific vacancies for a job based in Great Britain in other European economic area countries without advertising it in Great Britain and in English either before or at the same time. As part of last year’s consultation, we sought views on extending the regulation to apply to generic recruitment campaigns. That will close a loophole and increase the opportunities for British workers to apply for British jobs. The proposal will not stop agencies recruiting overseas or in additional languages; we are just trying to ensure that there is a level playing field for British workers by giving them equal access to work through agencies.

[Kevin Brennan (Cardiff West) (Lab)]

We agree with that part of what the Minister is proposing. However, does he acknowledge that, in response to the Government’s consultation, only two organisations in the whole country said that they had information about jobs that had been advertised solely in other EEA countries? Is there any further evidence that there is a genuine problem?

[Nick Boles]

I am happy to get back to the hon. Gentleman if there is any further evidence, but even two is two too many. The measures will reassure people. Even if the loophole is not necessarily being abused a great deal, the provision will reassure people that British workers are being given a fair crack at any job opportunity that opens up in this country.

That brings me to the conclusion of my introductory comments, and I hope that the Committee will support the regulations.

--- Later in debate ---

[Nick Boles]

I anticipated that the forensic zeal of the hon. Member for Cardiff West would not be wanting today; it has never been lacking in any of our previous engagements. As ever, he asked some extremely good questions.

We are entirely at one in recognising that agency workers are potentially vulnerable and open to exploitation. When we started this process, we asked ourselves which laws and regulations protect those potentially vulnerable workers, whether they are being enforced effectively, and by whom. We may end up discovering that the only difference of opinion is that we do not think that the regulations that we propose to repeal or amend are, in practice, necessary to protect potentially vulnerable agency workers from exploitation, because there are other, more effective protections that can be and are being enforced.

I hope that our good faith is underlined by the fact that, as the hon. Gentleman noted, although we originally proposed to remove regulation 27, we listened to the feedback in the consultation, in which respondents raised concerns that it might disadvantage work-seekers if we removed the specification of what should be included in job adverts, and concluded that we should not remove it.

Let me turn to the regulations that we are proposing to remove or amend. I will do my best to reassure the hon. Gentleman. Regulation 9 prevents agencies from acting on one basis for work-seekers and stating something different to hirers. The reason we do not believe that removing it will put work-seekers at risk is that we have not received any evidence of that through the work of the employment agency standards inspectorate or from most of the responses. I acknowledge that the Trades Union Congress took a different view, but no specific evidence has been provided that employment agencies and businesses do claim to act in a different capacity. Therefore, we do not believe that the removal of the regulation will have a negative impact.

I guess that, if there is a philosophical difference between the Government and the Opposition, it is that we do not want to have regulations that are theoretically useful, but unnecessary in practice. We want to be persuaded that regulation is necessary in practice. I am advised that there are existing protections in contract law to protect people, for instance, from misrepresentation by an agency or employment business that cover the sort of abuses the hon. Gentleman is worried about. I repeat that the employment agency standards inspectorate, which sits within the Department for Business, Innovation and Skills, has not given us any evidence of this particular situation arising.

Regulation 11 ensures that agencies cannot enter a contract with a hirer on behalf of a worker, and vice versa. It would most likely protect work-seekers in the entertainment and modelling sectors. The reason we have decided to remove regulation 11 is that we believe that sufficient protection already exists in those sectors through regulation 16, which ensures that an agency that is permitted to charge work-seekers a fee for finding them work must agree the specific terms with the worker, including whether the agency is entitled to act on their behalf in concluding a work contract. Given the existence and retention of regulation 16, we do not believe that the removal of regulation 11 is likely to have a significant impact.

The hon. Gentleman asked about the removal of regulation 17, which requires employment businesses to obtain agreement to terms with hirers. He raised the concern that that would leave work-seekers at risk of not being clear what terms of employment businesses had agreed with hirers. Again, we believe that the terms agreed between the employment business and the hirer are properly part of the business-to-business relationship, and that the two parties should have more flexibility when agreeing terms. The existing regulation imposes a potential criminal liability, which we think is disproportionate for such a business-to-business relationship.

The work-seeker would not be affected by the removal of regulation 17, as the terms of employment between the work-seeker and the employment business would still need to be agreed in line with regulations 14, 15 and 18, all of which we are not proposing to remove. We believe that the work-seeker’s interests are explicitly protected and that the agreements between the employment business and the hirer are, in a sense, a matter for them.

The hon. Gentleman asked about the amendment to regulation 23. It may be that there is a slight lack of clarity on our part here, although I hope not. We believe that we are amending the regulation to remove employment businesses from its scope. That is because this regulation mainly affects those in the entertainment and modelling sectors, where employment businesses are not widely used. If an employment business is used in such a capacity, we believe that sufficient provision exists in regulation 12, which ensures that a work-seeker is paid, so there will not be a lack of protection, even though we do not believe that employment businesses generally operate in the relevant sectors.

I hope that I have given the hon. Gentleman some reassurance, but I am happy for him to come back to me if not.

The hon. Member for Airdrie and Shotts asked about the extent to which there have been discussions with the Scottish Government. The consultation was public and open to anyone to respond to. As he will be aware, employment law is a reserved matter, so we believe that most of the consultation respondents, both positive and negative, including the TUC, were acting as representatives of workers in Scotland and the other devolved Administrations, because employment law is devolved. We did not specifically consult the Scottish Government because this is a reserved matter.

If there are no further questions, I hope the Committee will see fit to support the regulations.

[Kevin Brennan]

I thank the Minister for his comprehensive and thorough response, and for the courteous way in which he has dealt with the questions from the Opposition. To reiterate, we support the proposed change to regulation 27A, although he did not offer further evidence that it was a widespread and serious issue.

The problem for the Opposition is that we do not feel that it is proportionate and appropriate to remove the other regulations, given that we are talking about members of the workforce and work-seekers who are in the most vulnerable positions. If anything, this is a group of workers that is becoming larger as the labour market and employment practices and patterns change across the country. We are not here to debate why that is happening, but I think we would all acknowledge that it is. As I indicated in my remarks earlier, my constituency casework has involved increasing numbers of people who are concerned about how they have been treated in the workplace after being employed via an agency.

Notwithstanding my gratitude to the Minister for his thorough and serious response, it is right that we register our opposition to the changes that he is proposing to the regulations, other than regulation 27A, by dividing the Committee.

Question put.