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Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014

Volume 757: debated on Tuesday 9 December 2014

Motion to Consider

Moved by

That the Grand Committee do consider the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014.

Relevant documents: 14th Report from the Joint Committee on Statutory Instruments, 15th Report from the Secondary Legislation Scrutiny Committee

My Lords, the recruitment sector plays an important role in the labour market by matching demand for jobs to demand for workers. The sector is regulated by the Employment Agencies Act 1973 and the conduct regulations. The legislation covers all employment agencies and employment businesses in Great Britain, providing a framework for contracts between agencies, hirers and work-seekers. It also restricts fee charging and ensures that temporary workers are paid for the work they have done.

However, the legislation does not currently regulate where employment agencies place advertisements for vacancies. The Government are concerned that some agencies may be advertising British-based jobs in other European Economic Area countries without advertising those jobs in Britain. This means that workers in Britain do not always have the opportunity to apply for jobs that are based here. We believe this is wrong.

In The Plan for Growth, the Government set out their ambition to create a competitive and supportive business environment that allows businesses to establish themselves, to grow and to employ people. An important part of this ambition is the need to achieve a strong and efficient labour market—a labour market that gives people opportunities to find jobs that are right for them and allows employers to access the type of labour that matches the skills they need.

To fulfil this, we need to achieve a labour market that is flexible, effective and fair, and which encourages job creation and makes it easy for people to find work and stay in work. The Government believe that overseas-only advertising undermines the fairness of the labour market. It reduces the job choices available to people in Britain and for businesses that are hiring it also limits their choice of candidates. We want to do something about this. We want to ensure that people in Britain have the opportunity to enter the workplace, especially the young and the unemployed. We want to create a level playing field for workers in Britain.

Overseas-only advertising is already potentially a breach of the Equality Act 2010. However, the proposed regulations would go a step further by creating a specific requirement to advertise jobs in Great Britain and in English.

The proposed change to the conduct regulations would require agencies to ensure that if they want to advertise vacancies elsewhere in the EEA, they must also advertise in Great Britain and in English. The new regulations would apply to all employment agencies and employment businesses in Great Britain that find permanent and temporary work for people. It will apply only to vacancies advertised in European Economic Area countries; UK Immigration Rules already favour native workers over non-EEA workers. Each position has to undergo a resident labour market test before it can be advertised outside the EEA. We are not proposing to stop agencies from advertising jobs overseas or in additional languages. They will still be free to do so if they wish, as long as the vacancy is also advertised in Great Britain.

In addition, in the rare circumstances where it would make little sense to advertise a vacancy in English in Great Britain—for example, if there is a genuine requirement for a native foreign language speaker for a particular role—a defence will be available. However, in general, if agencies choose to advertise jobs overseas, they would need to ensure that those jobs are also advertised in Great Britain, either at the same time or in the period of 28 days prior to advertising the vacancy overseas.

We believe that this will expand the range of job opportunities open to people in Great Britain and will also expand the range of people from which businesses can choose. The new regulations would be enforced by the Employment Agency Standards Inspectorate, which enforces the conduct regulations. Agencies would need to demonstrate, through record-keeping, that they have complied with the requirements to advertise the vacancy, or vacancies, in Great Britain and in English.

Subject to the proper parliamentary process and necessary scrutiny, it is our intention that this change will come into force by the end of this year. I hope that the Committee will therefore support this statutory instrument.

My Lords, I shall be brief. On a quick glance, these seem to be sensible suggestions. I know how unpopular this is when it is blown up in the newspapers that British jobs are being advertised in Polish in Poland. I suspect that it is not as big a problem as newspaper controversies suggest. I am not convinced that the order will make much difference but, nevertheless, its spirit and intentions are good.

I have two questions. First, will the Employment Agency Standards Inspectorate be sufficiently well staffed to undertake the job required of it? Secondly, given the internet and the fact that people can pick up jobs wherever they are in the world, how much difference will this make in restricting the ability of employment agencies and businesses from getting their own way by the back door?

My Lords, I, too, welcome the measures brought forward by the Government today. It is important that jobs in the UK are advertised and made available to the people who live and want to work here. Indeed, we have already called on the Government to ban agencies from recruiting solely from abroad. However, Ministers are failing to go further to tackle the real problems in the employment agency sector and to halt the exploitation of Britain’s 1 million agency workers.

Agency working can provide flexibility that works for employers and employees, but the main recruitment industry body has warned that the number of rogue agencies has increased over the past three years. These agencies are associated with the worst elements of insecurity in our labour market, including the undercutting of wages and non-payment of the minimum wage. There is evidence that they are marketing agency workers to employers as a way to undercut wages of permanent staff, exploiting agency workers with unfair and illegal charges for travel, accommodation and taxes, in some cases leading to non-payment of the minimum wage, and engaging in tax avoidance schemes.

To reiterate, it is not only us who are saying this. The main industry body for the recruitment sector has warned that the problem of rogue agencies associated with non-payment of the minimum wage is getting worse. Regulatory bodies, including the Employment Agency Standards Inspectorate and HMRC, have also found evidence of non-payment of wages and of tax avoidance schemes. I would obviously welcome the Minister’s comments on that.

If we are in government after next May, we will crack down on employment agencies to tackle the worst elements of insecurity in our labour market. The next Labour Government will close loopholes which allow employment agencies to undercut the wages of permanent staff, ban employment agencies from recruiting only from abroad and force rogue agencies illegally exploiting their workers to clean up their act through measures such as the introduction of a licensing system.

We will not tolerate a world of work that is becoming more brutal because of the way in which cowboy employment agencies have been allowed to operate. They are undermining dignity at work, driving down standards and creating greater insecurity for families. I endorse the comments of my noble friend Lady Donaghy in relation to the internet and so on. I apologise for not being in my place at the start of the debate. I had not anticipated that we would get through the previous statutory instruments quite so quickly.

I thank the noble Baroness, Lady Donaghy, and the noble Lord, Lord Young, for their brief contributions to this debate. In response to the point made by the noble Baroness about inspectors, we are doubling EAS resources this financial year, with a view to increased resources for the financial year 2015-16. These additional resources will be used for targeted enforcement in high-risk areas to protect the most vulnerable agency workers. The noble Baroness also mentioned internet advertising for jobs, which is not just in the UK but worldwide. Most internet advertising is obviously in English as well.

The noble Lord, Lord Young, mentioned the minimum wage. He is quite right that there are a few companies which abuse the system and do not pay the minimum wage. We have in fact boosted the resources available for national minimum wage enforcement. In the new year, we will have the Small Business, Enterprise and Employment Bill, which I will be taking through the House along with the noble Baroness, Lady Neville-Rolfe. We are going to increase the penalty for people who abuse or break the minimum wage law from £5,000 to £20,000 by secondary legislation. This penalty will be applied not per company or on a per notice basis, but on a per worker basis. So we are doing something to ensure that companies do not break the national minimum wage law and that their workers are correctly paid. We will wait for that Bill to come through but, having said that, we have made a couple of amendments recently to make sure that people are paid the minimum wage.

What plans, if any, do the Government have for dealing with these rogue agencies that the main agencies within the recruitment sector are saying exist? Are the Government making any special efforts to shut them down?

Most agencies comply with the regulations but, although it is not a widespread practice as such, I agree that there are a few which do not. Hence we have these regulations coming in and we are doubling the number of inspectors. We have inspectors available to monitor them and to make sure that they do not break the law. We want to make sure that there is fair play and that British agencies advertise jobs in Britain as well as overseas.

I will just cover another point that the noble Lord, Lord Young, made. The subject of overseas-only advertising was raised and how we know it is a problem. The Government have received some complaints about employment agencies advertising jobs in the European Economic Area countries but not in the UK. These regulations will ensure that all agencies based in the UK give work-seekers a fair opportunity to apply for jobs in the UK.

I hope that I have covered all the points—unless there are any further ones—but if I have left out something I will be very happy to write to noble Lords. This change will level the playing field for workers in Britain. It will ensure that they have equal access to vacancies advertised by agencies and that the small number of agencies who deny job opportunities to workers in Britain will be subject to enforcement action, as I mentioned earlier. I am delighted that the Committee is more or less in agreement with these regulations. I know that issues were raised about the minimum wage and internet advertising. I hope that I have covered those but if I have not, I will make sure that officials drop a line to noble Lords on those subjects. I commend these regulations to the Committee.

Motion agreed.

Committee adjourned at 5.29 pm.