Agent provocateur

There was a time, not so long ago, when the very existence of labour agencies was viewed with suspicion by a sector that had always prided itself on its steadfast commitment to direct employment.

Now it seems that the clouds are parting somewhat. Contractors, along with their trade associations, have begun to accept agency labour as a familiar and necessary facet of the employment landscape.

In light of this, the HVCA has introduced a new platform to help establish industry-wide dialogue with the industry’s respectable agencies. The initiative aims to help contractors to distinguish between these and the somewhat dubious agencies which do not see any advantage in adhering to industry standards.

The new Building Services Engineering Employment Agency Alliance represents a group of agencies deemed capable of supplying quality personnel. To become a member, an agency must demonstrate compliance with the Alliance’s Key Commitments (see left). These examine commercial footing, commitment to the sector and whether or not the organisation is adequately regulated.

A third party assessor will decide whether or not the agency is in compliance. Those which are lacking will be allotted a short period of time to improve their standards.

The agency in question must then submit to a business audit carried out by BM TRADA Certification every three years, along with an annual compliance inspection in intervening years.

Labour pains

Former MP and Labour peer Lord O’Neill is independent chairman of the Alliance.

It’s logical that the industry’s focus should have turned away from the wholesale discouragement of employment agencies and towards differentiating between their merits.

Lord O’Neill, Alliance chairman

“It is logical that the industry’s focus should have turned away from the wholesale discouragement of employment agency activity and towards differentiating between their relative merits,” he says.

Stephen Quant, director of human resources at m&e contractor Skanska Rashleigh Weatherfoil, agrees: “In the past, we’ve found people who are not bona fide, don’t abide by government regulations, don’t offer holiday pay. Then the problem comes back to us as a direct grievance – it affects our brand.

“Managing the supply chain is the most significant thing we can do, and part of that is agency labour. We want everyone to be treated decently and everyone to be competent,” he adds.

Eugene Semenuik, director of employment agency Oracle Global Resourcing, views the initiative as an opportunity and a challenge for agencies.

“We’ve reached a milestone in bringing these three lobbies – the HVCA, contractors and agencies – together.

“For far too long, agency labour has been viewed as a necessary evil; poachers of staff who bring nothing to the table. The Alliance gives us this platform to change those misconceptions. We can work together towards adding value.”

Taxing demands

Semenuik is also confident that the electrical sector will soon follow suit: “I’m certain that the ECA will be watching our progress and will one day see the advantages to joining the Alliance, or creating one of their own,” he says.

There are serious dangers of incurring substantial debts for unpaid tax and NI contributions if it is determined that they are not truly self-employed

Alex Meikle, ECA

Peter Rimmer, head of HVCA employment affairs, says that the ECA has broadly supported the Agency Alliance during its development, and insists that the door is still open if the electrical association wishes to join. “We’ve been in dialogue with the ECA and they have made a significant contribution,” he adds.

Alex Meikle, head of employee relations at the ECA, says that the ECA has recognised for some time that there is a need to influence the growing market for agency supplied labour, and understands the HVCA’s intention to promote dialogue with the agencies through the Alliance.

“We believe, like the HVCA, that there is a need for a much improved dialogue on the impact of agency working; its effect on the level playing field for our contracting members; the detrimental effect it is having on apprentice recruitment; the need to ensure skills standards and more topically the risks arising from the impact, directly and indirectly, of the recently introduced Managed Service Company (MSC) regulations.

“For the moment we are not convinced that the HVCA’s Alliance with the agencies is the best way to achieve this improved dialogue, but we do recognise that something needs to be done and continue to address the issues arising from agency working with our colleagues in Unite, through the Joint Industry Board for the electrical contracting industry, with HMRC [HM Revenue & Customs], and through leading counsel.”

Meikle stresses, however, that while the ECA is supportive of the general principle, it is also conscious that there is a great deal of uncertainty regarding the employment status of skilled tradesmen and other operatives supplied by agencies.

“We are concerned that many of these tradesmen are declaring themselves incorrectly to be self-employed CIS businesses or Personal Service Companies,” he says.

“However well-intentioned, the Alliance proposition has failed to address to our satisfaction concerns about the employment status and tax and NI compliance of individuals provided by it. While these aspects remain in the melting pot, we feel that the most appropriate action for the ECA is to urge its members to take great care when utilising agency workers.

“If they are declaring themselves to be self-employed but, in effect, working as employees, members should note the importance of ensuring that full employed rates of tax and National Insurance contributions are made.

The key commitments place an obligation on agencies to establish the employment status of each worker before a hire takes place

Peter Rimmer, HVCA

For the moment, the ECA intends to keep any formal relationship with the agencies under review until these tax and National Insurance implications become clearer.

In response to these concerns, however, Rimmer pointed out that the need to establish employment status is nothing new. “It has been a feature of the employment taxation landscape in construction for as long as I can remember,” he said.

“The Alliance’s Key Commitments place an obligation on agencies to establish the employment status of each worker before a hire takes place and to ensure HMRC-compliant procedures are in place to ensure appropriate tax and National Insurance deductions are made.

“One of the principal objectives of the Alliance is to engage with the employment business community and facilitate collective dialogue between them and contractors about the whole range of issues that matter – including, health and safety, training and skills, and the treatment of individual workers.”

Unite-Amicus national officer Tom Hardacre said that the Alliance does not have the backing of the Union. “Amicus is very concerned about this development, and we’ll be looking to seek assurances from the employers’ association,” he said.

“The introduction of an Agency Alliance could conflict with the provisions of the National Agreement which deal with direct employment.”

It seems we have some way to go before any alliance is viewed as a favouable option by all. Do some of the creases need ironing out of the HVCA’s policies? Maybe. But perhaps this recent development will give the ECA the prompt it needs to create a better dialogue when it comes to agency labour.