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Labour plans crackdown on ‘rogue’ agencies

November 27, 2014  /   No Comments

Nick Elvin

A Labour government would put an end to exploitation of Britain’s agency workers, party leader Ed Miliband has promised.

Speaking earlier this week, Mr Miliband said some “cowboy employment agencies” were driving down standards and creating greater insecurity for families.

“There has been a huge increase in temporary agency work in recent years,” he said. “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.

“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 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.”

Mr Miliband said a Labour government would close a loophole known as the Swedish Derogation, which he said allows employment agencies to undercut the wages of permanent staff, and would also ban employment agencies recruiting only from abroad.

However, the chief executive of the Recruitment and Employment Confederation (REC), Kevin Green, criticised Mr Miliband’s plans, describing them as a “knee-jerk policy reaction” and largely unnecessary.

“Pay between assignments – or Swedish Derogation – was agreed under the previous Labour government,” he said. “It is not a loophole, it is the law. As with any new legislation, any sudden changes to these regulations – which took years to bed in – could have a negative impact on the jobs market.”

Mr Green added: “I am bemused as to why politicians believe it is necessary to crack down on agencies that hire exclusively from overseas. British agencies have to list all vacancies in Britain and in English. That is already the law. Advertising exclusively overseas is already prohibited under the Equality Act and the current government is about to introduce another new rule to the Conduct Regulations that explicitly prohibits this activity.

“Mr Miliband also proposes new licensing arrangements. We do not support the formal expansion of licensing, as we do not believe the licensing process itself is what drives out criminal activity. However, we are passionate about supporting the Gangmaster Licensing Authority to gather intelligence and prosecute criminal gangs who infiltrate the legitimate labour market, and will work with any politicians who want to develop new policies in this area.”

Mr Green defended the recruitment industry, saying agencies already had to abide by the law, while members of his organisation had to follow a code of professional practice and pass a compliance test.

“As [Mr Miliband] himself acknowledges, employment agencies and businesses are good quality, compliant organisations who work hard to secure both permanent and temporary work for people,” he said.

“A quarter of people in Britain have taken jobs as agency workers at some point in their careers. It is a mainstream part of the economy and our flexible labour market which has seen us do so much better than our European neighbours. Any measures undertaken by the next government must take full consideration as to the impact changes might have on the recovery.

“We are looking for a mature and consultative relationship with the Labour party and its current leadership and are really disappointed with Mr Miliband’s remarks.”

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