Employment Bill [HL]

moved Amendment No. 21: 21: After Clause 5, insert the following new Clause— ““Employment disputes: status of agency workers The Secretary of State shall make regulations by order providing for improvement in the status of workers in employment disputes who are supplied or engaged by an employment business or employment agency.”” The noble Lord said: Amendment No. 21 falls within the provenance of the Bill because it concerns the position in disputes of a particular class of persons who at the moment are unjustly treated. The purpose of the amendment is to improve the status of workers supplied to work for an end user by an agency. As Lord Justice Mummery said, in a judgment on 5 February this year, to which I shall return: "““There has been an explosion of numbers in the workforce engaged to work under arrangements with employment agencies””." He estimated the total number to be 1.3 million. Another estimate used, especially in the debate on the employment of agency workers in the other place last Friday—which I hope all Members of the Committee will read—is 1.4 million and there is evidence to suggest the figure is 1.4 million and rising. In other words, workers are being taken on as persons supplied by an agency. The president of the appeal tribunal, Mr Justice Elias, has recently said: "““Many agency workers are highly vulnerable and need to be protected from the abuse of economic power by the end user””." He went on to suggest that a legislative solution is ““urgently required””. This amendment has two perspectives. The first perspective encourages the Minister to make regulations in the triangular relationship in which an agency worker finds him or herself. There are three aspects to the triangular relationship. The first is a contract between the agency and the worker, which is usually stated in terms not to be a contract of employment; it is a contract to supply labour. The second aspect is a contract between the agency and the end user—the employer, in conversational terms—which is not a contract of employment, but merely a labour-supply contract. There is no question of an employment contract there. Thirdly, we have the relationship between the worker and the end user. My noble friend Lady Turner will deal with the triangular relationship in regard to real temporary workers; I wish to concentrate on agency workers who stay at the same point of employment—again I use a conversational term—for many months and in many cases many years. That triangular relationship of employment agency workers is increasing. This month the Court of Appeal in the case of James v Greenwich Council decided that those judges who had said they would infer a contract of employment between the contract worker and the agency and the end user, of which there is quite a history of judgments suggesting that is what the courts should do, gave business-reality to the relationships because the agency worker is working side-by-side with permanent employees, very often on inferior terms and without employment protection rights. The Court of Appeal unequivocally rejected that approach and held that judges must not imply a contract of employment between the end user and the worker unless it is necessary on facts. Miss James had worked as a care staff support worker at the same workplace for more than three years. She was provided to the council by an agency and paid by means of a payment from the council through the agency to her. The end user paid more than the wage because the agency had a slice of the payment. She was provided to the council by the agency and paid in that way. She carried out her work according to the instructions and control of the council—that is usually one of the tests of an employment relationship in the legal, technical sense—and was on the same rota as permanent employees. She wore a badge describing her as a permanent staff member, but she had no express contract of employment with the end user, Greenwich Council. She was off sick for a while, and when she returned, the council abruptly told her that she was no longer required as it had replaced her. After three years, she was naturally somewhat amazed at that and claimed that she had been unfairly dismissed. The first hurdle that such a claimant needs to surmount at the tribunal is to show that she worked under a contract of employment, otherwise she has no rights in respect of unfair dismissal, which Miss James alleged this was. The council denied that she was an employee in any legal sense. It said she was an agency worker who was, in legal terms, self-employed. The court refused to imply any contract between Greenwich Council and Miss James, and in its judgment the Court of Appeal said that that must be the pattern applied in future cases to agency workers working, even for long periods, for the same employer. The court went on to say that a contract of employment can be implied to give business efficacy to the case, but only in a very rare instance. Lord Justice Mummery declared that the test of the necessity must be imposed on this relationship between end user and agency worker. He said that proceedings in the tribunals concerning the disputed legal status of agency workers had been put on hold in a large number of cases awaiting judgment in the tribunals. He directed the tribunals to approach the long list of cases on hold to apply this test. That means that many thousands of workers—an increasing number—who have worked at the same workplace for years, but who are supplied by an employment agency will not qualify for basic employment protection rights, such as the right not to be unfairly dismissed. I know that there is a qualification period, and they will need that as well as a contract of employment to get a case on its legs, but under this test they do not have a chance of a court implying a contract of employment. The object of this amendment is to provide an opportunity, by regulation from the Minister, to rectify that position, possibly by laying down a presumption that an agency worker who has worked in the same place of employment for a certain period is presumed to be under a contract of employment. That was the approach of one of the members of the Court of Appeal, Lord Justice Sedley, in a previous case which was rejected by the Court of Appeal in the Greenwich case. The idea that such a step would destroy the flexibility of the labour market is in my contention absurd. It is hardly extravagant to provide that basic right to agency workers after working in a place for a long time—the right to be treated fairly. There is a second perspective to the amendment. The Minister arguably has a power already to make such regulations, improving the law on workers supplied by an agency. The amendment could be seen as a wake-up call to use those powers, which derive from Section 23 of the Employment Relations Act 1999. That gives to the Minister power to extend certain employment rights, including the unfair dismissal and various similar rights, to a ““specified description”” of workers, who might not ordinarily be seen as working under a contract of employment, and to clarify who is the employer. The Minister has remarkable powers under Section 23 and the amendment made to that section in Section 41 of the Employment Act 2002 does nothing to make that power irrelevant to this point in the argument. A decade ago, Lord Justice Buckley said in the case of Montgomery v Johnson Underwood in 2001 that further consideration for the status of agency workers must be given by government and that, "““the power conferred by section 23 of that Act on the Secretary of State … to extend the protection of employment legislation to a specified description of individuals might be put to important use in this respect. Continued confusion about whether there exists any protection””," for agency workers, "““against unfair dismissal assists nobody””." Our amendment gives the Government a splendid opportunity to say that it is unnecessary to accept it because powers already exist to improve the situation under Section 23. I am aware that there is a draft of the European directive, on which I am not relying—but if your Lordships read the debate in the House of Commons of last Friday, it is a central feature in improving the lot of those workers, on which more than 150 Members of Parliament in the other place were prepared to vote as something that was required. The James judgment makes government action even more urgent. We now know that the triangular structure for agency workers deprives hundreds of thousands of workers of basic employment protection rights. Maybe we can reach some agreement on that European draft directive. That seems rather unlikely at the moment—but why on earth should the Government not use their powers under Section 23 of the 1999 Act to make some improvement at least in the legal position of these agency workers who at the moment—as your Lordships will see if they read the debate in the other place—are deprived of employment protection rights? Some will say that that is why the category of agency workers is ““exploding””, as Lord Justice Mummery said. If you take on an agency worker, scarcely any employment rights are thought to be basic to modern employment relations, including the right to be treated fairly, even in dismissal. Those rights do not apply to such a worker. To move the position forward, for the reasons that I have given, I beg to move.