The Direct Marketing Association has been lobbying the UK government to head off the threat of legislation which would increase the basic rights of freelance staff. But do we really face the likely end of the freelancer as we know it? Jenny Wotherspoon may allay concerns.
Agency Workers – All Change?
More than one million people in the UK provide their services through employment agencies or as temporary workers ("atypical workers"). This is particularly significant in the marketing and advertising sectors where the use of agency creatives and field marketers is common practice.
In the majority of cases atypical workers are not classed as employees. This means that they are not entitled to employment benefits during their engagement or a redundancy payment/compensation for unfair dismissal on the termination of their assignment.
The UK – Legislation
The exponential growth in the number of atypical workers, coupled with the increasingly common horror stories of vulnerable (often migrant) workers exploited by unscrupulous employers/agencies had led to increasing calls for employment rights to be extended to atypical workers.
The Temporary and Agency Workers (Equal Treatment) Bill, introduced by Andrew Miller, Labour MP for Ellesmere Port and Neston, proposed just such protections. The Bill had its second reading in Parliament on Friday 22 February 2008 and MPs voted by 147 to 11 to back the bill. This unprecedented backing illustrates the strength of the support for increased regulation in this area.
Those opposing the bill have claimed that it is a "blunt instrument" which would damage the UK's labour market flexibility. It is also believed that the plans will mean that employers are no longer able to afford atypical workers which may lead companies to outsource work to other jurisdictions.
Many consider that this legislation would have particularly significant impact on the advertising and marketing sectors and the DMA (UK) has called for certain marketing businesses (such as field marketing) to be excluded from the scope of any legislation.
Although the government opposes the bill and it is unlikely to become law, the Prime Minister has agreed to set up an independent commission (Chaired by Sir George Bain, head of the Low Pay Commission) to meet with business and union leaders and consult on a way forward. It remains to be seen whether the Government will be forced to accept some form of regulation in this area in order to keep the peace with the trade unions.
Similar legislative proposals have been considered in Europe. New legislation in this area was first tabled in March 2002 and has been under consideration ever since. In December 2007, EU ministers failed to reach an agreement on legislation and no further developments have taken place.
In its original form the legislation would have given agency workers the same basic rights as permanent staff after a qualifying period of 6 weeks' service. These proposals were opposed by the UK Government. However, it is anticipated that European legislation in this area may be revisited when France take over the EU presidency later this year. It looks like the EU will have another fight on its hands!
Why does this matter:
Until further legislation is introduced, employers in the marketing and advertising sectors can continue to engage atypical workers on the same basis as they have always done.
Employers should note, however, that it has always possible for an implied contract of employment to come into existence between an agency worker and the end user client.
In a recent case of the Court of Appeal, James v Greenwich Council, it was held that the circumstances in which this will occur are limited to those arrangements where the agency relationship is not genuine and the implication of an employment contract is necessary to reflect the reality of the working relationship.
This judgment will make it difficult for agency workers to claim successfully that they are employed by their end user. However, in order to limit these risks, employers can take the following practical steps:
- Assess nature of work agency staff undertake – are fixed periods/projects possible?
- Minimise integration of agency staff into the workforce.
- Require the agency/temporary worker to provide a substitute if they are unwilling or unable to work.
- Reduce control – ensure the agency deals with discipline, pay, grievances etc.
- Seek appropriate indemnities and warranties from the agency.
- Ensure that contractual documents are consistent with agency worker status.