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INTRODUCTION From refineries in Côte D’Ivoire to mines in Colombia, from the energy sector in Serbia to the glass workers in Turkey, from India to Western Europe, from Australia to the US, people have seen their jobs disappear to sub-contracting companies that usually employ workers at inferior conditions. In other cases, jobs have been terminated, with work being taken over by workers sent in by agencies or on short-term contracts. Numerous “new ways of employment”, most of them precarious, have been invented and used. This is one area of business where there is no discrimination: Outsourcing through contract and agency labour (CAL) affects the blue collar mine workers in developing countries just as much as the white collar workers in the high-tech biotechnology business in OECD countries. In fact, it could be said that this is one phenomenon that has, to a large extent, spread from the “south” to the “north”, instead of the other way around, like most “management techniques”. It has also spread from a relatively limited number of sectors - it always was a problem for migrants in the construction sector, for example - to all industries, affecting jobs that were considered “safe”, such as core jobs in the chemical industry. While still varying from sector to sector, the use of contract labour seems to have a dominant presence in all of the sectors that the ICEM deals with. Even to the extent that a number of ICEM affiliates have declared the need to deal with the explosion in the use of contract and agency labour as their number one priority. ICEM affiliates all over the world have had to come to terms with the new strategy of companies, and some governments, to employ two categories of employees: core workers, who receive relatively good employment conditions on the one hand, and contract or agency workers, or workers in other precarious jobs, on the other, with the latter usually getting the inferior deal. In most cases, this means getting less pay, or less pension, or less medical or sickness benefits, or less paid holidays, or less job security, or … or …. In many cases, it means a combination of all or several of these things. At first - for some of us already a very long time ago - subcontracting was mainly used for those workers that were considered non-essential. Typical examples included cleaning, IT, security or catering. More recently, and throughout the different ICEM sectors, contract and agency labour has become increasingly common as a method to also employ workers that are considered to be working in core areas of the enterprises, performing ‘core jobs’. Contract and agency labour is used by companies in their search for lower costs almost everywhere. Decisions are made based on purely economic arguments. Once the decision is taken and the “problem” dealt with, many companies don’t seem to care too much about what happens to their forICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


INTRODUCTION mer workers. “We don’t pay them, they don’t work for us, we don’t have any responsibility to make sure they get treated right”. Workers in these situations are often vulnerable and exploited. The widespread consequences of contract or agency labour include that it, at that point, becomes much more difficult for workers to defend themselves, individually as well as through their trade unions, and that hard won social standards are often lost. Trade unions are losing a lot of members because of this phenomenon. A key reason is that workers are more easily intimidated when they are in a precarious employment position. While preparing for this guide, the ICEM has come across very many examples where precarious workers are just too scared to join a trade union. Often for good reason, as too many contract and agency labour workers have been confronted with colleagues who have been “put aside” because they were interested in union activities.


This is even more of a danger where there is no well-described “employment relationship” to speak of, or where it becomes a difficult issue to even identify the employer or the respective responsibilities of different, linked employers. In addition, many CAL workers shift jobs regularly, making it more difficult to establish enough of a “stake” in the job to develop a close relationship with the union at the company. The same work status and lack of a future in a job that affects the involvement in trade union activity can also create problems for companies. Precarious employment often robs workers of their motivation, and of any loyalty to the company they might have (which after all, shows no loyalty to them). Real worker “investment” in a job is unlikely to come from “just in time” workers. The growing precariousness of work should therefore also be a concern for management in terms of quality, turnover, competence and productivity, and employers should welcome joint discussions and progress through negotiations that will make both the company and trade union stronger. Contracting out has become almost a “herd” mentality, a stifling form of conformity. Everyone is doing it, so it must be the right thing to do. It has been successful, among other reasons, because of the perceived advantage for the employer, who is said to be able to continue to make a product or a service, without having to take responsibility for the workforce that makes the product or creates the service. It is assumed that, next to having less responsibility for workers, it is also cheaper. However, in many cases, the business case is not all that clear. Experience on the ground often contradicts this belief. Clearly, contract and agency labour is also used in many cases to do away with union influence. Quite often, employers are willing to pay for that, ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

INTRODUCTION including through, for example, huge redundancy fees, or extensive early retirement payments, in the knowledge - or belief - that it will guarantee them a more “docile workforce” afterwards. Of course, there are workers who enjoy “temping” or “working with a lot of flexibility”, allowing them - to a certain extent – to decide when they work and when they don’t. And there is nothing wrong with that. The problem is that, in our experience, most CAL workers around the world are absolutely not in that situation. On the contrary, in many countries and industries, a lot of workers seem to be facing the choice between a precarious job or no job at all. This guide is written to assist all trade unionists, whether they are working at plant, local, regional, national or international level, with their daily work on contract and agency labour. Many of the methods and practices that were used elsewhere may be adapted successfully to your situation. It is hoped that the “best practice” examples from around the world, including at the legal and at the international level, can serve as departure points for good ideas and actions at home, wherever you are, helping all to solve a few - and hopefully more - contract, agency and other precarious work problems.

Manfred Warda ICEM General Secretary September 2008









CAL, A DESCRIPTION 2.1 WHAT IS CAL? Many different words exist to describe precarious “work relationships”. Some of the terms are interchangeable; others describe situations that are alike, but not exactly the same. And, to complicate matters, sometimes the same words mean different things in different countries, different regions or different languages. The use of the right wording is important at times. The ICEM’s project uses the words ‘contract labour’ and ‘agency labour’, as these are recognisable and familiar terms that describe a situation known by most workers in many industries around the world. The terms are also commonly used in most countries. At an international standard setting process at the International Labour Organisation (ILO) at the end of the 1990’s, however, the use of the words ‘contract labour’ caused such a problem that the whole process was derailed. It turned out to be a very difficult term to use in an international legal standard setting procedure.


Contract and agency work are just two “pieces of the puzzle”, albeit all-pervading ones, that make up the precarious workplace landscape. Other “new forms of employment” have also become popular. Nearly all are approaches that do away with what used to be “standard”, meaning a permanent fulltime job, directly employed by a single company with a regular working week and benefits, and the protection, including against dismissal, that often comes from legal status as an employee. What has essentially been changing is the previous “normal” relationship between employers and workers. For a large segment of the world’s workforce, this relationship has become one of a ‘much lesser’ quality. For many others, such as the increasing contingent of “self-employed” workers, it has changed from a labour relationship to a commercial relationship, with the worker taking all the risks. As a result, many of the protections that workers have fought for, often over a very long time, such as social protection or anti-discrimination rules, were simply lost. In some cases, the labour situation has become so extremely complicated, with sub-sub-sub contractors and other complex forms of work relationships, that, even where law makers want to legislate, they find it very difficult to do so. The structures of the companies themselves are also changing. Whereas there used to be a time when a company tended to have a well-known owner, core workers with permanent contracts and, perhaps, a subcontractor in such sectors as cleaning or catering, that situation has now dramatically changed. Enterprises now tend to have a much more complicated “peel” structure, with work places that are “multi-layered”. In addition to the management ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

CAL, A DESCRIPTION and the board of directors, and the “regular” permanent workers, there can also be, for example, short-term contract workers with a direct contract; part-time workers with a direct contract; contract workers, with a commercial contract for a limited period (these can be part-time); agency workers; day labourers; and/or informal workers. And there may be subcontractors companies doing the work that is outsourced. The owner is still usually at the heart of the company. However, in this respect as well, the world has changed. For many companies, the true identity of the owner has become much less clear. It may be a person or a group of people. But, it may just as well be a collection of shareholders, a hedge fund, a private equity fund, or a sovereign wealth fund. As a rule, the further a worker is removed from the centre, the higher the chances that his or her conditions will be poor.

TERMINOLOGY A non-comprehensive overview of some of the ‘precarious job’ terms used: Contract labour Agency labour Precarious work Atypical work Casual work or contingent work Outsourcing Temporary labour contracts Direct hire Dispatched workers Irregular workers Individual contracts

Labour brokers Seasonal workers Zero hours contracts Industrial trainees Probationers Off site or on-site contracting Personal labour contracts (usually bogus self-employment) On call / daily hire Day labourers Home workers

CONTRACTING OUT In the ICEM’s view, contracting out is where a company ‘contracts out’ work to another employer, which, in some cases, can also be an individual. The work may or may not be done at the same location. The new employer may take on none, some, or all of the existing staff. Where work is contracted out to workers on an individual basis - and not to a specific sub-contracting company - for example, through an agency, or through a direct short-term contract, it may or may not be the same worker that, in the end, does the same work as before, but this time as a contract worker.



CAL, A DESCRIPTION AGENCY LABOUR Agency labour is where a company needs workers and, rather than employing them directly, asks an agency to send the required number of workers.

2.2. WHICH WORKERS ARE MOSTLY AFFECTED? By and large, the phenomenon of contract and agency labour is currently affecting all categories of work, including jobs that are – or were, as the case may be – considered core jobs. This varies from sector to sector, and region to region, ranging from companies that contract out nothing at all, to wellknown international textile multinationals, who subcontract almost all work, only leaving their “brands”. Within the different ICEM sectors, some sectors appear to be more affected than others. The mining and diamond sectors, for example, are dealing with huge numbers of contract workers. But agency work, contract labour and outsourcing are also buzzwords in the chemical, paper, materials or energy industries. 12

The same trends can be seen in other industries, covered by other Global Union Federations. Precarious and insecure employment has been part and parcel of the work of BWI (Building and Wood Workers’ International), as well as for the world’s textile workers. Another well known example is the many free-lance journalists. Not all of these - and their number is growing are free-lance out of their own free will. A lesser known example may be the precarious situation of a lot of teachers, having to work through extended periods of temporary, insecure and badly paid work. Within the different industries, there are categories of jobs that are more likely to be contracted out than others. Common examples include cleaning, catering, security, transport, or maintenance and repair. Other jobs that companies have regularly started to contract out are those jobs that deal with sorting, packing, loading or unloading, engineering, warehousing and administration or clerical work. But the list does not end there. Today, virtually all types of jobs are in danger of being outsourced. In addition, there is also apparently no limit on the number of outsourced employees. In the mining sector, there are countless examples, as well as countless countries, where the contracted workforce outnumbers the permanent workforce. Women, as well as young workers, and very often also migrants, are frequently the first victims of precarious employment situations, of extremely low salaries and/or of bad working environments. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

CAL, A DESCRIPTION According to a 2007 IMF (International Metalworkers’ Federation) article on precarious work, 1 in 3 women workers in Australia are non-permanent workers, paid 21% less than permanent workers, often without access to holiday leave, sick leave or public holidays. In Canada, 40 % percent of all women’s jobs are considered non-standard and, in Japan, about 30% of metal workers are atypical or contract workers, with women forming a high proportion. In Thailand, 80% of all contract workers are women.

2.3. “TRICKS” It is not only particular “industrial” categories, or particular jobs, that are targeted. The world of work is also witnessing the use of novel techniques to re-categorise certain workers, so as to make sure that employer obligations do not have to be fulfilled. Workers around the world have been known to be suddenly promoted, becoming managers or supervisors, doing exactly the same job for the same pay, but preventing them from joining a union because of their “management” status. Another commonly used “trick” is the use of abusively long probationary periods or of disguised employment training or apprenticeships contracts. Perhaps one of the most common techniques used around the world is to keep workers on a series of consecutive short-term contracts - typically of a few months. This has, for example, happened to a large number of Goodyear workers in Thailand, where many have been working for over ten years without a permanent contract. At the global ICEM CAL conference in Bangkok, in November 2007, the term “permatemps” was introduced to describe similar problems in North America, where agency and contract workers also keep getting short-term contract after short term contract, year after year. In a lot of these cases, employers use loopholes in the law by dismissing workers for a few days (or a little longer, depending on the period described in the law). By doing so, employers avoid legislative requirements that temporary workers become permanent workers after a certain period of time. That way, the counting can start from zero again. Also used is the technique of “periodically changing the subcontractor”, again to reset the clock to zero. A case in Korea, which was brought forward to the ILO, describes a worker who had been nominally employed by 7 different subcontractors while he kept performing the same job for the same company, Kiryung Electronics.



CAL, A DESCRIPTION In a number of other cases and countries, companies don’t even have to make use of loopholes as they often simply “get away with it”. This often happens in situations where there is no (strong) union, where legislation is weak, non-existing, or not adhered to, and/or where government officials, as well as judicial structures are corrupt. Another ‘technique’ used is to create fake agencies. These are so-called independent companies, often set up by the user enterprise itself, to provide the company with agency and contract workers. In many cases, these ‘agencies’ are shell companies, catering only to one company, set up specifically to avoid obligations to workers. Many other tricks exist, far too many to mention. The practice of using “seasonal works” in every season is just one more example.



2.4. MAIN PROBLEMS CAUSED As mentioned earlier, in many, if not most, cases, contract and agency labour is the result of a deliberate employer decision to lastingly limit or reduce the permanent workforce. Arguments used to do this include the need to “maximise flexibility” (read: easier to dismiss workers from one day to the other) or the search for “cheaper alternatives” due to “market pressures”. A million excuses can, and have been, given, as well as invented. Among the more universal ones: “our demand fluctuates a great deal”, “it’s a global evolution”, “everyone is doing it”, “head office orders us to do so” or “it’s just a temporary measure”. The end result of the outsourcing effort commonly is a shift of the risk onto the workers, with jobs typically becoming non-permanent, or temporary, casual and insecure. Workers in these jobs are usually not fully covered by labour law nor by social security protections. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

CAL, A DESCRIPTION In addition, companies argue, once work is contracted out or agency labour used, they have no control over the employment conditions of the workers. Identifying the real employer, and establishing under whose responsibility such issues as working conditions and benefits fall, is a often a huge problem. With employers frequently claiming that “responsibility lies elsewhere”, and as legal frameworks are often not very well defined, or non-existent, it has become a problem for many workers to identify their real employer. This can already be problematic in relatively simple situations where one company deals with one subcontractor. It is easy to see how situations can get even more complicated when a series of companies are interlinked through a set of commercial agreements with subcontractors engaging other sub-subcontractors, using vague formulations in employment contracts (or none at all), legal frameworks being absent, social inspection lacking - or corrupt - and justice simply being too far away. All of this not only makes it clear that there is a need to have a well-defined “employment relationship” between an employer and an employee, but also that there is nothing that can replace permanent, direct employment. Participants at the many global and regional ICEM CAL meetings have made reference to a wide variety of problems faced by contract and agency labour workers, ranging from employment insecurity and inferior salaries, pension rights issues and working time problems, to major health and safety crises and brutal treatment and abuse of workers. To name just a few: • Job insecurity and an uncertain future. Often, temporary contracts can be terminated at any point in time, with almost no prior notice • Higher risk for unemployment and underemployment • Workers’ assignments and functions can change at any time at the employer’s initiative • Uncertain working hours • Continuous demand for total availability • Low(er) wages, or irregular wages • No annual pay rise or bonus • The right to sick leave often does not exist • Limited or no access to social benefits, including pension rights; health insurance; maternity/paternity rights; holiday rights and payments • Fewer benefits overall. For example, transport or food allowance • Increased risk to health and safety problems • Verbal abuse • Sexual harassment • Poor, or no training • Not much, or no career development • Lack - or denial - of rights at work, including the right to join a union ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008



and the right to collective bargaining, resulting in a weak bargaining position Low level of union organisation

Not only is the phenomenon producing inferior working conditions for workers themselves; it also is a threat for the organisations that represent the workers, as these “new and changing patterns of employment” are often a tool to put pressure on workers not to join or form a union. Or CAL is used as a way to make sure that new workers do not even have the choice to join a union, as is the case in many countries around the world where CAL worers face legal or other difficulties in joining the “permanent workers” union already active at the workplace.


Among the problems for trade unions: • Many contractors/agencies with which to negotiate • Unclear employer responsibilities (including which employer does what) • Contractors often change • Permanent workers can be hostile to contract workers. Sometimes, two separate workforces are created with different interests • Agencies can exploit workers • Agencies can be a front for illegal or criminal elements • Contract and agency labour is used to do away or weaken the union • Contract workers are scared of losing their jobs • Contract and agency labour workers are legally, or practically, not allowed to join or form a union. • Contract and agency workers don’t see an immediate value in joining the union • Unions are losing members • Collective bargaining is more difficult as there is less bargaining power Recent research in New Zealand on casual workers showed that workers, as well as employers, often lack good general knowledge on their rights in this area. The research showed, in addition, that precarious workers not only have limited access to holiday, sick leave, training, skill development and career development, but also that the precariousness of the work intrudes on their family life, limiting the ability to budget and plan ahead.







FACTS & FIGURES In Europe, an estimated average of 4 to 5 percent of all workers is working as a contract or agency worker, varying from rather low percentages in the Nordic countries to 33% in Spain. According to figures by the European Foundation for the Improvement of Living and Working Conditions, the use of temporary agency work had increased five-fold in Denmark, Spain, Italy and Sweden over the last 20 years. Another European figure, from a European Commission green paper, says that “the share of total employment taken up by those engaged in working arrangements different from the standard contractual model, as well as those in self-employment, has increased from over 36 % in 2001 to almost 40 % of the EU-25 workforce in 2005. There are large differences within Europe between different countries and different regions. In the UK, some 80% of temporary work is in the service and public sectors. In France, 75 % is in the construction and the manufacturing sectors. Temporary workers in the EU are mostly men. However, in the Nordic European countries, they are predominantly women, and in the UK and the Netherlands, the percentage is around 50% for each category. In Korea, according to 2007 figures by the Korean Labour and Society Institute, 55% of the labour market was organised through contract or temporary work. At least 70% of the women workers are contract workers. On average, Korean irregular workers work the same number of hours as their permanent, directly employed counterparts (an average of 46.6 hours per week). Unfortunately, again on average, they earn only 51,9% of the Korean permanent workers’ salary. 66.4% of the irregular workers in Korea are not covered by the national pension system, and 65.5% are not covered by the national health system. 68.5% of irregular workers in Korea have no unemployment insurance, while 83.7% have no paid holiday. 78.7% of all irregular workers in Korea are not part of a five-day working week scheme. At the Unilever tea factory in Khanewal in Punjab Province in Pakistan, there are 22 unionised regular workers and over 750 non-unionised casual workers. Many of these casual workers have worked at the factory for 10 to 15 years, producing its famous “Brooke Bond” tea brand. At Unilever’s Karachi tea factory, where both Lipton and Brooke Bond tea is produced, there were 133 regular workers and 700 casual workers. In Angola, 70% of Angola men, women and young people are in precarious and poorly paid employment that is neither recognised nor protected by law (according to the International Monetary Fund). The situation for many other African countries is similar or worse.



FACTS & FIGURES According to a 2008 article in the Journal of the American Medical Association, a 2004 survey of day labourers in the United States found that “19 percent of the day labourers reported work-related injuries that required medical attention in the previous year, compared with less than 5 percent of workers in all private industries and about 6 percent of all workers in construction.”

IMF SURVEY The International Metalworkers’ Federation (IMF) globally surveyed its affiliates in 2007 on the issue of precarious employment. Some of the results:

90% of all responding unions indicated that the share of precarious workers in the metal sector had increased over the last 5 years.

Two out of three unions said companies in their country were shifting from directly employing temporary workers to hiring them through agencies or brokers.

One-third of the unions indicated that precarious jobs comprised up to one-fifth of the workforce in their country’s metalworking sector. Another 44 per cent said such jobs accounted for between one-fifth and half of their nation’s metal sector workforce. And for 13 per cent of respondents, precarious work was said to be used for more than half of the employment in the sector.

Wages of precarious workers are much less than for permanent workers, said two-thirds of respondents. Among the unions replying that this is so, one-third indicated that wages of precarious workers were less than 50 per cent of those of permanent workers. Another quarter of the respondents indicated that wages of precarious workers were between 50% and 75% of those of permanent co-workers.


EMPLOYMENT AGENCIES Adecco was the world’s largest private employment agency in 2007, serving some 150,000 clients from more than 7,000 offices in 60 countries, employing an internal staff of over 30,000. The company says its “daily number of staff on assignment” is over 700,000. Manpower was the world’s secondlargest provider of temporary employees, said to be placing around 2 million people yearly in office, industrial, and professional positions. Manpower has some 4,500 offices in 80 countries. The third largest employment agency, Vedior, is in possession of a network of more than 2,200 offices. In a move to create an even larger staffing agency, plans to unite Vedior with Randstad, another giant, operating ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

FACTS & FIGURES primarily in Europe, with around 315,000 temporary workers, are set to be finalised in the second part of 2008. According to the “Economic Report 2007” of Ciett (the International Confederation of Private Employment Agencies):

2006 marked another year of growth for the agency work industry. Across the world, 8.9 million agency workers (full-time equivalent) were employed daily.

The agency work sector is one of the largest private employers globally.

Agency work remains a small (1.8% of European employment), yet “significant and potent sector” in Europe, though still some way behind South Africa (3.1%), the United States (2.2%) and Japan (1.9%). In Europe, the UK had the highest percentage of agency workers vs. the total national workforce in 2006, i.e. 4.3%.

There are 67.500 private employment agencies (PEAs) globally, totalling 120.000 branches and employing 728.000 internal staff. > Sale revenues (€76.2 billion) of the top ten worldwide companies account for 33% of the total agency work market. > Total worldwide turnover in 2006 reached €228 billion, up from €191 billion in 2005 (+19%). > The USA still accounts for the single largest country share with 38% (or €87 billion) of global sale revenues, followed by the UK (16%) and Japan (11%). > Europe is the lead regional entity with 43% of total worldwide sale revenues (€97 billion).

Japan had a total of 30,600 private employment agencies in 2006. The UK had 10,500 of them, and the US 6,000. South Africa is one of the countries with the most “impressive” and rapid expansion.

The number of agency workers has doubled between 1996 and 2006.

There is wide discrepancy concerning gender. In Japan and Sweden, only 17 and 20% respectively of the agency workers are women, whereas this goes up to 83% and 76% respectively for Austria and Germany.

A comparison between the 2005 and 2006 Ciett figures for 21 European and 5 non-European countries shows that the number of agency workers only decreased in one country.








ICEM campaign & project From the very start, the project has been financially supported by Solidarity Support Organisations in Sweden, Norway and Germany (LO-TCO, LO Norway and FES), as well as by a number of ICEM affiliates in those countries, including Swedish affiliates IF Metall, Pappers, and Unionen, Norwegian affiliate Fellesforbundet and German IGBCE. At the global level, the project is run at the headquarters level, where the global consultant/coordinator is working in close cooperation with the ICEM’s Project officer. The two regional, full-time coordinators are working “in the field”: one in Thailand for Asia and one in Peru for Latin America. There is hope that a third regional coordinator can be appointed soon to deal with the campaign in Sub-Saharan Africa. The project also works closely with a number of experts from ICEM affiliates in Western European countries (Denmark, Norway, Sweden and the Netherlands). These trade unionists assist the project by providing firsthand experience in dealing with CAL issues. They also provide assistance and direct input through their participation in national, regional and global seminars and workshops around the world. 24

As part of the ICEM’s campaign, a wide range of activities have been – and are – organised. These have included meetings, seminars, workshops and conferences, both at national and international level. Three global conferences on contract and agency labour have been organised to exchange information and bring trade unionists dealing with the issue in different countries in contact with each another. The first global conference was held in September 2004. The second was organised in September 2005 and the third in November 2007. Nearly all ICEM Sectoral and Executive Committee meetings since 2005 have also had the CAL issue on their agendas in one way or another. At the regional level, the coordinators are organising around 15 workshops per year for ICEM affiliates. These are local and/or national events. On top of that, efforts are ongoing to organise a yearly regional meeting on CAL on every continent where the campaign has activities. Of course, a lot of the day-to-day campaign work concentrates on using the ICEM’s network to provide assistance and practical solidarity to unions facing CAL problems. This work has, in the meantime, become an integral part of the ICEM daily activities. Several campaign documents have also been prepared, including the important first research paper, prepared by Celia Matter, entitled “Contract/Agency Labour: A Threat to Our Social Standards” (


ICEM campaign & project Other documents have included leaflets, a legislative overview, a feasibility study on the legal possibilities for transnational corporations to set conditions for their CAL providers, smaller research documents, and, more recently, CAL newsletters and a “Short Guide for Negotiators on How to Deal with Contracting Out, Outsourcing and/or Agency Labour”. The ICEM site also holds over 250 articles that have a CAL perspective, from all parts of the world. Dedicating one, two or more of the bi-weekly InBrief articles has been one of the most important methods to keep the campaign continuously visible. Another element of the work is linking the ICEM’s focus on contract and agency labour to other activities, such as the international trade union movement’s “Decent Work, Decent Life” campaign day, on 7 October 2008. The work around this Global Day of Action and its follow-up is coordinated with other GUFs. This coordination, on issues that connect contract and agency labour, precarious work, and the “work relationship”, is an increasingly important part of the CAL work. The ICEM has been leading the effort to bring the different GUFs, as well as the ITUC and TUAC, around the table and discuss issues that are relevant to all in this domain. As a result of that, and under the auspices of the Council of Global Unions (CGU), a CGU working group has been set up, chaired by the General Secretary of the ICEM. The coordination around the Global Day of Action has been one of its results. Cooperation with UNI on discussions at the global level with the international private employment agencies’ employer’s organisation is also on the table. A questionnaire for affiliates was sent out in 2008 aiming to get an extra global view on how CAL problems have evolved and developed over the last few years.


Develop and exchange information between ICEM affiliates, as well as with other GUFs, on a global and on a regional level Coordinated solidarity action in support of the campaign and its activities Maintain the promotion and awareness raising amongst ICEM’s affiliates in all regions on union strategies, organising, negotiating and campaigns in response to contract and agency labour ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


• • •

Continuation and further development of global strategies and initiatives on dealing with contract and agency labour at the level of the ICEM and the other GUFs Take up the issue of contract and agency labour in collective bargaining Develop dedicated research to support both the campaign and union negotiators

Increasingly, it is believed that the ICEM campaign needs to adopt an allinclusive approach, and organise activities at all three different levels, legal, company and trade union level, where a difference can be made. One rationale for such an approach is the experience at the global, as well as at the national level, that new problems seem to arise elsewhere whenever a solution seems to be found at one specific level, a.k.a. the “seven-headed monster” problem. (According to the legend, if one cuts off one of the monster’s seven heads, another new one immediately grows back on elsewhere).


The exchange of “best practice” examples is important for all three levels. One of the main aims of the ICEM’s project is therefore to collect as many good examples as possible, and distribute them widely among affiliates, and other unions, so that all can learn from one another. Some such examples are outlined in the next three chapters.





THE LEGAL ANGLE 5.1 > NATIONAL LAWS, RULES AND REGULATIONS An area where work certainly needs to be continued is that of “changing the law”. Without good laws, which protect workers from abuse and which make sure that a formal relationship between workers exists and gets recognised, problems will continue to exist. Good laws also recognise freedom of association and the right to collective bargaining for all workers, and they force employers to respect those rights. However, and regrettably, it is not only a question of making sure that good laws exist, but also that respect for and conformity with them is assured. Making increased use of labour inspections is one possible route to enforcement of the law. In many countries, the competence of labour inspectors needs to be increased and greater resources need to be provided. In addition, there is often a serious problem with corruption. Beyond that, efforts are also needed to prevent good laws being overturned by politicians who believe that flexibility is a synonym for violating workers’ rights. One particular argument to use in negotiations with authorities is that, in the end, the result of bad working conditions will be damaging to a country’s finances. Where workers are insecure, and sometimes poor, tax policies are not fair and proper financing of government services is not possible. Unqualified and poorly motivated workers often produce poor quality work, leading to lower productivity (and, ultimately, less investment), bad working conditions, including lower health and safety standards, and insufficient means for social protection. It has furthermore been acknowledged, including by such international institutions as the World Bank, that a smooth and well-functioning social dialogue between workers and employers is in any country’s interest, economically as well as socially. There is a wide range of issues on which unions can campaign in order to gain better legal protection for contract and agency workers. Among them are: • Favour, in general, permanent direct employment and limit the number of contract and agency labour workers • Create better rules to avoid arbitrary dismissals and CAL abuse • Guarantee that a formal ‘employment relationship’ between a worker and her or his employer will be established, before the work starts • Where agency labour is used, make sure that the role of the user enterICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE • • • • • • • • • • 30

• • •

prise and of the agency is well described Seek assurance that CAL workers are made aware of their rights and are informed of the conditions and circumstances of their job Guarantee protection for whistleblowers, i.e. workers who bring CAL abuses to the attention of unions, companies or authorities Equal pay for equal work, as of day 1 Set other levels of benefits (besides salary) also at the same level as for permanent workers, also as of day 1 Better social security protection for CAL workers Guarantee CAL workers’ training and career development List categories of work, sectors, or types of jobs where CAL labour is not allowed, or make sure the law specifies that CAL work will only be allowed in certain cases Make sure CAL labour cannot be used in certain circumstances (as a minimum, it should not be possible to replace permanent workers in case of industrial action or dangerous jobs) Reduce the maximum allowed time periods for contract and agency labour Make sure CAL contracts can not endlessly be extended for years and years through legal loopholes Make sure the trade union at the company receives all available information on contract and agency labour work at plant level Allow core trade union rights Allow trade union organising, or make organising easier where restrictions apply

A common legislative problem is that laws often only cover specific issues or situations. The idea of the “7-headed monster” has been picked-up in this respect by several speakers at international ICEM conferences, as a concept to explain that - where contract and agency labour, and other forms of precarious employment, is used – companies, whenever a solution is found for one particular problem, often seem to find other and new ways of avoiding their responsibilities. Enterprises regularly start, for instance, to resort to full-blown subcontracting – thereby working only with commercial links - once agency labour gets to be sufficiently regulated, or they engage bogus “self-employed workers”, as has been described in a number of cases in the Netherlands. One such account from the Netherlands tells the story of Central European migrant workers, employed in the construction industry. These workers, who are paid ridiculously low wages, were so-called “self-employed” and, through a legal loophole, had the papers to prove it (documents in Dutch, a language they were unable to read or understand themselves). What follows in this chapter are examples, both “best” and “bad practice”, of how the legal angle is dealt with in different countries around the world. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE 5.1.1 > ASIA/PACIFIC The law in Indonesia, heavily influenced by the Dutch law, avoids the “revolving door problem” (agency workers being fired just prior to the end of a certain period, to avoid having to give them a permanent employment contract) by stating that if a worker performs the same job for more employers, then the last employer has to give the worker the same rights as the previous employer. Where a worker, after working for 6 months as an agency worker, would be dismissed for one day, the above principle would kick in, and he or she would still be considered to have 6-month seniority even if there is a certain hiatus in time between similar jobs. In India, laws usually limit the use of contract workers for core production work, but large differences exist in this between the different parts of the country. The problem, however, remains - as in many other countries - that, once in place, laws need to be adhered to. In Thailand, the law doesn’t allow agency workers to join the same union as the regular workers - agency workers can form their own union, separate from the regular workers’ union - a situation that the unions, with the support of the ICEM campaign, are protesting. A national campaign has been set up calling for the recognition of CAL workers’ rights, including the right to organise and become part of the same union as the regular workers. A recent change in the Labour Protection Act (BE 2551, article 11/1) states that business operators are deemed the official employer of any employee working in the production process or doing work that is essential to the business of the business operator regardless of whether such a person is supervised or paid wages by another agency. Business operators must provide ‘fair’ benefits and welfare to contract workers who perform the same work as regular employees and they can not discriminate. In New Zealand, in June 2008, changes to the Employment Relations Act were proposed by the Labour government to strengthen employment protections for temporary and casual workers. If these changes are adopted, employees and employers will be able to clarify their employment relationship, using a test already developed in case law by the Employment Court. The test takes into account such issues as the regularity of the employment, the autonomy of the worker, and whether or not the worker is genuinely free to accept or reject offers of employment. At present in New Zealand, only the Employment Relations Authority and the Employment Court can decide whether or not an employee has a fixedterm contract, or whether he or she is a permanent employee. The proposed amendment will extend this power to labour inspectors. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE In addition, those employees in a ‘triangular’ relationship (employees whose employer contracts their services to another employer) that belong to a union will be entitled to terms and conditions that are “at least as favourable as those enjoyed by unionised workers employed directly by the secondary employer under a collective agreement”. In China, a country with no independent trade unions, lawmakers have also started to consider the abuses of contract work. The new labour law, which came into practise in 2008, requires companies to sign long-term contracts with their workers and abide by restrictions on overtime. It also foresees penalties for companies failing to observe regulations. The law was almost immediately attacked by employers’ organisations, mainly “western” ones, who argued that it would be bad for business. According to the International Trade Union Confederation (ITUC), a recent survey by the China’s National People’s Congress found that less than 20 percent of small- and medium-sized private companies had signed contracts with their workers.


The ITUC reports that Chinese enterprises have been reacting to the new law in a variety of ways, including through the use of more covert ways to reduce employee numbers, especially affecting workers who would enjoy more rights under the law. There also appears to have been an increase in the use of subcontracted work. There are also reports of low value-added production chains relocating from Guangdong to Inner and West China, or out of China altogether, in order to reduce the costs that employers anticipate will result from the new law. In Korea, legislators have been very active in the area of CAL legislation over the last few years. Two laws have been passed, both taking effect in July 2007: the Act for fixed-term workers & part-time workers and the Act for agency workers. Both were set to “solve” the problems of job insecurity and discrimination of CAL workers. The end result, however, was the opposite of what the legislation originally intended to achieve, something that the Korean trade unions already warned about in 2006. According to the two laws, the period during which workers can be employed as CAL workers is limited to 2 years. Following this, workers should be hired as regular permanent workers. Unfortunately, the laws only stipulate rules for the timeframe and do not call for any reason to be given as to why contract and agency labour is used. In addition, the laws only apply to those CAL workers who are directly employed by the principal company. One negative consequence has been that employers have started to terminate a lot of the short-term labour contracts just before the end of the two year period. Another damaging result, as has happened in a number of large ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE supermarkets and manufacturing plants, has been an increase in outsourcing, often of entire departments, to contractors. Problems also exist for those CAL workers that are continuing to work for the same company beyond the 2-year limit. In this case, employers often simply create new job categories, or dispatch CAL workers to “a new line” or “another department”, again on a temporary contract. When, in early 2007, the Korean Employers Federation (KEF) surveyed their members, 80% answered that they would hire new CAL workers through consecutive 2-year periods. To add insult to injury, a second employers’ association is currently demanding to expand the period from 2 years to 3 years. In the Philippines, according to research conducted for the International Transport Workers Federation (ITF), a worker cannot be a contractual employee for a period of more than six months, and, even as a contractual employee, he or she enjoys some of the same benefits as permanent employees. A common practice (especially in the retail and hospitality sectors), however, is for employers to replace contractual employees after the six-month period with new hires, and, in practice, contractual employees often do not receive the benefits to which they are legally entitled. (1)

5.1.2 > AFRICA Particularly in Africa, but not exclusively, governments have been ‘advocating’ the use of contract and agency labour through changes in the legislation. Much of this flexibilisation has been done following pressures from outside organisations, including the IMF and the World Bank. At the ICEM regional meeting for Sub-Saharan Africa in 2007, it was said that, by and large, governments in Africa have reinforced the prevalence of CAL by • Promoting flexible labour markets • Eliminating red tape (less state interference), coupled with a general deregulation of benefit to employers • Deregulating labour laws (limiting the trade union role) • Facilitating outsourcing and privatisation • Eliminating subsidies and reducing public expenses Particularly in the African context, the issue of transnational outsourcing has been raised. Many union leaders speak about the adverse consequences of the neo-liberal agenda, allowing multinational companies to maximise profits by moving across borders in search of cheap labour, playing out countries against each other in search for the “best” conditions. Poor working conditions have often been the result.



THE LEGAL ANGLE In Namibia, a new law was adopted in mid-2007 (Labour Bill 2007), aiming to outlaw the omnipresent system of “labour hire” (the jargon used in Namibia for employing workers through temporary work agencies). Through the adoption of an amendment that stated that “No person may, for reward, employ any person with a view to making that person available to a third party to perform work for the third party”, the new law not only bans the use of agency labour, but also makes sure that companies can not outsource work to subcontracting companies. Unfortunately, over a year later, the law hasn’t been implemented yet. According to the Labour Minister, this will happen “soon”.

5.1.3 > LATIN AMERICA In Chile, a new law, Ley 20123”, was passed in 2007. On the one hand, the law officially makes it easier for companies in Chile to outsource work. On the other hand, it gives CAL workers a much better protection than before as it regulates the obligations for outsourcing and temporary work, including in the area of pension rights and health and safety, areas where the companies actually doing the work are responsible. 34

The situation is an improvement in comparison to earlier times, when around 2,300,000 workers were working under a “free-market” subcontracting system that had almost no rules or regulations and quite often saw workers end up without a contract or any basic benefits. While there are no industrial or sectoral limitations, contract work in Chile can currently only be used in certain cases, such as to replace workers on holiday (up to 90 days), in new projects (up to 6 months) or to replace workers on sick leave. The law also forbids using contract labour in case of a strike. The law states that the contractor is the accountable player in most areas concerning contract and agency workers’ rights, benefits and conditions. However, the new law also forces the user-enterprise to take on certain responsibilities. When the contractor doesn’t pay its workers, then the user enterprise will be forced to fulfil the financial obligations in its place. The worker also automatically becomes an employee of the user-enterprise if its contractor fails to fulfil its obligations to her or him. The user enterprise also has certain obligations to communicate with the contractor. These communications need to be able to be verified by social inspection services through a system of ‘certification of implementation of labour obligations’. The Chilean Labour Code also says that an employee who is working under the subordination and dependence of another person, thereby enjoying a ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE fixed remuneration, is considered as someone automatically having a contract of employment. Unfortunately, bringing the law into practice has sometimes not been easy. A government commission has been set up with wide ranging powers in order to make sure that the rules and regulations for all CAL workers are applied. Uruguay is another example of a country with a new union-friendlier government than before. A similar bill on outsourcing, drafted by the trade unions, was adopted there in 2007. This law also stipulates that end users and subcontractors / intermediaries are jointly liable for contract workers’ rights and protection as well as for such issues as the payment of their social security contributions and accident insurances. Among other provisions, the law in Uruguay states that contract workers can, under no circumstances, replace workers who are temporarily unemployed, or engaged in an industrial relations conflict. All contract workers need to receive a written contract that needs to include information on the conditions of employment and on the salary as well as, where possible, the name of the company where work will be performed. In Peru, ICEM mining affiliate FNTMMSP has been concentrating on using labour inspection as a tool to do away with the excesses of contract and agency labour in the country. Since 2000, the union has been organising training for their members and informing them about the use of inspection visits. Over the years, the campaign met with some success. In certain cases, the ministry of work ordered mining companies to pay fines and transform contracts of contract workers into permanent ones. However, given the exponential growth of CAL in the Peruvian mining sector, the union’s successes certainly didn’t stop the phenomenon. In 2006, the Peruvian unions managed to reinforce the efficiency of the inspection visits, getting the national law adapted to the principles of ILO Convention 81 on Labour Inspection. In 2007, a new government was elected, which lived up to one of its election promises, to do away with abuses by “service companies”. The government also made a commitment to increase the number of labour inspectors. In June 2008, the Peruvian government enacted a law to give full labour rights to some 400,000 subcontracted workers, including 66,000 in the mining sector. Under the new law, companies will have to place all of the subcontracted workers on their own payroll. Many companies in Peru, in order to avoid paying workers’ benefits, had created cover-enterprises entirely for the purpose of recruiting workers for one particular company. The new law aims to close these “front” companies, ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE in addition to holding the user enterprise that employs the subcontracted workers responsible for social security and other payments until a year after the contract with the outsourcing company expires. The law also sets stricter rules for the registration of outsourcing companies that provide services to other firms. They now have to have more than one client and they will be required to provide invoices on their activities. Also, and for the first time in the country, a list of outsourcing companies will be drawn up. As soon as the legislation was written, the business community in Peru started to pressure the government not to sign the law, calling it rigid and obsolete. ICEM affiliate FNTMMSP welcomed the new law as a step forward, but, at the same time, said that several aspects of needed protection are still pending, such the prohibition of outsourcing of key activities including, for example, the extraction of minerals. Another recent victory for the unions in Peru has been the ratification by the Peruvian government of ILO Convention 176 on health and safety in the mining sector. 36

Similar efforts as to those in Peru are taking place in Colombia, where unions are also aiming to make better use of social and labour inspection. Considering the fact that the ICEM affiliates in Colombia, as in several other countries in the region, have a membership of 20 to 50% contract and agency labour workers, it is evident that much can be done. In Brazil, the national confederation CUT extensively discussed the issue of precarious employment at its congress in 2006. CUT saw the general lack of legislation as one of the main reasons behind the explosion in the use of contract and agency labour. One argument repeatedly made for the strengthening of laws was that precarious employment practices have a negative impact on public finances and, in particular, on social security. The priorities set by the CUT Brazil congress were to organise contract and agency workers, negotiate clauses, at company or at branch level, on contract and agency labour, and work on legislation. Similar voices were raised by CUT Colombia, where it was suggested to make affiliation to the national social security system an obligation for all workers.

5.1.4 > NORTH AMERICA In Canada, a category called “dependent worker” has been included in the labour relations’ legislation to ensure protection for workers who are ecoICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE nomically dependent on a particular employer with which he or she has a contract but not, formally, an employment relationship. A provincial example is that the Ontario Labour Relations Act specifically defines a dependent contractor as: “A person, whether or not employed under a contract of employment and whether or not furnishing tools, vehicles, equipment, machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor.” In other words, as with the ILO recommendation, the facts of the situation take precedence over the intentions of the employer. (1) In the USA, the Supreme Court reached the conclusion in 2003 that drivers who own their trucks and had consignment contracts with one company were not employees covered by labour laws, despite the content of their work, personnel regulations and subordination to user companies. Similar issues are being raised at state level. In August of 2007, the California Court of Appeal denied the appeal of FedEx against the trial court’s decision in Estrada vs. FedEx Ground Package System, Inc. The court found that FedEx Ground drivers are employees and not independent contractors. The grounds cited by the court included that the work performed by the drivers was wholly integrated into FedEx’s operation, and that they received some of the benefits to which regular employees were entitled. (1)

5.1.5 > WESTERN AND NORTHERN EUROPE Many European countries have relatively good legislation in the area of contract and agency labour. A summary of one of the “best practice” examples the Belgian legislation on contract and agency labour - can be found further in this document. Besides having specific laws on agency or contract labour, quite a few European countries also have legal arrangements where the law or the authorities allow the social partners to agree on issues, including on agency work or contract work. This has had positive results for CAL workers in quite a few European countries, with collective bargaining efforts generally bringing improvements for both agency and contract workers. Often, contract and agency workers in Europe are therefore protected by a combination of law and collective agreements.



THE LEGAL ANGLE The regular labour law in the Netherlands, an example of a country where coverage comes from a combination of laws and agreements, also applies to agency workers, with some specific regulations because of the triangular relationship. Among other things, the Dutch law forbids strike breaking by agency workers. It also foresees for equal pay for comparable workers in the user-enterprise unless there is a collective agreement that says otherwise. As a result, different rules apply to “skilled workers”, who get equal pay as of day 1, and “unskilled workers”, who are paid according to the collective agreement with the Dutch agencies, and get equal pay only after 26 weeks. There also is ‘chain-liability’, meaning that the user-enterprise is liable if the agency does not pay social security premiums or taxes and minimum wages.


The collective agreement for temporary agency workers limits an agency worker’s contract term, in a first period, to 78 weeks, during which time an unlimited number of contracts are possible. Often, and increasingly so, these are very short term contracts (often only 1 day), and they can be ended immediately by both parties. After this 78 weeks period (1½ year), a second period starts, consisting of another 104 weeks, or eight consecutive fixed-term contracts, which ever one ends first. An agency worker becomes a permanent worker once he or she has been working longer than these eight consecutive terms, or after the second period of 2 years. The worker also gets paid in this period when he or she is ill, or has no work. Where an agency worker signs an indefinite contract with an agency, he or she also gets paid when ill or out of work, and there is no time limit set for the contract. After 6 months, agency workers are entitled to a pension plan and to vocational training. A new period only starts after a break of 6 months or longer in the first period of 78 weeks and a break of 3 months or longer in the second period of 104 weeks. The law in Germany is similar to the law in the Netherlands, as is the new draft EU Directive, in the sense that it states that agency workers have the right to the same wages as permanent workers unless there is a collective bargaining agreement that says otherwise. An exception is built in for former unemployed workers, who can earn less in the first 6 weeks of their contract. A somewhat bizarre consequence of this legislation is that, as reported by German trade unions, employers are currently showing a clear interest in working together with unions, as it is the only way for them to obtain lower salaries.


THE LEGAL ANGLE In Germany, as in a number of other countries, PEAs (Private Employment Agencies) need a special accreditation, in this case from the Federal Employment Office. Agencies in the country risk losing this accreditation after any violation of the legislation. Hiring non-permanent workers in Germany is only allowed when one of the two following circumstances applies:

With a limited, fixed-term contract through which a non-permanent worker can only be hired for a limited amount of time. The maximum period is 2 years after which the worker must be given a permanent contract. Exceptions to this, however, apply when the user-enterprise is a new company (not older than 4 years) or when the non-permanent employee is older than 58 at the start of his or her employment.

Non-permanent workers can also be engaged in a number of specific, well-described situations. A temporary worker can, for example, be employed to replace another employee on maternal or parental leave. At times, such periods can be used consecutively, meaning that a temporary worker under this system can be employed for a longer period (in the example of maternity leave - for up to six years).

A “veto clause” also exists in German legislation, allowing a works council to veto the use of agency labour in certain well-described circumstances. A company works council has the right, for example, to veto the use of agency labour when there is a danger that permanent employees of the company will lose their jobs as a result.

THE LEGAL SITUATION IN BELGIUM FOR AGENCY AND TEMPORARY WORK / AN OVERVIEW These are extracts from a web-site set up by the Belgian ABVV/FGTB, to explain the Belgian legal situation and give guidance to agency and contract workers. Much more on the Belgian legal situation can be found on the site itself (in Dutch only):

1 > WHEN IS THE USE OF AGENCY LABOUR ALLOWED? An agency labour contract can be agreed upon • for a limited period of time • for a clearly defined job • to substitute a permanent worker It is only legal to use agency labour in those cases where ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008



agency labour is used to (temporarily) replace a permanent employee agency labour is used where the enterprise faces a temporary increase in the workload agency labour is used for exceptional work

1.1 > WHEN AGENCY LABOUR IS USED TO REPLACE A PERMANENT WORKER [Two categories: To replace a worker whose contract is ‘suspended’, or to replace a worker whose contact has ended.] Are regarded to be permanent workers: all workers (including those in a trial period or in their notice period) connected to the employer through a labour contract, for an indefinite period or a definite period, performing a welldescribed job, or those employed through a “replacement contract”. The agency worker needs to belong to the same professional category as the permanent worker that he or she replaces.


It is not obligatory to mention the name of the person that is being replaced. It is also not stipulated that the agency worker needs to perform the same function as the worker he or she replaces.

1.1.1 > CATEGORY ONE: CONTRACT ‘SUSPENDED’ Agency work is allowed where a contract has been ‘suspended’, except in case of a strike or a lock-out, or when there is temporary unemployment for economic reasons, or because of weather conditions. According to the ABVV/FGTB, this refers to those instances where a permanent worker is not working due to (among other) • Accident of illness • Maternal or parental leave • Annual holiday • Recuperation days • Other holiday • Paid training

1.1.2 > CATEGORY TWO: CONTRACT ENDED In this case, the user enterprise needs to follow a procedure that is different for when the agency worker replaces a worker whose employment contract has been terminated for an ‘urgent reason’ or whose notice period has been respected, on the one hand, and those cases where the contract was terminated for another reason (including by mutual agreement or death of the employee). Where the agency worker replaces a worker whose employment contract ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE has been terminated for an ‘urgent reason’, or where the notice period has been respected. In this case is the maximum employment length limited to 6 months. This period starts at the end of the contract of the permanent worker. The period can be extended once with an additional 6 months, provided the procedure below is respected. Procedure - First 6 month period: Where there is a union representation at the user enterprise: • Agency work is only allowed if the union delegation agrees with it before the work starts • The user enterprise is required, within 3 days after it receives the agreement of the union delegation, to inform the ‘Inspection of Social Laws’. Where there is no union delegation at the user enterprise: • Agency work is allowed if the agency provides the ‘Social Fund for Agency Workers’ with specific information Procedure - Second 6 month period: Where there is a union representation at the user enterprise: • The agreement of the union delegation needs to be received before the extension into the second 6 months period. Where there is no union delegation at the user enterprise: • The agency is required to send information to the social fund after 5 months. In case there is no union delegation at the user enterprise, there still is a procedure to shorten the period during which agency labour can be used, when one or more workers’ organisations, after receiving information from the ‘Social Fund for Agency Workers’, apply to the agency. A minimum period of 3 months will be allowed to use agency labour, however, in such cases. Where the agency worker replaces a worker whose employment contract has been terminated for another reason (mutual agreement, death of the permanent worker,…) The length of the period during which agency labour can be used is 6 months, possibly extended by one additional 6 month period. In this case, there is no specific procedure to be followed for the first 6 months period. For the second 6 month period, a procedure similar to the one described under 1.1.2. needs to be followed.



THE LEGAL ANGLE 1.2 > WHEN AGENCY LABOUR IS USED TO CONFRONT A TEMPORARY INCREASE OF THE WORKLOAD Here, the maximum allowed period for the use of agency labour, as well as the procedure to follow, depends on whether there is a union delegation at the user enterprise or not.

1.2.1 > A UNION DELEGATION EXISTS AT THE USER ENTERPRISE The use of agency labour is not limited in time in the collective agreement that applies at national level. It is the user enterprise who, in agreement with the union delegation, sets the allowed time period. In this case, agency labour is only allowed following the consent of the union delegation. The union does not only have to respond positively to the question if agency labour can be used or not, but also on the number of agency workers and the period during which they can be employed.


1.2.2 > NO UNION DELEGATION EXISTS AT THE USER ENTERPRISE Provided a well-described procedure is followed, involving the above-mentioned social fund, agency labour can be used during 6 months. This period can be extended twice with an additional 6 months period.

1.3 > WHEN AGENCY LABOUR IS USED FOR EXCEPTIONAL WORK Agency labour is, in principle, allowed where work is exceptional for a period up to 3 months. There is no possibility for an extension, nor is there a procedure to follow. In as far as it is not considered as ‘a normal activity’ of a user enterprise, exceptional work can include, among other: work to prepare and run yearly events, congresses, study days, seminars, manifestations, exhibitions, receptions, market research, translations, etc.. Other examples include loading of trucks, secretarial work performed for business people staying temporarily in the country, or work at embassies.

2 > WHEN IS IT NOT ALLOWED TO USE AGENCY LABOUR? Agency labour can not be used when one of the following situations apply:

• • • •

Temporary unemployment due to economic factors Temporary unemployment due to bad weather conditions For agency work in certain sectors, i.e. moving companies and port activities. Also in the construction sector, specific agreements apply In case of a strike or a lock-out



When needed permission is not granted When work to be carried out is considered dangerous. Examples includ those jobs that deal with asbestos removal or poisonous waste.

3 >AGENCY LABOUR - THE WORK RELATIONSHIP An agency worker needs to have a labour contract with the agency and there needs to be a commercial contract between the agency and the user-enterprise. Commercial contract A written contract needs to be drawn up within 7 working days, starting from the moment that an agency worker starts his or her employment. Among many others things, this contract needs to contain, as a minimum:

• • • • • • •

The reason for the employment of the agency worker The place and length of the employment The working time rules of the user-enterprise The gross salary, excluding holiday entitlements Method of payment The salary of a permanent worker with the same qualifications in the user-enterprise The specific characteristics of the job

The agency worker must receive, within 2 working days from the start of his or her employment, a written notification that contains, as a minimum, an overview of all required details as they need to be listed in the commercial contract. Labour contract In order to be legal, the agency and the agency worker need to sign two contracts. Both parties need to agree that they are entering into an agency work contract, at the latest when the agency worker starts to work for the agency for the first time (this agreement does not need to renewed every time). Another written labour contract needs to be signed at the latest two days after the start of the agency workers’ assignment. This contract needs to be renewed for every assignment. This labour contract needs to contain a number of specific elements. Among several other: • The gross salary figure, excluding holiday entitlements • The occupation and qualification category of the agency worker, using ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008



the names commonly used a the user enterprise A description of the job Working time per week, as well as the average working time per week, calculated on a yearly basis Name of the user enterprise and the place of work Period to which the contract applies (where it is possible to establish this) The reason why a permanent worker is replaced (where this is the reason for the agency work)

Clauses in contracts that stipulate it is forbidden for the agency worker to sign a direct contract with the user enterprise are considered non-existent, including in those cases where parties signed a contract that may contain such a clause.



Commonly, the first three working days will be considered to be a trial period (unless otherwise agreed). Where an agency worker is employed through consecutive labour agency contracts, it is not allowed to work with consecutive trail periods if the agency worker is employed • with the same function • at the same work station • with the same user enterprise

5 > OBLIGATIONS OF THE USER ENTERPRISE The user enterprise needs to provide the agency with specific information concerning the employment. The user enterprise also has obligations towards the agency worker, including in the following areas: • Reception of the agency worker • Adhere to the requirements of the labour regulation • Management of the agency worker • Provision of protective clothing and other such material At the time of the reception, the user enterprise is required to provide the agency worker with, among other, the following: • Information on the general structure of the enterprise • The role of the worker in the enterprise, as well as a job description, and information on how monitoring and verification of the job is carried out • Information on whether or not a ‘works council’ exists at the enterprise, whether there is a ‘committee for safety and prevention’ and whether or not there is a union delegation. The names and an indication on how to find the trade union representatives also need to be communicated. • The work rules ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


The measures concerning first aid, fire extinction and evacuation plans.

Information that needs to be communicated to the company works’ council by the user enterprise The user enterprise needs to inform its works council concerning the presence of agency workers, as well as provide information as to the reason for this agency work. The user enterprise also needs to inform the works council on the structure of the workforce (permanent workers, workers with a temporary contract, and agency workers). The user enterprise furthermore needs to provide information on the evolution of employment within the company, including on: • The number of contract and agency workers employed at the company • The procedure used to employ them (directly engaged by the employer, provided by an agency, permanent employees provided to the enterprise by another employer) • The reasons why agency workers, or workers with a temporary contract, were employed • The average length of their employment period • The departments of the enterprise where these workers are employed 45

6 > OBLIGATIONS OF THE AGENCY The agency is the “legally responsible” employer for the following areas (among other): • The hiring, reception, and information that needs to be transmitted • Signing a labour contract for agency work • Payment of the salary, holiday payments, … • Deduction of social security payments • Accident insurance

7 > RIGHTS OF THE AGENCY WORKER All agency workers have a right to Holidays and paid vacation Agency workers are entitled to a day off when a holiday falls inside the working period. This also applies to ‘days in lieu’. In some cases, agency workers also are entitled to a day off when the holiday falls just outside of the working period.

Equal salary An agency worker can not be paid less than what would be paid to a permanent worker, had this person be hired by the user enterprise. This does not mean, however, that an agency worker is entitled to the same salary paid to the person that the agency worker replaces. The agency worker does,


THE LEGAL ANGLE however, have the same rights to a pay raise as the permanent worker. The same applies to all other benefits that the employer foresees, such as lunch vouchers, additional bonuses, etc. The salary of the agency worker is paid through the agency. Maternity leave The agency needs to respect the law on maternity leave. Just as permanent workers, agency workers are entitled to 15 weeks maternity leave (17 in case of twins or higher). Payments during this period are assured through the health insurance system.

Protective clothing Obviously, agency workers are, where protection is needed, entitled to the same protection as permanent workers. Protective and work-related clothing needs to be provided by the user-enterprise.

Social security As do permanent workers, agency workers enjoy social security rights, including in such areas as pension rights, unemployment rights, sick leave, occupational diseases and child support allowances.


8 > RECOGNISED BY AN INDEPENDENT COMMISSION Within the sector, a “commission of good services” has been established. This commission has representatives of workers’ and employers’ organisations as its members. The commission is the authoritative body for all inquiries in regard to the question “which work is allowed to be carried out by agency workers”, in regard to the social statute of agency workers, as well as concerning the duties of the agencies themselves. The commission deals with problems as they arise, and can call for information on such things as: • The number of agency workers during a certain period, as well as the reason why the user-enterprise uses agency labour • The length of the period during which the concerned agency workers are employed • The job that has been carried out by the agency worker • The length of employment, the salary and benefits for the agency worker

9 > RULES FOR TEMPORARY WORK This applies to contracts where the period of employment is indicated with a date or a particular event, for example, the end of a project. For every individual worker, there needs to be an individual labour contract. This contract needs to be signed, at the latest, at the time when the worker starts his job. Where this requirement is not fulfilled, the same conditions ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE are to apply as for contracts that have an indefinite time span, for example in the area of redundancy payments.

Consecutive contracts with a limited timeframe The principle is that, where parties have signed consecutive agreements for a limited duration, and where there is no interruption between the assignments, then it is assumed that they have entered into a contract of unlimited duration. There are a number of exceptions to this rule, including • When there is an interruption of the labour contract, owing to the employee. For example, when an employee refuses to sign the renewal of his or her contract for family reasons. • Where consecutive contracts are needed because of legal stipulations, for example, where permits need to be renewed. This only applies to situations where the employer has no influence on the decision making process. • In certain cases, consecutive contracts are allowed for up to 2 years. Employers and employees can agree to sign a maximum of 4 consecutive contracts with a limited duration. Conditions here are that the length of these contracts is at least 3 months, and that the total working period does not exceed 2 years. • A possibility exists to allow for consecutive limited-duration contracts for a period of up to 3 years. However, in those cases, specific permission needs to be obtained from the “Social Law Inspectorate”. In these cases, employer and employee can agree to sign consecutive contracts with a minimum of at least 6 months. The law stipulates that workers with a limited-duration contract can not be treated less favourably than comparable workers with a permanent contract, solely on the basis that they are employed for a limited period of time, unless the difference in treatment can be justified and motivated objectively.

Case law is building up an increasingly rich picture of work relationship issues in some countries. In the UK, for example, a Court of Appeals hearing of the case Hawley v. Luminar Leisure Ltd. & Others, in 2006, appears to have set a landmark. The case concerned a member of the public, Mr Hawley, who was seriously injured when punched in the face by a doorman employed by a security services firm at one of the defendant company’s clubs. The Court of Appeal held that Luminar was vicariously liable for the conduct of the doormen at its clubs, since they had become their “temporary deemed employer”. The facts showed that the club exercised detailed control over ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE what the doormen did. The level of control and subordination was the crucial point, rather than the contractual terms of the doormen’s employment. (1) In France, the Supreme Court examined the case (Cour de Cassation Ruling No. 5371 of 19 December 2000) of a person who drove a taxi under a monthly contract that was automatically renewable, called a “contract for the lease of a vehicle equipped as a taxi”, and who had to pay a sum to the taxi company described in the contract as “rent”. The Court held that this contract concealed a contract of employment, since the taxi driver was bound by numerous strict obligations concerning the use and maintenance of the vehicle, and was in a situation of subordination. In addition, in Rulings Nos. 5034, 35 and 36, of 4 December 2001, the Supreme Court examined the case of workers engaged in the delivery and collection of parcels under a franchise agreement. It determined that the provisions of the Labour Code were applicable to workers operating at an enterprise, under conditions and at prices imposed by that enterprise, without the need to establish a subordinate relationship. (1)


In Central Europe, in Croatia and Macedonia for example, laws are on the books to ensure that contract or agency workers are not used to the detriment of the permanent workforce. However, throughout the region, laws, as well as collective bargaining agreements, are all too often violated. In Croatia, clear limits exist for the use of contract and agency labour since the adoption of a new labour law (Section XXIII contract and agency labour, 231-239). Agency work can not be used in Croatia to: • Replace workers on strike • Replace workers that were laid off because of business/economic reasons • Carry out dangerous jobs • Be put at the disposal of another agency Workers can also not be sent out by an agency for a period of over one year. Even with strong legislation, it has proven to be difficult to limit contract and agency labour in the context of unemployment and lack of decent jobs. It was estimated, in 2005, that 67% of contract workers in Croatia had no alternative form of employment. In Macedonia, following a campaign by ICEM affiliate SIER, workers now have the right to be informed on what is going to happen at their workplace in relation to contract labour. This includes the right to be informed about any upcoming outsourcing plans. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE The “new forms of employment”, including contract and agency labour, are also making headway in Eastern Europe, where one of the main problems appears to be the absence of regulation. Russia, Ukraine and Moldova are said to be among the countries were CAL work is being used the most. In Russia, for example, private employment agencies noted an increase in demand of around 10 percent a year over the last few years. Another recent development in the country is that the Russian-owned companies themselves are now also starting to call on contract and agency labour, where it was mainly foreign companies before that made use of CAL labour. The legal situation in regard to contract and agency labour in Russia is somewhat ambiguous. Unions are of the idea that it is, by and large, illegal – and that is should remain that way. According to ROGWU, ICEM affiliate in the energy sector in Russia, CAL should be banned or severely restricted by law, with contradicting Russian legislation now being in place. ROGWU sees CAL as a form of employment that has already had too many adverse and detrimental consequences for workers. At the same time, ROGWU admits that there is no denying that the problem exists, and that there is more and more use of contract and agency labour. For that reason, the union recommends that unions at the local level include provisions in their collective agreements that restrict the use of CAL, and limit its use to specific functions and tasks on a temporary basis. The situation appears to be relatively similar in a number of Russia’s neighbouring countries, such as Belarus and the Ukraine, where many contract workers work in jobs that are “not entirely in line with the law”, are badly paid and see little to no contributions to a pension scheme or a social security system. In countries like Kyrgyzstan, local unionists also tell of multinational companies entering the country and stimulating an increase of the use of precarious employment.

5.1.7 > MIDDLE EAST AND NORTHERN AFRICA The situation for contract and agency workers in the region is particularly difficult given the endemic lack of trade union rights. Trade unions are often limited in their ability to operate, or they are simply banned. The sometimes horrifying working conditions for contract workers - frequently shipped in from other, mainly Asian, countries - for example, in the construction sector in many of the Middle Eastern countries, have made news headlines globally. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE In Iraq, the situation is especially difficult. Hassan J’Aama, President of the ICEM affiliate IFOU (Iraqi Federation of Oil Unions) spoke on the difficult situation for contract workers in Iraq at the 2007 ICEM World Congress. He mentioned not only the overall security situation, but also the distressing fact that several former anti-union laws in Iraq have not been changed since the fall of the previous regime. Both the occupation forces and the Iraqi government were particularly blamed for not abolishing Decree 150, which bans unions in public enterprises, including in the oil sector.



A key question for the work at the international level is: “What are the relationships (or situations) under which work is performed that present obstacles to bargaining and organising (or union recognition)”. Organising and collective bargaining are important angles of the problem. In the end, what is needed are strong unions, which are able to protect members from precarious work situations. And for that, strong laws are needed to allow workers to organise and their unions to properly represent them, including in collective bargaining. The notion of the “employment relationship” is a very important one in this discussion. Workers everywhere need to be protected by a well-established “employment relationship”. It needs to be clear what that relationship is, and who the employer(s) is/are. It also needs to be clear who is responsible for what. A particular problem related to all this is the increasing use of commercial law, instead of labour law, to “relate” workers and employers.

5.2.1 > ILO At the international level, more work should be done with the ILO to make sure that legal protections for contract and agency labour workers, as well as for other categories of precarious workers, are strengthened, both at the international as well as at the national level. In particular, there is a need to guarantee the CAL workers’ rights to freedom of association and collective bargaining. Besides its role as a standard setting body, the ILO might therefore also need to get more actively engaged in what could be one of its key roles: making sure that laws are applied and adhered to in the different countries of the world. At national level, laws often exist, sometimes good ones even, ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE but are not applied, or understood, or both. At the international standard setting level, several instruments have been developed that are of use for unions in their struggle to defend contract and agency labour workers. A few of these, including one on the employment relationship, and one on private agencies, are described in more detail here below. ILO Recommendation No. 198 on the Employment Relationship ( A key development at the international level has been the ILO’s work on the employment (or work) relationship issue. Since the 1950s, problems related to contract labour had been repeatedly discussed at different ILO forums until, in 1995, the issue was finally placed on the agenda of the International Labour Conference. The plan was to have discussions in 1997 and 1998, with a view to a possible adoption of an ILO Convention and/or an ILO Recommendation. The effort failed, with some of the principal difficulties in the discussions being the complexity of the phenomenon and the inability to reach agreement even on the definition of “contract labour” or how to define and identify the workers concerned. Other issues included the questions “is there a “third category” of workers, who are neither employees nor independent (self-employed) workers” and “how to distribute employer responsibilities in the “triangular relationship”?”














THE LEGAL ANGLE The major items discussed by the ILO in 1997 and 1998 were (2) • Definition of Contract labour as a dependent work which is similar to the work performed within the employment relationship • Contract workers’ equal treatment with employees performing essentially similar work • Measures to ensure that Contract labour is not used for the purpose of denying rights and avoiding obligations under labour and social security laws (“disguised employment relationship”) The discussion at the ILO later evolved as the Workers’ Group at the ILO started highlighting the need to provide protection to the growing group of workers that were not protected by labour law, either because of failure to enforce it, or because of the difficulty of distinguishing between the scope of commercial legislation and of labour law, or because labour legislation had not been updated to reflect the realities of new forms of work.


The effort ultimately led to the adoption, in 2006, of the ILO recommendation No. 198 on the Employment relationship. Together with the recommendation, an accompanying resolution urges governments to promote its principles. The recommendation is an important instrument because the legal rights of a worker with respect to an enterprise, for which he or she works, are dependent on the existence of an employment relationship. The lack of a (good) employment relationship is often a sore point when contract and agency labour is used. In fact, many CAL workers lack good protection precisely because the employer made an effort to evade its responsibilities through avoiding an adequate employment relationship. The ILO Recommendation 198 states that “The issue of who is or is not in an employment relationship – and what rights/protections flow from that status – has become problematic in recent decades as a result of major changes in work organization and the adequacy of legal regulation in adapting to those changes. Worldwide, there is increasing difficulty in establishing whether or not an employment relationship exists in situations where 1) the respective rights and obligations of the parties concerned are not clear, or where 2) there has been an attempt to disguise the employment relationship, or where 3) inadequacies or gaps exist in the legal framework, or in its interpretation or application.” It is important that the ILO Recommendation 198 urges governments towards the formulation, application and periodic review of national policies to clarify and adapt the scope of relevant laws and regulations to protect workers in the context of an employment relationship.


THE LEGAL ANGLE This needs to be done with regard to: • Determination of the existence of an employment relationship • Determination of the nature and content of the national policy - this should be conducted with the participation of the most representative organisations of employers and workers • Dispute settlement • Compliance and enforcement • Non-interference into civil or commercial contracting • Development of criteria for determining whether or not such a relationship exists, based on the facts about what is actually expected of the worker and how the worker is paid, rather than whatever the parties to the relationship might call it; • Establishment of a new mechanism, or the use of an existing one, to monitor developments in the labour market and the organization of work “so as to be able to formulate advice on the adoption and implementation of measures concerning the employment relationship”.

FROM THE ILO RECOMMENDATION ON THE EMPLOYMENT RELATIONSHIP (2) The national policy should at least include measures to: • Provide guidance on effectively establishing the existence of an employment relationship and on the distinction between employed and selfemployed workers • Combat disguised employment relationships • Ensure standards applicable to all forms of contractual arrangements, including those involving multiple parties • Provide effective access to appropriate, speedy, inexpensive, fair and efficient procedures and mechanisms for settling disputes regarding the existence and terms of an employment relationship • Ensure compliance • Provide training • With particular emphasis to ensure effective protection to especially affected workers, including women workers, as well as the most vulnerable workers, young workers, older workers, workers in the informal economy, migrant workers and workers with disabilities Regarding the determination of the existence of an employment relationship: • Primacy of facts notwithstanding how the relationship is characterized by the parties • Specific indicators of the existence of an employment relationship, including the fact that the work ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008



• •

>> is performed personally for the benefit and under control of an other party >> involves integration in the organization of the enterprise >> is carried out within specific working hours or workplace >> is of a particular duration and has a certain continuity >> involves the provision of tools, materials and machinery by the party requesting the work >> is periodically remunerated Effective measures aimed at removing incentives to disguise an employment relationship Promotion of the role of collective bargaining and social dialogue

Regarding Monitoring and implementation: • Mechanism are needed for monitoring developments in the labour market and the organization of work, and for formulating advice • The most representative organisations of employers and workers should be represented, on an equal footing, in the above mechanism • Collection of information and research • Special attention to the transnational provision of services 54 The ILO published an “annotated guide to ILO Recommendation No. 198 ( ILO Convention 181 (Private Employment Agencies Convention) ( Another important ILO standard in this area is the ILO Convention 181 on private employment agencies, adopted in 1997. This benchmark establishes a number of key principles for private employment agencies. A problem is that only 20 countries have ratified it so far. One of the reasons why the convention is important is because it requires governments “in accordance with national law and practice”, to “take the necessary measures to ensure adequate protection for the workers employed by private employment agencies”. It also requires governments to “determine and allocate, in accordance with national law and practice, the respective responsibilities of private employment agencies … and of user enterprises” in relation to a number of items, including collective bargaining. Among the main points of the convention: “Recognizing the role which private employment agencies may play in a well-functioning labour market” and “Recognizing the need to guarantee the right to freedom of association and to promote collective bargaining and social dialogue as necessary components of a well-functioning industrial ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE relations system” “After consulting the most representative organizations of employers and workers concerned”, a country may: “(a) prohibit, under specific circumstances, private employment agencies from operating in respect of certain categories of workers or branches of economic activity… “ “(b) exclude, under specific circumstances, workers in certain branches of economic activity, or parts thereof, from the scope of the Convention or from certain of its provisions...“ “The legal status of private employment agencies shall be determined in accordance with national law and practice, and after consulting the most representative organizations of employers and workers.” “The competent authority shall ensure that adequate machinery and procedures, involving as appropriate the most representative employers and workers organizations, exist for the investigation of complaints, alleged abuses and fraudulent practices concerning the activities of private employment agencies.“ Government shall “in accordance with national law and practice, take the necessary measures to ensure adequate protection for the workers employed by private employment agencies” …”in relation to: (a) freedom of association; (b) collective bargaining; (c) minimum wages; (d) working time and other working conditions; (e) statutory social security benefits; (f) access to training; (g) occupational safety and health; (h) compensation in case of occupational accidents or diseases; (i) compensation in case of insolvency and protection of workers claims; (j) maternity protection and benefits, and parental protection and benefits.” Governments “shall determine and allocate, in accordance with national law and practice, the respective responsibilities of private employment agencies ”…”in relation to: (a) collective bargaining; (b) minimum wages; (c) working time and other working conditions; (d) statutory social security benefits; (e) access to training; (f) protection in the field of occupational safety and health; ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE (g) compensation in case of occupational accidents or diseases; (h) compensation in case of insolvency and protection of workers claims; (i) maternity protection and benefits, and parental protection and benefits “Supervision of the implementation of provisions to give effect to this Convention shall be ensured by the labour inspection service or other competent public authorities”


• • • • •

• • • • •

Need for licensing or certification of Private Employment Agencies Equality of opportunity and treatment in access to employment and nondiscrimination Protection of personal data of workers No charge for the workers concerned No child labour Protection for migrant workers Adequate protection of the workers concerned and allocation of responsibilities between PEAs and user enterprises in relation to >> Freedom of Association and right of Collective bargaining >> Minimum wages >> Working time and other working conditions >> Statutory social security benefits >> Access to training >> Safety and health protection >> Compensation in case of >>>> Occupational accidents or diseases >>>> Insolvency >> Maternity and parental protection Elimination of unethical practices of PEAs (R. 188) A written contract of employment, where appropriate. As a minimum requirement, the workers should be informed of their conditions of employment before the effective beginning of their assignment (R. 188) No replacement of the workers of the user enterprises who are on strike (R. 188) PEAs should not prevent their workers from being hired by the user enterprises Relationship between PEAs and public employment services (R. 188)


THE LEGAL ANGLE ILO Declaration on Social Justice for a fair globalisation In June 2008, the ILO adopted the Declaration on Social Justice for a Fair Globalisation. Dixit the ILO: “Amid widespread uncertainty in the world of work, ranging from financial turmoil and economic downturn to growing unemployment, informality and insufficient social protection, the governments, workers and employers of the International Labour Organization have adopted a landmark Declaration designed to strengthen the ILO’s capacity to promote its Decent Work Agenda and forge an effective response to the growing challenges of globalization.” Extracts: “Convinced that in a world of growing interdependence and complexity and the internationalization of production: …….the importance of the employment relationship should be recognized as a means of providing legal protection to workers…’ ‘… the commitments and efforts of Members and the Organization ….should be based on the four equally important strategic objectives of the ILO, through which the Decent Work Agenda is expressed and which can be summarized as follows: …iii) promoting social dialogue and tripartism as the most appropriate methods for … making labour law and institutions effective, including in respect of the recognition of the employment relationship, the promotion of good industrial relations and the building of effective labour inspection systems…”

5.2.2 > EU ON TEMPORARY AGENCY WORK For over ten years, the EU has been discussing rules for workers employed by private agencies. Whereas the EU has been able to agree, through negotiations involving its social partners, on Directives covering part-time, fixedterm and temporary work, the agency work effort remained blocked. As European employers’ organisations continued to refuse to accept the equal footing principle for agency workers, the EU Commission put forward its own proposal in 2002. Efforts to find a compromise continued to fail for a long time, mainly due to the resistance of a limited number of countries, including, at various stages, the UK, Ireland, Poland, Denmark and Germany. Partly due to a recent agreement in the UK – where 1.4 million agency workers are finally going to be treated equally – albeit only after 12 weeks of work, something which was still considered a major breakthrough as UK employers were saying the period should have been set at at least one year - there is now hope again that an EU Directive can finally be adopted. The EU employment ministers came to an agreement on a text in June 2008, at which point the draft returned to the European Parliament for further readICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE ing. The agreed concept for the Directive is that there would be equal treatment for everyone, as of Day 1, a position that is also reflected in an agreement between UNI and Eurociett, the agency employers’ organisation in Europe. The latter agreement is believed to have helped in getting the agreement at EU level. Exceptions to the equal treatment principle are allowed by the draft Directive where the social partners come to an agreement at the national level, as has happened in the UK, for example. Concerning the UK agreement, it may be of interest to note that the 12 weeks mentioned in it will apply to equal pay and holiday entitlements, but not to sick pay or pension payments, while the temporary workers will also have to work the same length of time as full-time workers to enjoy paid maternity leave. According to the draft EU text, an exception in regard to equal salary can also be made, again after consulting with the social partners, in those cases where temporary workers have a permanent contract with a temporary work agency that guarantees them adequate and continuous payment whether or not they are on assignment. 58

Also of importance is that equal treatment as of day 1 does not necessarily mean that all conditions will be exactly the same as for similar permanent workers. What is meant is that an agency worker would get the same conditions, including holiday and sick pay, as a newly hired permanent worker would get.

5.2.3 > OTHER INTERNATIONAL STANDARDS Besides these international legal efforts, there have also been numerous standard setting exercises that do not have full “international legal status”, but are of relevance anyway, for various reasons. Some of these standards were adopted by governments, others by companies, trade unions or NGO’s, yet others by a combination thereof. A limited number of examples are listed here below. Many more exist. 1 > The ICFTU/TUAC/ITS Basic Code of Labour Practice (adopted in 1997) “(name of company) recognises its responsibilities to workers for the conditions under which its products are made or its services are provided and that these responsibilities extend to all workers producing or providing products or services for (name of company) whether or not they are employees of (name of company).” “Any workers producing or providing products or services manufactured, sold or distributed by (name of company) must be provided with living wages and ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE LEGAL ANGLE decent working conditions, and the international labour standards established by Conventions 29, 87, 98, 100, 105, 111, 135 and 138 of the International Labour Organisation must be observed. “ “(name of company) will require its contractors, their sub-contractors, principal suppliers and licensees (franchise-holders) to provide these conditions and observe these standards when producing or distributing products or components of products for (name of company) or when providing services sold by (name of company). (name of company) will, prior to placing orders with principal suppliers, engaging contractors and subcontractors or granting licenses (franchises), assess whether the provisions of this Code can be met.” “For the purposes of this code the term contractor shall mean any natural or legal person who contracts with (name of company) to perform work or provide services. The term “sub-contractor” means any natural or legal person who contracts with a contractor, as defined above, for the purpose of performing work or providing services related to or as part of an agreement with (name of company). “THE EMPLOYMENT RELATIONSHIP IS ESTABLISHED Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment. Younger workers shall be provided the opportunity to participate in education and training programmes.” 2 > The ETI (Ethical Trading Initiative) base code on employment relationship “REGULAR EMPLOYMENT IS PROVIDED” “To every extent possible work performed must be on the basis of recognised employment relationship established through national law and practice. “ “Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting, sub- contracting, or home-working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment. “ 3 > EBRD (European Bank for Reconstruction and Development) Language that originates from the code of conduct efforts has also been introduced in documents of a number of multi-lateral organisations that deal with the banking sector, primarily after the agreement by the IFC (International Finance Corporation, one of the 5 “legs” of the World bank) to incorporate all core ILO Labour standards into its loan agreements. From the European Bank for Reconstruction and Development’s (EBRD) “Environmental ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE LEGAL ANGLE and Social Policy”: The Performance requirements (PRs), including any specific requirements set out in the ESAP (Environmental and Social Action Plan), will apply to the project regardless of whether it is carried out directly by the client or through contractors or subcontractors. It is the client’s responsibility to ensure that contractors working on project sites meet these requirements. Effective contractor management includes: • Assessing environmental and social risks associated with contracts. • Including relevant PRs/ESAP provisions into tender documents as appropriate, and screen potential contractors’ capacity to meet the requirements. • Contractually requiring contractors to apply these standards and include appropriate non-compliance remedies. • Ensuring that contractors have knowledge and skills to perform their project tasks in accordance with the PRs and ESAP requirements. • Monitoring contractor compliance with the above requirements. • In the case of sub-contracting, requiring contractors to have similar arrangements with their subcontractors.


The client will document and communicate to all workers their working conditions and terms of employment including their entitlement to wages, hours of work, overtime arrangements and overtime compensation, and any benefits (such as leave for illness, maternity/paternity, or holiday). In the case of non-employee workers engaged by the client through contractors or other intermediaries to work on project sites or perform work directly related to the core functions of the project, the client will: (i) ascertain that these contractors or intermediaries are reputable and legitimate enterprises; and (ii) require that they apply the requirements… above.

(1) Extract from a research report by Brendan Martin for ICEM, entitled “Can transnational corporations legally apply conditions to companies that supply them with contract and agency labour.” (2) From: ‘Contract and Agency Labour, ILO action’, a presentation by Vladislav Egorov, Senior Labour Law Specialist of the ILO, at the ICEM Conference on Contract and Agency Labour, Istanbul, Turkey, January 2008.)







THE COMPANY ANGLE 6.1 > THE NATIONAL LEVEL As stated earlier, corporate action is often interacting with accomplishments at the legal level. Good laws are a precondition for good protection at enterprise level. And good relations with employers can help in achieving improvements to the law. One essential point that the ICEM is trying to emphasise is that, in dealing with employers, quite a few problems can be avoided by acting pre-emptively. The campaign therefore encourages unions to take measures aimed at protecting CAL workers before the problems start to surface.

6.1.1 > COLLECTIVE BARGAINING As in so many other situations, good collective bargaining is a crucial element. Where there is use of contract and agency labour, dealing effectively with the issues in collective bargaining should be high priority. As far as possible, contract and agency workers and contract and agency issues should be dealt with in collective bargaining agreements. Ensuring that all workers are protected is not just a matter of solidarity, it is also one of self-interest as workers do not benefit from a divided workforce, or from having separate, isolated bargaining units. Unfortunately, the reality is not always as we would like it to be and CAL related problems are omnipresent. Where problems do occur inside companies, national and international networks are at the unions’ disposal. Part of the work of the ICEM’s project is to use its available national and/or international networks to put national and international pressure where needed. As a rule, multinational companies may always be seen as - if not legally, then morally – responsible for the workforce that, in the end, makes their products, delivers their services and generates their profits. Whereas multinational enterprises commonly will claim that responsibilities lie elsewhere in case of problems in the supply chain, there are distinct possibilities at this level as company public images often are very vulnerable. Once it becomes apparent that negative publicity can become costly, companies are often willing to accept responsibilities they did not “know” they had before. In many countries, such as the Netherlands, Sweden, Belgium, Spain, Switzerland or France, unions have been able to conclude national agreements that cover temporary staff. In Germany, where the number of temporary workers is expected to rise to over 1 million within the next three years (from 732,000 in 2007), the major agencies already work with unions ensuring that protection for agency workers is a part of the agreements. Agreements also exist within some national branches or industries, for example in ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE the Norwegian food sector. National agreements have, as a rule, led to good results, often taking on board elements that are already covered by law (thereby also assisting to assure that the law is respected) and/or issues which could/should be covered by it. At international conferences, unionists have spoken favourably of such arrangements, in particular, where they also cover such issues as labour inspection, equal treatment principles or the need for recognition of employment agencies by an independent commission, preferably one in which unions are involved. As a rule, the overriding principle in collective bargaining, as advocated by the vast majority of the ICEM’s affiliates, should be that agreements concentrate on keeping employment direct and permanent. This also is the case where social partners agree that there may be reason, at times, to use contract and agency labour.


Central to the ICEM campaign is a model clause (for collective bargaining purposes) aimed at avoiding problems with contract and agency labour, and other possible forms of precarious employment, by taking pre-emptive action. The fundamental idea is to agree that the union(s) will be consulted prior to changes that could affect the employment status of employees. “Employers will not sign any contracts with a third party that could affect the employment status of their direct employees, prior to consulting with such employees’ union representatives.” In addition to this, there obviously is a wide range of other issues that can be taken on board where collective bargaining discussions are taking place. These can include the following:

• • • • • • • •

Agreement on converting precarious jobs to permanent, directly employed jobs Favour the use of direct permanent employment in new hiring Determine categories of work, sectors, or types of jobs where CAL labour will not be allowed or make sure that CAL work will only be allowed in certain cases. Reduce the maximum allowed time periods for contract and agency labour Make sure CAL contracts can not endlessly be extended for long or unlimited periods Ensure all workers have an adequate and well-described “employment relationship” with their employer Ensure that collective agreements also apply to contract and agency labour workers Guarantee equal pay for equal work as of day 1


THE COMPANY ANGLE • • • • • • • •

Negotiate for all conditions, such as social security payments or health and safety provisions, to apply to all, including to contract and agency workers, also as of day 1 Guarantee non-discrimination Negotiate for better protection against dismissals Negotiate good training and learning of skills for all Seek assurances that CAL workers are made aware of their rights and are informed of the conditions and job environment Respect of trade union rights for all Negotiate union protection for contract and agency labour workers. Agree with the company that all CAL workers can affiliate to the permanent workers’ union and that the company will not resist these efforts. Take measures to influence the company so that it ensures that its subcontractors apply similar good conditions to their workers.

Collective bargaining itself is a good organising tool, as CAL workers will have more reason to join the union when they see that the union can do something for them.

6.1.2 > ORGANISING There is a rising number of trade union leaders around the world who give the answer “organising, organising and organising” to the question “what are your top 3 priorities”. Whereas organising efforts should be a core priority for all, all the time, everywhere, this most certainly applies to situations where unions are confronted with agency, contract and other forms of precarious work. The international trade union movement can assist, with practical solidarity and advice on organising, but in the end, the organising work needs to be done locally, in the field. And, yes, there are problems. For many employers, using contract and agency labour is one of the ways to avoid a high level of union organisation. It can be expected that - when the solution to your problem is the removal of a tool used for that purpose - a struggle will take place. The work certainly isn’t easy given the many CAL workers that have already been dismissed for joining or forming a union, or asking about one. In some cases, these dismissals happen on an individual basis. In other cases, as recently in Pakistan, where the IUF is involved in a longstanding struggle with a soap and detergents producer, workers are dismissed in massive numbers. The Pakistani workers, around 2,000, were all directly employed with Unilever until about ten years ago. All of them were organised. Over the years, that situation eroded through the use of temporary contracts renewable ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE every 9 months and through the use of agency workers. The current temporary workers have a notional right to be made permanent, but that “just didn’t happen”. Workers can – legally – join the union, but they were all sacked as soon as they did, only to be replaced by agency workers, who do not have the right to join the union. In a large number of countries, organising CAL workers is nearly impossible for the union that represents the permanent employees due to legal restrictions. In many Asian countries, for example in Bangladesh, Thailand or India, agency workers are simply forbidden by law to join the union that represents the workers at the company. Often, the situation is not even that clear. In some cases, unions need to test whether they are stopped by the law or not when they try to organise contract or agency workers. A refusal of the right to organise frequently hinges on an interpretation of the labour law by a labour or court authority. Unfortunately, these tend to, in many countries, routinely interpret the law in such a way that contract workers, especially agency workers, are not allowed to join the unions that are representing the permanent workers. Thailand is a clear example of this. 66

Where unions are relatively strong, they can talk to the company on behalf of the contract/agency workers and conclude an agreement. Unfortunately, many unions - often, but not exclusively, in non-OECD countries - are not that strong. In many of these cases, unions have no other choice but to revert to the labour courts in order to challenge labour authorities and/or the employer that stops them from organising contract workers. In some other cases, unions tend to make use of the judicial court system due to a lack of information about alternatives. Union members, and even leaders, often get very little workers’ rights education, if any at all. When a crisis happens, union leaders then start to seek justice through the courts, rather than through using union power. As is often the case in general in organising, contract or agencies workers are best approached as early as possible, preferably when they enter the company, or when they have finished their training. In addition, it is often said by workers who are asked why they are not a member of the union that “they were never asked”.


Both at the national and at the international level, there is an enormous difference in the many agencies that enterprises can work with. Variations ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE COMPANY ANGLE go from well-respected, large multinational agencies to fake-employers, in some cases set up by the employer itself, mainly to avoid legal obligations. Where agency labour is used, it may be advisable to work with longstanding and specialised firms which commonly have relatively good terms and conditions. Some of these agencies have agreements with trade unions. In various countries, such as Sweden, the Netherlands or Belgium, legislation and/or collective agreements exist that state that agencies need to be recognised, in some cases through a joint commission (employer, union, government), before they can operate in the country. Where used, these experiences has been reported on as ‘fairly positive’, as it has allowed unions to largely do away with inferior-quality agencies. The largest agencies at the international level do not take a negative view on certain regulation. The image of the industry is an important selling factor and they are worried about the smaller and middle-sized agencies that are often not respecting the rules. Most of the large agencies provide much more than temporary staffing services. Other services include permanent employee placement, employee testing, training, project assistance, outsourcing services, consultancy and other human resources-related services. One national example of how things can be done comes from France, where Rhodia (one of the companies with which the ICEM has a framework agreement) signed, in December 2007, and after it signed its agreement with ICEM, a joint charter with Adecco. This charter provides a framework for the company’s conditions with regard to the employment of temporary staff. The charter sets out commitments in ten different areas, including for such issues as health and safety, basic employee welfare rights and conditions of employment.

ICEM NEGOTIATORS’ GUIDE The ICEM has prepared a guide for trade unionists on how to deal with the issues of contract and agency labour at company level. The brochure gives practical suggestions on what to do when (or before) these issues come up. The guide can be downloaded separately from the ICEM web-site: VADE-MECUM POUR LES NÉGOCIATEURS CONFRONTÉS À LA SOUS-TRAITANCE, L’EXTERNALISATION ET/OU LE TRAVAIL INTÉRIMAIRE


De plus en plus, les entreprises veulent réduire leurs effectifs permanents en sous-traitant directement des fonctions ou alors en ayant recours à des agences de travail intérimaire. Ce petit guide a été conçu dans le but de fournir quelques conseils aux négociateurs syndicaux confrontés à une telle situation.

Il faut que toutes les dispositions pertinentes des conventions collectives en vigueur figurent bien dans le cahier des charges destiné aux sous-traitants ou aux agences de travail intérimaire. 1 2 3 4

Les tâches à effectuer dovenit avoir la même qualité et respecter les mêmes normes Les conditions de travail et d’emploi doivent être les mêmes que celles qui sont en vigueur chez l’employeur actuel Les soumissionnaires doivent fournir, dans le cadre de leur offre, des indications sur les mesures qu’ils comptent prendre sur des questions telles que la liberté d’association, le travail des enfants, les questions d’égalité des chances, la santé et le sécurité, la formation, les relations avec l’employeur, les salaires et les horaires de travail, les droits en matière de pensions, les licenciements Les soumissionnaires devraient être obligés de fournir des exemples de conditions d’emploi appliquées dans des contrats actuels ou précédents, notamment des indications sur la manière avec laquelle des transferts précédents de salariés vers leur entreprise ont été effectués, moyennant quelles conditions, etc

En tout premier lieu, les organisations syndicales devront tenter de convaincre l’entreprise qu’il n’est peut-être pas nécessaire de sous-traiter des activités. Si ceci s’avère vain, il faudra, dans une deuxième phase – et si la législation en vigueur le permet –, exiger que tous les salariés qui travailleront pour un sous-traitant ou une agence d’intérim soient couverts par la même convention collective que celle dont bénéficient les salariés permanents, c’est-à-dire qu’ils ont droit aux mêmes salaires et autres avantages.

Il s’est avéré efficace de négocier une disposition conventionnelle garantissant que les organisations syndicales seront consultées bien avant que des pourparlers avec des sous-traitants ou des agences de travail intérimaire ne soient engagés. Ceci permettrait de garantir que les syndicats seront associés du début à la fin au processus d’attribution de contrats de sous-traitance. Voici un exemple de clause standard utilisée et préconisée par l’ICEM : « Dans le cadre de sa politique générale, [l’entreprise X] s’engage à ne recourir ni à la sous-traitance, ni aux agences de travail intérimaire, hormis dans les situations dans lesquelles il est avéré qu’il n’existe pas d’autre alternative. Dans le cas où l’entreprise envisage de recourir à la sous-traitance ou à une agence de travail intérimaire, elle consultera les organisations syndicales représentant les salariés qui risquent d’en être affectés, avant toute signature de contrat avec une partie tierce. L’entreprise veillera à ce que les représentants syndicaux aient accès à toutes les informations pertinentes et utiles. Si le recours à la soustraitance ou au travail intérimaire est convenu, l’entreprise s’assurera que les représentants syndicaux peuvent rencontrer au préalable le ou les sous-traitants et agences d’intérim avec lesquels l’entreprise a l’intention de passer un contrat. »





THE COMPANY ANGLE Examples of corporate horror stories on contract and agency labour are not really hard to find. What this guidebook is trying to do, however, is to concentrate more on good practice examples - things that worked – including, from the corporate world. More good and bad practice stories can be found, among other places, on the ICEM’s web-site.

6.1.4 > ASIA/PACIFIC Quite a few Asian countries were cited at the global ICEM CAL conference, in Bangkok in November 2007, as being “full of contract and agency labour”. As in many other continents, agency work was said to be used like mad to replace permanent workers, with the “new” CAL workers often later doing exactly the same work as they did before, but for much less pay, and much lesser benefits. In India, for example, the phenomenon is everywhere. In the Indian mining and diamond sector, almost all workers work through contract or agency labour.


On the other hand, there are also success stories coming out of the country. A recent one started with an eight-day strike by 13,000 contract workers, affiliated to several Indian trade unions. In April 2008, they struck against state-run Neyveli Lignite Corporation, a mining and electricity generating company in southern Tamil Nadu state. At one thermal power station, 2,000 demonstrators were arrested by the police at one point. Reportedly, the company had filed a petition with India’s Supreme Court to vacate a recent Madras Hugh Court ruling calling on Neyveli to make all contract workers full-time employees. The contract workers, some employed for as long as 12 years at the company’s three mines and three power stations, were seeking permanent work status, housing provisions, medical and transport allowances, and payment of bonuses. The end of the strike indicated that contract workers obtained their demands for regularisation. During the strike, 4,000 contract workers had already been absorbed into the company. Also in India, a clause exists in the national collective agreement for the cement sector (Cement Wage Board), between the All India Cement Manufacturers Association and the National Union Federation of Cement Workers, prohibiting contract labour in the process work of the cement industry. Contract work is, in theory at least, only allowed in the loading/unloading part of the work. In spite of this clause, the ICEM project learned of contract workers performing core jobs in the cement industry who had been working with that status for up to 25 years.


THE COMPANY ANGLE At a Holcim owned company in Jamul, Chhattisgarh, India, 3 contract workers were killed over the last 10 years. According to the union, the reasons for the accidents included the following: • While working on heights, no belts were provided for the contract workers • Elementary safety equipment like shoes and helmets were not provided to contract workers • Where chemicals are used, no special provisions were made • All work involving risk is performed by contract workers. Very often, inexperienced workers are asked to perform hazardous tasks • To avoid having to regularise workers, management rotates the contract workers between various departments. Unfortunately, this makes sure that they don’t get the benefit of accumulated experience • Cement manufacturing involves exposure to various kinds of airborne particles, including cement, slag, gypsum, silica and coke dust. Even so, there are no regular checkups for contract workers with regard to occupational diseases like silicosis, asthma, and tuberculosis. Contract workers at the plant earn 108 rupee per day, the level of the minimum wage, vs. 300-385 rupee per day for the regular workers. Loading/unloading contract workers earn 270 rupee per day. Regular workers at the plant get up to 15 days sick leave, up to 10 days casual leave, 20 days annual leave, a bonus payment, shift allowance, safety equipment and a uniform. They also have access a hospital facility. Contract workers have none of those benefits, except for a limited incentive bonus and a travel allowance. In an interview, one Indian employer said that they employ contract workers “to boost productivity”. “When workers have job security, they don’t work hard. So we need to keep them insecure”. In Japan, a lot of the limitations on the use of agency labour were removed during the 1990’s. As a result, one third of the total workforce in Japan is said to be working in precarious work situations. One typical result of this has been an increase in average working hours. The particular situation of Indonesian precarious workers was described by a member of the ICEM’s CAL project team, following a visit to a Goodyear plant in Indonesia, in 2007. Contrary to the situation in Europe, a Goodyear agency worker in Indonesia is close to being top of the range. Below the agency workers are the subcontractor workers (who would be happy with an agency job), followed by day-workers (who would be very happy with a job with the subcontractor). After six months, agency workers are permanently hired by Goodyear in InICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE donesia. Even though the job for the workers doesn’t change much, it still makes a big difference, as the visitors found out from an “anecdote” of a Goodyear plant worker who had suffered from a work-related concussion, causing him to be out for 6 weeks. If he had been a permanent Goodyear worker, he would have been paid, based on (limited) insurance. Had he been an agency worker, there would have been no insurance – but agency workers would get their job back. This worker was neither a permanent, nor an agency worker, so the only thing provided was first aid – no insurance. No guarantees. When asked “can agency workers come into the union”, the answer of the union was: “yes, but it’s the last thing agency workers want, as Goodyear will no longer employ them as an agency worker.” On the other hand, as proof that it is possible, the IMF affiliated Metal Workers’ Union was able to recruit 15,000 contract workers in Indonesia recently. The union aims to double that figure by next year.


In Thailand, with the help of the ICEM CAL project, workers at German owned TIG Linde, and their union, TIGLU, managed to sign a milestone agreement with their company in early 2008, securing their right to organise. The agreement came after a struggle which not only saw a month long protest, including by the regular union members of TIG Linde in Thailand at various worksites, but also support of the ICEM and a number of the ICEM’s affiliates, including from Germany, Netherlands and Belgium. All participated in local actions and/or were involved in getting the company engaged at headquarter level. TIGLU, a merely 3-year old union, had earlier managed to organise all 13 work sites of Linde, the largest gas company in the country, providing the strength to act against the precarious employment situation. In one particular Linde plant, regular jobs had earlier first been contracted out to Adecco. Later, in February 2008, Adecco was replaced by Esteemed, another, much more obscure, agency. The reason given was that the Adecco fees were 30% higher. Esteem turned out to be an organisation whose offices were housed in an empty building under construction, feeding the argument of the union that the change of agencies primarily was an effort of the company to do away with the union once and for all. When workers were forced to sign new contracts with Esteemed, an agency no one had ever heard of, most of the workers felt they had no choice. Nine workers, however, refused and were promptly dismissed one day later. Reportedly, several agency workers that signed were threatened with dismissal if they got involved in union activities. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE COMPANY ANGLE Whereas TIG continued to treat the agency workers more or less as regular employees at the worksite, their status did have consequences. One worker tells the story of being denied a bank loan to buy a house as he didn’t have a secure job. So he had no choice but to continue to live in his rental house. In the end, Linde agreed to reinstate the 9 dismissed workers to their same truck driving positions. The company also agreed not to victimise workers by way of transferring them. One common tactic often used by TIG to victimise union workers is to order transfers of union members to different work sites or different departments, as well as putting them under pressure for their involvement in union activities. The agreement reached states that the 9 workers must continue to work in the same position, in their original station, and not be transferred to other sites, except for temporary work. The company did also agree to provide the 19 Esteemed workers with the same working conditions as TIG’s regular employees. TIGLU also took action to defend other contract workers at Linde. A number of them have been working at TIG/BOC/Linde for 19 years, and, yet, they still work under a temporary contract system. The same union has also made use of the labour inspection services in Thailand, for example, to counter the bad practices at the TIG’s branch in the Saraburi province, where agency workers received lower overtime pay, no sick leave payments and inadequate safety equipment. After the inspection, the local agency paid the workers in full. However, it then retaliated by giving them new contracts that had to be renewed every 3 months. As part of the ICEM project, union networks have been formed in Thailand, working on organising and protection of contract and agency workers. Thailand is an example of an Asian country where unions are sometimes not strong enough to reach their goals through bargaining. Whereas the union at Linde was successful in its efforts, others in the region, such as at the unions at Goodyear Thailand, Chevron Thailand or the Cement Contract Workers’ Union in India, had to revert to the courts. While it is often easier to reach goals through union bargaining, it is not impossible to get what a union wants through court action, as can be seen from the example of Chevron Thailand. There, the court ruled that Chevron was the principal employer of the agency workers - and ordered that Chevron needed to pay the same compensation to the dismissed agency workers as the amount it would have had to pay for dismissed permanent workers. Another detailed example of how destructive contracting out can be for workers comes from Malaysia, where the management at the Lafarge Rawang ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE plant, under the name of a “Voluntary Separation System (VSS)”, contracted out its limestone quarries in 2002 and 2003. 50 regular workers became irregular workers, employed by a contractor, as a result. In 2005, the company contracted out its packing section, turning 40 other regular workers into irregular ones. In 2007, the enterprise contracted out its lorry sections, adding another 30 workers to the irregular contingent. Reportedly, the company is planning another VSS exercise, this time to outsource its maintenance section (60 workers), production lines (40 workers) and laboratory (40 workers) within the coming year. When Lafarge took over the plant in 2002, 430 out of the 700 employees were trade union members. In April 2008, only 310 were left. It is expected that the number of union members will further decline to 170 in 2009. The union membership (for CIEU, the Malaysian industrial union) needs to be approved by the company and the government, according to Malaysian labor laws.


REGULAR WORKERS at Lafarge Rawang











THE COMPANY ANGLE In Azerbaijan, negotiations concluded in June 2008 between the ICEM affiliate Oil and Gas Industry Workers’ of Azerbaijan (OGWUA) and the Caspian Shipyards Co. Ltd. produced wage gains and health and safety improvements for some 1,000 contract employees after they had staged a wildcat strike over unequal pay and unfair working conditions. The contract workers are employed in the construction of offshore rigs for Agip, a subsidiary of Italian energy firm Eni, as well as in repairing and upgrading other offshore equipment. The workers will now have a legitimate workplace organisation under OGWUA. The negotiations also resulted in a US$78 increase to offset inflation, as well as a 6% boost in wages. Minimum salaries have also been increased from a low of $US140-per-week to US$300. The management also agreed to continue dialogue on health and safety improvements, signing long-term contracts, granting annual paid leave, and reducing the disparity between foreign workers and Azeri workers.

6.1.5 > AFRICA Africa has been described as globalisation’s playing ground, with increasing investment, for example in the mining sector, bringing - besides possibilities for organising - mainly across-the-board problems, caused by investors who seem to think anything is possible on the continent. One example was given at the CAL conference in Bangkok by a representative from Tanzania, where gold company Barrick dismissed close to 1.800 contract and agency miners after failed negotiations on the respect of ILO core labour standards, standards which are clearly incorporated in Tanzanian labour law. A lot of the CAL problems on the African continent are caused by foreign multinational companies. Some of these are African - mainly South African - enterprises, such as Anglogold, De Beers, Sasol or Eskom. Others, and in greater numbers, are coming from other continents. One particular company often cited in this regard is mining giant BHP Billiton. Another growing source of union frustration, including with respect to precarious employment, is related to the increase of Chinese investments all over Africa. Local opinion on whether this will, in the end, have more positive than negative consequences seems to differ from country to country, but all seem to agree that the general labour practices of the Chinese companies are certainly ‘up for amelioration’. Nigeria is an example of an African country where, according to the ICEM affiliates, Chinese investment has so far had especially negative effects on workers. That said, most of the CAL problems occur at local and “lower” level, further ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE down the production chain, and within smaller companies, where the use of contract and agency labour, and of unprotected and otherwise precarious often informal - work is widespread. During a July-August 2007 sector-wide tyre strike in South Africa by 6,000 members of the ICEM affiliated NUMSA, 150 contract workers defied management at Goodyear and joined NUMSA on their picket lines. Later, NUMSA managed to successfully defend the contract workers in court, when Goodyear challenged their right to strike. The 150 contract workers were rewarded for making their stand during the strike when, as a result of language won by NUMSA regarding labour brokers, they became former contract workers, finding job security and medical assistance in a permanent job at the company, while also being covered by the Tyre Industry’s Provident Fund.


In December 2007, contract workers protested in Nigeria when Nigeria Liquefied Natural Gas LTG (NLNG) reneged on the signing of an agreement granting them union recognition through ICEM affiliate NUPENG. The agreement was in place after the Nigerian Ministry of Labour and Productivity certified recognition, but NLNG twice backed away from signing the pact. When the contract workers at the Bonny Island transfer terminal in Finima began protesting as a result of this refusal, NLNG responded by calling in Nigeria’s Joint Military Task Force (JTF), who promptly organised a brutal attack on the contract workers – many of them NUPENG members – blinding one worker, and injuring 28 others. The JTF fired tear gas directly at the contract workers, attacking them with batons. By and large, the large multinational oil companies that operate in the Nigerian Niger Delta favour CAL workers, posing large organising difficulties for the ICEM affiliates. In 2005, Nigerian oil unions reported that for every permanent Shell employee working on the installations, there were four contract workers. Also endemic to the Niger Delta is the lack of sound occupational and health provisions. It is not uncommon on the continent to force an employee to sign a document that he or she, once employed, will not join a union. In many cases, workers don’t know about their rights. Another problem is that – again as on other continents – unions are often banned or restricted in Export Processing Zones. Nigerian companies are among those enterprises that tend to fire cal workers just before the expiration of their 3, 6 or 12 months when they are about to become permanent staff, only to reabsorb them on a new contract agreement. Shell and Mobil in Nigeria employ many workers in that manner, ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE COMPANY ANGLE some of whom have been temporary workers for over 10 years. The practice is common throughout the African continent. At Shell and Chevron in Nigeria, contract workers do not even eat in the same place as the permanent workers. In some cases, they have their own entrances to the work place.

6.1.6 > EUROPE In 2005, Spanish ICEM affiliate Fiteqa-CC.OO. started an effort to organise contract and agency labour workers after strikes and conflicts created rifts between permanent and contract workers. It took some time, but significant agreements were in the end negotiated with Spanish companies, including with Repsol. In addition, and possibly even more importantly, the national confederations CC.OO. and UGT started discussions with the employers and the government, which led to an agreement in 2006, involving all parties, that dealt with the reform of certain aspects of Spain’s labour market. The objectives of the agreement included acting against fraud and abuse with temporary employment and contract work, promoting permanent work contracts, changing temporary work to permanent work, and protecting workers against unemployment (see the cut-out section for a summary of the agreement).

A FEW OF THE MAIN POINTS IN THE TRIPARTITE AGREEMENT ON LABOUR REFORM IN SPAIN 1 > To promote permanent employment and to replace temporary contract with open-end contracts Permanent employment is promoted from the start For workers between 16 and 30 years old, women, workers over 45, workers with a handicap, or workers who have been unemployed for over 6 months, a new plan for reducing social security contributions kicks in to facilitate hiring through open-end contracts Temporary work must be changed to permanent work • Financial incentives are created for employers to change temporary contracts into permanent ones, where these temporary contracts had been drafted prior to the new regulations • A possibility exists to change temporary contracts, drawn up during a certain period, into permanent contracts ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008



Apart from these incentives, there is a reduction in the social security contributions for companies for all permanent contracts

2 > To act against fraud and abuse in temporary employment Ending the abuse of continuous temporary contracts at the same company If a worker has been working for the same company for over 24 months, doing the same job, or is employed through two or more temporary contracts over a period of 30 months, his or her contract will become permanent. Limits to this apply for construction workers, as well as for workers in agencies. Training contracts and age limits Workers over the age of 21 that already have some work experience cannot be given a training contract by companies.


New rights aimed at coordinating trade union work Where workers from several companies are working together at the same workplace: • The user enterprise must have a register with information on all the contracts and subcontracts, and needs to make this available to the trade union representatives • If the contract or subcontract workers do not have their own trade union representation, then they will be able to channel their demands through the trade union representation of the company • The trade union representations of the company, and of the contractors, are allowed to meet to coordinate their trade union activities Labour inspection and trade union participation in it are strengthened • More inspectors will be hired • Trade unions can participate in planning exercises by the labour inspection services. They also are entitled to be informed of results of labour inspections. Tripartite bodies will be created in this regard

3 > To increase protection against unemployment Unemployment benefits are set at a higher level for people with open-end contracts or contracts of a fixed discontinuous nature Earlier access to unemployment benefits will be assured, especially for older workers


THE COMPANY ANGLE In 2007, the Amicus section of the ICEM UK affiliate Unite released a comprehensive study, detailing the use and misuse of agency workers in the UK, including at some of the country’s most visible corporations. Examples given came from Coca-Cola, BMW, Harper Collins Publishers, Norwich Union, Honda, Unisys, and WH Smith. One contract employer had up to five South African data-processing workers share one bed. The workers took turns sleeping, with those not sleeping being at work. At a Honda plant in Swindon, due to growth in sales, the Japanese automaker found it needed an additional 800 workers. But, rather than hire and train full-time, permanent staff, local managers turned to an agency called Best Connection. Workers from this agency are paid £2-anhour less in comparison to the Honda starting rate, and they receive a third less holidays. At Coca-Cola in Wakefield, an agency specifically recruited Polish workers to do quality checking at £7-an-hour, nearly half the hourly wage negotiated by Amicus at the plant. The workers also missed out on a 38% shift allowance. At a BMW plant in Hams Hall, the company’s canteen operates with a two-tier pricing system – with prices higher for temporary staff. Some temp workers at BMW had worked for more than five years without being called for full-time employment. Out of a total of 4,700 BMW workers in the UK, 1,200 are agency workers. Examples were also provided from several other companies where agencies provided migrant workers, frequently from Poland, but also from Africa or other Central and Eastern European countries, working at £5 an hour less than the permanent workers. Other agency workers were found to be forced to accept a drastic reduction in pay, down to 20% under the minimum wage, or lose their job. Another UK study, from the national centre TUC, also in 2007, found that a quarter of the agency workers are in assignments of over one year (so, not just filling temporary needs). And yet, these workers do not gain the enhanced employment rights that other workers enjoy after 12 months in a job as they do not have the normal legal rights of an employee. The study also found that agency workers are paid 80p for every pound paid to permanent staff while doing the same level of job. More recently in the UK, in June 2008, Unite, representing 600 tank-truck drivers of Hoyer and J.W. Suckling Transport Ltd., won a two-year 14% pay increase for the drivers, thanks to a strike two weeks earlier that pressured Shell. The strike had stopped petrol supplies at Shell’s 950 retail stations in the ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE UK, and severely impacted delivery of fuel for BP, Total, and Esso. Most drivers for those companies refused to cross picket lines at Shell depots and terminals. The dispute was fairly unique, since it saw a union successfully bringing pressure on a primary company over low contract fees paid to service providers. In Switzerland, ICEM affiliate Unia managed to agree on the country’s firstever national collective agreement for temporary workers, also in June 2008. The agreement, which covers 260,000 workers, was signed with Swissstaffing, the Swiss umbrella organisation for labour agencies. If approved by Switzerland’s federal government, the three-year agreement will cover all major labour agencies, employing 70% of all agency workers in Switzerland. Previously, labour agreements only existed between Unia and individual branch offices of labour agencies. The proposed agreement will not replace those accords, but create a uniform set of rights for temporary workers. 78

The agreement will give first-time collective work rights to some 180,000 temporary employees, as well as lifting their minimum rates of pay. Other new rights include medical insurance allowances, paid medical leave, better health and safety standards on the job, and continuous training opportunities. In Denmark, the country where ‘flexicurity” was “invented”, almost 80% of all workers are covered by a collective agreement. The national agreement includes subcontractors, and contains specific clauses for part-time, agency and foreign workers. EU Directives (including on, for example, working time) are also incorporated into the agreement. The collective agreement in the manufacturing sector, between Danish COIndustry and the Danish Industries Federation (DI), which covers more than 50% of all employees, includes an appendix on agency workers, one of foreign workers and one on part-time work. The agreement is an “area” agreement, meaning that all work done in DI member companies is covered by the agreement, no matter if a worker is a company employee or an agency worker. This means that an agency worker has his or her contract with the agency company, but is covered by the local agreement, negotiated by shop stewards at the company. It is a paradox in Denmark that this only applies to blue collar workers. The same organisations’ agreement for white collar workers does not yet have a special paragraph for agency workers. The Danish unions are hoping to solve that problem in the near future. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008





















79 In 2003, the agreement between the Danish Union of Electricians and its counterpart, the employers’ organisation Tekniq, was challenged by the employers when they allowed agency workers to work at a lower salary and at lower overtime pay, which went against what was agreed between the partners. DEF took the case to the Danish Labour court, which ruled that “If a member of Tekniq takes in agency workers, the recipient company must make sure that the agency worker follows the DEF-Tekniq agreement as long as they work under the agreement’s valid area”. A recent problem surfacing in Denmark, as well as in Sweden and a number of other countries, is that employers (faithful to the seven-headed monster principle) start to resort to other forms of ‘new employment’, mainly subcontracting, now that agency labour is starting to be more or less adequately regulated. In Germany, 10-15% of the workforce in the industries covered by German ICEM Affiliate IGBCE are agency workers, earning approximately 30% less than permanent workers. Some of these agency workers are former permanent workers, doing the same work at the same workplace, but for less money. A collective agreement was recently agreed in Germany between the DGB (the German union confederation) and the PEAs (Private Employment AgenICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE COMPANY ANGLE cies). This was the first agreement negotiated and signed in Germany by the DGB, where branch unions normally sign agreements. In this case, it was recognised that agency workers are employed in many different industries and that agencies operate in different branches. Together with the DGB, IGMetall and Ver.di, the IGBCE announced, for the current bargaining round, a joint plan to call for equal pay for all agency workers in their industries. The unions are also campaigning around that issue. Also in Germany, in early July 2008, the head of Manpower Germany announced the setting up of a new subsidiary ‘Manpower Equaltreatment Gmbh’. This new agency will pay temporary workers the same wages as the permanent workers at the company where they work. Other work conditions and benefits will also be similar. The new agency will provide both highly skilled and lesser skilled workers.


Manpower Equaltreatment will furthermore carry the financial risk where the agency is not able to find a new assignment for a temporary worker after his previous one. In that case, the worker will get his contractually guaranteed salary. In an interview, the Manpower director said that the arrangement will be a little bit more expensive for employers, but also that there is a great demand for it, for example within large enterprises, who want to use this as a tool to improve or keep social harmony inside their companies. Another reason given is that quite a few enterprises prefer high-quality agency workers, which they hope can later become permanent staff of the company, so they need a good pool of workers from which to choose. He also mentioned that some companies, such as Airbus, BMW and Audi, already have union agreements that contain requirements that call for solutions of this nature. In Sweden, unions signed a new collective agreement in porary agencies. A novelty in that agreement was that it ees the right to one hour of introductory information on working hours, with no loss of earnings. Companies have promote union organisation.

2007 with the temgives new employthe union during also agreed to

Another particularity for Sweden is the way in which unions and employers are jointly dealing with the issue of authorisation of employment agencies. Since 2004, agencies need to be “recognised” by a board. There are a number ample, the need to lines and be bound liability insurance,

of requirements to achieve the authorisation, for exfollow the Association of Staff Agencies’ ethical guideby collective agreements. Agencies also need to have be a member of the Staffing Association, have been in


THE COMPANY ANGLE business for at least 12 months, and have an equality plan. The authorisation to perform as a labour agency is given for one year at the time, and an authorisation board tests the applicant’s qualifications in accordance with the statutes. This board, which consists of two trade union representatives, two representatives from the Association of Staff Agencies and one impartial chairman, can submit proposals on decisions regarding potential warnings. The board can also withdraw a granted authorisation. 450 agencies, employing 43,000 employees are covered through this system. Another possible best practice example from Sweden is the requirement for agency workers on assignment to get, as a minimum, ‘an average salary at the workplace’ (not the salary of the lowest earning comparable worker, but an average wage of all comparable workers’ wages). This was done to avoid problems with entry-level payments for agency workers. The agency workers also gets the same working conditions as all other employees (working hours, insurance, overtime pay, etc.). The above-mentioned system is one way to solve a problem that has been raised by many ICEM affiliates: “what does equal treatment really mean”? Equal treatment can mean a number of things. It is often interpreted to be “equal to the conditions that a newly hired employee would normally get when hired at the same time”. This is a somewhat arbitrary rule as it may allow for conditions to be set, right there, right then, by an employer at a much lower level than normal. Questions often raised in this respect also include: “what is normal” and “equal to whom”? From Belgium comes an example of how precarious employment is by no means limited to non-OECD countries, including in the formal economy. The country set up a “service vouchers system” a few years ago, through which private households can pay, with vouchers, and through a subsidised system, workers for certain kinds of work. The system was set up originally in part to do away with a number of traditionally “black economy” jobs, such as cleaning in private houses, gardening or in-house renovation. Advantages for the workers in question include an official salary, social benefits (such as pension rights) and insurance. The system is a huge success, and 80.000 jobs have been “created”. Unions defending the workers, however, currently find it very difficult to come to an agreement with employers on issues that are taken for granted for all other workers in the country, such as the automatic indexation of the workers’ salary, or fair negotiations on a wage increase. In a period of rising inflation, and of global food and energy prices, it is astonishing that workers at the bottom range of the salary scale can not get access to the same ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


THE COMPANY ANGLE pay rise as all others. Another peculiarity of the system is that workers can be given “one-hour-aweek“ contracts.

6.1.7 > THE AMERICAS One clear “best practice” example comes from Brazil, where, until 2002, there were 4 CAL workers for each Petrobras permanent worker. Petrobras is Brazil’s largest industrial company, operating in the oil and gas sector. At the time, there was an average of three lethal accidents per month. In 2008, after years of negotiations - where it helped that the union could count on a supportive government - the Petrobras CAL ratio came down to 1 permanent Petrobras worker for every 2.2 CAL workers.


After a new law was adopted in Chile, setting limits on the use of contract and agency labour in the country, BHP Billiton, the world’s largest combined energy and mining company, said it would file a legal appeal to avoid having to hire contract workers as full-time, permanent employees at its Escondida copper mining operations. The legal appeal was to be the response to a directive from the country’s Ministry of Labour, which stated that the company was to directly employ 767 subcontractors at its copper mining operation in northern Chile, in order to comply with the new law on subcontracting. The state-run mining company Codelco, the world’s largest copper mining enterprise, also must bring over 5,000 workers onto its permanent rolls for the same reason. Codelco utilises the services of some 30,000 subcontractors, and 15,000 permanent workers. Contract workers at Codelco, working in an industry where profits are soaring as a result of the recent much higher copper prices, have staged industrial protests in 2006, 2007 and 2008, aiming to get the same performance bonuses as the permanent workers, as well as housing and education benefits, and a health plan. The Codelco contract employees, mainly operating in the transport, maintenance and catering sections, earn about half of Codelco’s permanent workers. Their actions are supported by the CUT Chilelinked Copper Federation of Chile, a union representing workers at some 400 sub-contractors of Codelco. As an indication of how difficult life can be for contract workers, after a 16day strike in 2006 and a 37-day strike in 2007, a strike in 2008 was needed to simply get earlier agreements implemented. In Chile’s copper industry, permanent staff earn, on average, three times more than contract workers, who often perform the same work. Prior to the ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

THE COMPANY ANGLE law taking effect, some 50% of all enterprises were estimated to contract out part of their production, while 20.7% contracted out (part of) their main economic activity. A full 35% of Chile’s labour force was estimated not to have a direct contractual link with the primary enterprise. In Colombia, it took blood sweat and tears, and help from the world, to convince US-based Ross International to accept union demands on contract and agency labour. After originally agreeing to end its abusive use of contract work, the company later came back on its earlier promises to ICEM affiliate Sintravidricol for joint union representation at its different plants. After interventions by the Colombia’s Ministry of Social Protection, the ICEM and the USW from the US, the company finally gave in, but only after a 23-day strike by union members in January 2008. The concluded agreement recognises the union at three of the five Colombian Ross plants, agreeing to joint bargaining. The company had been removing staff for years from the one plant that was unionised to the other four it built in Colombia, where workers operated as contract workers under conditions that were much lower than they had before. The union agreement enabled all of the workers previously on fixedterm contracts to become full-time, permanent staff. Another Latin American “best practise” example comes from Argentina. There, the Federación Argentina Sindical del Petróleo y Gas Privados managed to negotiate that all contract workers are covered by the collective agreement. A regional international example of what can be done comes from the ICEM BASF network. In Latin America, BASF has agreed that contract work is an important subject for permanent social dialogue. This has allowed the unions to monitor the situation, learn from the monitoring, and hopefully pass information on to other BASF unions worldwide. According to the Latin American trade unionists, these negotiations and cooperation on the subject with BASF have vastly improved overall discussions with the company, which, at one point, had to admit that they themselves also did not know the number of contract workers present at particular chemical worksites in the region. In addition to the seriousness of the ‘permatemp’ problem, some limited progress was also reported by trade unionists from the USA at the ICEM CAL conference in Bangkok, including progress on the rights to information for contract workers.



THE COMPANY ANGLE A FEW EXAMPLES OF AGREED LANGUAGE ON CAL FROM COLLECTIVE BARGAINING AGREEMENTS From an agreement between South African CEPPWAWU in the industrial chemical sector The parties agree that employers, signatories to this agreement, will refrain from engaging labour brokers who abuse or who are violating the fundamental rights of workers as per applicable labour legislation and agreements concluded at sector and/or plant level. From an agreement between ICEM US affiliate USW and a company in the paper sector In response to changing business conditions, we need to caution ourselves not to build temps immediately into the solution, but to first consider cost effective internal options. For purposes of increasing production capacity to meet surge demand (i.e. starting up additional production assets not staffed; adding crews), temporary employees can be brought into the plant. The parties will discuss the duration of the assignment and the number of temporary employees needed. 84

The “Temporary Employees Notification and Utilization form” has to be filled out and signed by the area manager and the appropriate union representative(s). Adequate advance notice of the intent to use temporary employees and a timely response is required. For temporary employee requests outside of tractor jobs or extensions of agreed timelines, the Union President and the Plant Manager must mutually agree to the request or temporary employees will not be used. The parties agree that this decision will be based on balancing the interests of our employees and the business requirements. When temporary employees are used: • Temporary employees will be generated through a family pool which may or may not be administered through a temp agency • If we are unable to staff our temporary needs with the family pool, the temp agency will provide the additional manpower • All temporary employees will be required to join the union and pay union dues per the cooperative bargaining agreement Temporary employees will be paid according to the designated temporary employee rate in the cooperative bargaining agreement, in addition to double time on Sundays. No temporary employees will be eligible for overtime of holiday work; exceptions would have to be mutually agreed upon by the Union President and the Plant Manager.


THE COMPANY ANGLE From an agreement between the Trinidad and Tobago Oilfield workers’ trade union and a Trinidad Petroleum company The company will ensure that the Contractor provides for his employees • Health and safety apparel and equipment necessary for the operations and of similar or equivalent standard provided for workers of the company • Adequate workmen’s compensation insurance coverage. Proof of this insurance must be forwarded to the company prior to the commencement of the contract. The company undertakes that any complaint in writing brought to its attention by a contractor’s employee with respect to the payment of proper wages, health and safety concerns and operation of the contract, shall be investigated. Appropriate action shall be taken on the issues raised and the complainant advised accordingly. The company will treat all reports of violations in strictest confidence in subsequent investigations with the contractor. From an agreement between the Trinidad and Tobago Oilfield workers’ trade union and a Trinidad electricity company The company will not contract out work normally performed by employees covered by this agreement. However, provided always that the employment of its regular employees shall not be adversely affected, the company may contract out work in the following circumstances: • Before the company contracts out work, the union shall be notified • Where the work load for a limited duration, but not in excess of 6 months, continuously can not be carried out by the regular work force • In case of specific projects or temporary operations requiring skills and/ or equipment not available in the company The company will stipulate when contract labour is engaged that … the contractor shall pay not less than the rate for the particular job classification or not less than the minimum rate where a scale exists In the event that it is proven that a contractor has violated the abovementioned provisions, the company will suspend the said contract. Except that the contractor will be allowed the opportunity to rectify the violation within 7 days before the suspension of the contract.



THE COMPANY ANGLE 6.2 > THE INTERNATIONAL LEVEL The Global Union Federations (GUFs), the union organisations that are, at the international level, the counterparts of multinational enterprises, and of their sector-based employer’s organisations, where these exist, are engaged in efforts to facilitate the work of their national trade union affiliates through discussions with employers at the international level.

6.2.1 > COLLECTIVE BARGAINING Quite a bit of this work is being done at the individual company level where the issue of global framework agreements becomes relevant. However, there also are ongoing talks between some GUFs and certain employers’ organisations, as is the case, for example, between UNI and Ciett, the organisation grouping private employment agencies, and their national member organisations, at global level. UNI is the GUF that covers (among many other sectors) the workers employed as internal staff at private employment agencies (a distinction is being made between agency staff and agency workers). 86

While discussions are ongoing at the global level, an agreement has already been reached at European level between UNI-Europa and Eurociett, the European employers’ organisation for the temporary agency sector. In that agreement, the social partners state, among other things, that it is necessary to • Establish the principle of equal treatment and make it clear that agency workers are protected by the relevant labour legislation or by a collective agreement • Promote sectoral social dialogue at national level … recognising temporary agency workers’ right to freedom of association • Facilitate access to vocational training for agency workers

6.2.2 > MULTINATIONAL ENTERPRISES AND GFA’S One of the ways for the ICEM - and other GUFs - to play an important role at the international company level is by linking affiliates in countries where problems exist within particular multinational enterprises, with affiliates in countries where those enterprises have their headquarters. Providing the opportunity to unions to reach out to their companies’ global head offices, through other ICEM affiliates, is one of the tested ways of the ICEM’s CAL project. Another is to bring support from unions from the other countries where the multinational may also have operations. Of course, this practical solidarity is not only part of the ICEM’s project work; it is part and parcel of the ICEM’s daily activities.


THE COMPANY ANGLE Another important aspect of the ICEM’s international work is the ICEM’s (and, again, other GUF’s) work in the area of Global Framework Agreements. Whereas work is ongoing, albeit on a slow pace, to have more specific language on contract and agency labour included in the texts of all global agreements, some of them do already agree on the need to make sure that the basic principles of the agreements also apply to the workers of subcontractors and suppliers of the multinational company in question. In the ICEM’s experience, discussions on this are often difficult exercises. One recent success, however, came during the last review process of the ICEM-Rhodia agreement, which now contains a section that says that all contractors and suppliers will need to agree to follow the stipulations of the contract, and that Rhodia agrees to terminate its links with the subcontractor in case of violations. The position of the ICEM, however, is that it is important to look at finding a solution first, before insisting on the need to sever any relationship. The ITGLWF (International Textile, Garment and Leather Workers’ Federation) has reported at least two cases, one in Peru and one in India, where their framework agreement with the textile giant Inditex, managed to improve an appalling contract labour situation. BWI’s model GFA agreement has a clause on the establishment of an employment relationship. It calls for companies to “respect obligations to all workers under labour and social security laws and regulations arising from the regular employment relationship (Social Security Minimum Standards Convention C102). In locations where conditions permit, efforts shall be made to offer fixed employment opportunities. All workers shall receive a written contract of employment. The company and all sub-contractors shall, wherever practicable, directly employ all labour, and shall pay social security and pension contributions for their workers.” Some of this language has already been inserted into existing GFAs, such as in the agreement between BWI and the Dutch company VolkerWessels. The ICEM will continue to seek to include binding commitments in its Global Framework Agreements covering labour standards and other social protections for contract and agency labour workers. It will also maintain its effort to make sure that GFAs also apply to suppliers and contractors of the company that signs the agreement.







TRADE UNION APPROACHES & STRATEGIES A number of unions around the world have taken a principled stand to work towards a complete ban of contract or agency labour, a strategy which has failed in most cases. Others simply chose to ignore the problem at first or decided to concentrate on the “core permanent” workers only. Many have been forced to revise this strategy in the meantime, as the phenomenon kept growing, and as more and more members of the workforce became “out of reach”. It would seem as if most ICEM affiliates have taken a more or less pragmatic approach - often forced by circumstances – accepting that a certain amount of contract and agency labour may be “a necessary evil” and that it is extremely difficult to avoid it completely. Many of these unions have entered into discussions with employers, with varying levels of success. Some have reached collective agreements that protect contract workers, and/or limit the extent of contracting out, whereas others have won the right to intervene before contracts are awarded. Legal protections have been won as well. Other unions have mainly concentrated on organising contract workers. 90

Some unions have even managed to, using an array of different arguments, reverse the process and convince their companies it is in their own best interest to work with directly employed workers with permanent contracts. A particular problem has often been that two different categories of workers are created with the permanent workers of the company, and sometimes also their trade unions, being disconnected from the CAL workers. The result of this split has all too often created tensions, and even conflicts, between different parts of the workforce. It’s only logical that permanent workers will want to defend what they have. As part of that process, it’s easy to consider contract and agency workers as “another workforce”, or even a threat. Of course, being divided into separate work groups doesn’t facilitate cooperation. Even in those cases where both groups work on the same premises, workers often do not know each other well. It is imperative to avoid this split. The fact that CAL workers most often earn less – which may or may not affect wages and conditions of direct permanent workers - is a threat that will not be solved by antagonism. Nor do the CAL workers themselves fix wages and other benefits. Treating CAL workers as the enemy is certainly not the way to keep permanent jobs permanent. While it is a fact that CAL workers are often perceived as “others taking over my job and willing to work for lower conditions”, it is also a fact that this is not the reality. It is not a contract or agency ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

TRADE UNION APPROACHES & STRATEGIES worker’s decision to replace a permanent job with a precarious one. Unions have approached contract and agency labour workers in different ways, often forced by legal circumstances. In quite a few countries, it is simply not legal for a union to affiliate a contract worker or an agency worker. In other countries, it is not possible for CAL workers to join any union at all. While there appears to be some consensus on the fact that it nearly always is a good idea to bring CAL workers into the regular union structures, this is not always possible. For that reason, separate unions have been created in some countries and sectors, dealing exclusively with contract and/or agency workers, but working with the same employer(s). The results of the IMF 2007 survey on precarious employment listed “recruiting precarious workers into existing unions” as the most important trade union strategy in regard to precarious workers. Education of union members came in second, followed by education for workplace union officials, participation of precarious workers in union activities, and providing legal counselling. One internal way to deal with the problem is for unions, where needed and/ or possible, to adopt new – or changed – union policies, working towards a better cooperation with contract and agency workers, or their unions, where the latter exist. Where CAL and permanent workers are operating side by side, working or supplying for the same employer, there is an obvious and imperative need to also form a common front where trade union issues are concerned. It is easy to see why some employers consider it to be in their interest to see different groups of employees in different camps as this takes away much of the bargaining strength they would have as a combined workforce. The experience of the ICEM CAL campaign in various countries around the world shows that one of the better ways to avoid the internal struggle problem is to - not really surprisingly - organise most of the union work at branch level, instead of at company or individual workplace level. Where unions manage to organise themselves at the branch or industry level, company-level discussions are often bypassed. To encourage this is another of the priorities of the ICEM project, both in Asia and in Latin America. Similarly, sectoral agreements, or even national agreements, on contract and agency labour workers are often preferable to company or plant agreements, for a number of reasons, and in spite of the fact that they are at times less detailed. One reason is that they may be easier to agree on, as companies can not use the argument that the competitor would get an advantage. AnICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


TRADE UNION APPROACHES & STRATEGIES other is that it is easier for a union to have discussions once that apply for all, instead of having to go through the process a multitude of times. Another problem is that, in some cases, short-term and agency workers have little or no interest in joining the union. They see their involvement in the company as too short to get anything out of it. In companies with a sizeable amount of precarious workers, where it may already be a challenge to find union members, it is likely to be even more of a challenge to find union activists. Among the possible methods to facilitate trade union membership for contract and agency labour workers:

• • •


• • • • • • •

• • • • • • •

Open the union to all workers. Avoid having different categories of workers being set up against one another Set up a specific section of your union to deal with the issue of contract and agency labour. If needed, change the union rules, so that it becomes possible for contract and agency labour workers to join the union Grant full union rights to contract and agency labour workers that join Encourage participation of CAL workers in trade union activities Consider the need to have alternative contribution levels, or other methods of union dues collection Have an in-depth look at the possibility to provide specialised services to CAL workers, including on such issues as unemployment benefits, education on their rights, health insurance, training or career development Educate members and officials on CAL Provide legal counselling Negotiate collective bargaining agreements that take the concerns of CAL workers into account. In addition to the “equal work for equal pay” principle, other items can be social benefits, company benefits, training for CAL workers, health and safety, etc. Through negotiation, try to get contract and agency labour workers transferred to regular permanent jobs Work towards, where they do not yet exist, branch and/or national unions that CAL workers can join Conduct public campaigns on contract and agency labour work in order to mobilise workers and change the political environment. Engage in solidarity actions with other unions where possible and needed, national as well as international Organise, organise and organise Recruit members into existing trade unions, or, where not possible, guarantee a smooth working relationship exists with other unions defending CAL workers Where needed, use labour, or other, courts to defend the interests of CAL workers



Network with other unions, nationally and internationally, and exchange information and good practices that may assist your union with your struggle.

Many of the ICEM’s affiliates around the world have already taken action in several of these areas, often high-profile. Quite a few have also declared contract and agency labour, or precarious work, or casualisation, or a related term, to be among their top work priorities. While it is obviously just a start, declaring that the issue is of the highest importance is often still necessary. Once that first hurdle is taken, actions can be organised to follow up. Also at international trade union level, unions can learn a lot from successful and less successful initiatives that other unions have taken, and use the experience of other ICEM affiliates.

HAVE AN INTERNAL DISCUSSION IN YOUR UNION This set of questions, based on questions from a 2007 IMF article on precarious work, might help getting started. 1 > What forms of contract and agency labour take place in your country/ region? 2 > How does contract and agency labour differ in nature from permanent employment in terms of rights, protections and entitlements? 3 > How does contract and agency labour impact on women workers? 4 > How does the content or enforcement of labour laws contribute to the problem of contract and agency labour? 5 > How can the ILO Recommendation on the Employment Relationship be used at a national level to improve rights for contract and agency labour workers? 6 > How does contract and agency labour impact on workplace health and safety? 7 > What is the impact of contract and agency labour on sustainable development? 8 > What impact, if any, does contract and agency labour have on your union’s capacity to bargain collectively with employers? 9 > How can the negative impact of contract and agency labour be reduced through collective bargaining? 10 > What legal or practical barriers exist to organising contract and agency labour workers? 11 > What actions has your union taken to organise or otherwise improve ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008


TRADE UNION APPROACHES & STRATEGIES conditions for contract and agency labour workers? 12 > How can unions build solidarity between permanent and contract and agency labour workers? 13 > What role can other actors play in addressing contract and agency labour work, such as the International Labour Organisation, non-governmental organisations, national trade union centres, the International Trade Union Confederation, national governments, legislative and judicial systems?

7.1 > EUROPE From Finland comes the example of how a campaign targeting a Taiwanese company failed as one of the ICEM affiliates didn’t include the 40% CAL workers in its plan. As a result, the union didn’t get sufficient support for its actions. The union learned from it, and managed to get CAL workers involved in its disputes and collective bargaining after that. Strength does come with numbers. It is a mistake they only made once. 94

One of the ICEM affiliates that has declared the issue of contract and agency labour to be a high priority, and communicated widely about it, is Unite, the UK union formed in 2007 through the merger of Amicus and TGWU. The union listed the fight against casualisation as one of its top priorities at its founding congress, and called the plight of a million UK agency workers “the biggest issue facing the country today”. Under the heading “An Injury to One is a Concern to All’ (http://www.siptu. ie/agency), Irish affiliate SIPTU is another European union engaged in a struggle against the abuse of agency workers. In early 2008, the union’s President warned that there would be no further social partnership agreements unless agency workers are granted equal rights. Dutch ICEM affiliate FNV has a brochure on outsourcing on its site (www., entitled “Offshoring, outsourcing”, which sets out the union’s main priorities for action in this domain. In Italy, all three national federations (CGIL, CISL and UIL) have set up sub-structures that deal specifically with workers employed through ‘new forms of contracts’. CAL and other precarious workers are offered representation, protection and information in the general area of contract work.

7.2 > ASIA/PACIFIC Japanese unions UI Zensen and Rengo are currently campaigning on CAL issues. The issue is seen as one of the unions’ key priorities. A tactic that has ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

TRADE UNION APPROACHES & STRATEGIES been successful in Japan was to establish union subdivisions that concentrate on CAL workers. Rengo’s 2008 shunto effort (the Japanese traditional spring negotiation offensive) included attempts to raise salaries and other levels of benefits for Japanese part-time and agency workers. The confederation is demanding that all companies sign a minimum wage agreement for contract workers, ensuring the salary level is higher than the official minimum wage. It is also promoting a revision of the Japanese Worker Dispatch Law. That proposed change would guarantee more rights for contract workers and temporary workers. Japanese unions made substantial gains in 2007 in recruiting part-time and non-regular workers into their union ranks, helping to produce a 12% membership increase. In India, the INMF (Indian National Mineworkers’ Federation) strongly voiced the opinion, at the international mining conference in early 2008, that contract work should not be allowed at coal mines and that the existing contract workers should be hired as permanent workers. INMF has organised about 10,000 contract workers so far. In Korea, partly assisted by ICEM project work, several unions are amending their statutes, so as to allow contract and agency labour workers into membership, as well as into the union’s committees. Among others, the Korean KMHU (Korean Hospital and Medical Workers’ Union) has a special department for organising contract workers, which is said to be performing very well. A few ‘contract and agency labour unions’ have also been formed in Asia, as is the case in India, dealing with irregular workers at the regional level.

7.3 > AFRICA In Nigeria, ICEM oil sector affiliates NUPENG and PENGASSAN, working together under the name NUPENGASSAN, set up a special branch to deal with the problems of casualisation in the Nigerian oil sector. Specific union company divisions also exist in Nigeria, dealing with CAL on a company basis, such as PENGASSAN’s Mobil Producing Contract Staff Branch. In Sierra Leone, the United Mineworkers’ Union is dealing with 150,000 informal workers in the mining sector. 10,000 of them are organised and the union is having discussions on salaries and benefits on their behalf. The union is hopeful that the situation in the sector might improve soon, due to better laws which will be, in turn, the result of a better government.



TRADE UNION APPROACHES & STRATEGIES 7.4 > AMERICAS The CAL issue has also been high on the union agenda for nearly all Latin American ICEM affiliates, who declared 28 July as their “international day against contract and agency labour�. The date was chosen as it was on that day that, in 1983, 200 contract workers died in Colombia when a tunnel collapsed under a construction site for a large energy project. In the Peruvian mining sector, only 16,000 workers out of a total of over 85,000 are permanent workers. 11,000 of them are organised and the ICEM affiliated mining union is hoping to expand that number considerably by bringing the contract and agency labour workers into membership. Also in Peru, unions plan to set up a National Coordinating Committee for contract and agency workers. A concrete example of the practical co-operation between unions in Peru is the exchange of information on labour inspection and on the setting up of union sections for contract and agency workers between ICEM affiliates FNMMTSP in the mining sector and FENUPETROL in the energy sector.


In Colombia, in October 2007, ICEM affiliates Sintraelecol, Sintravidriol, Sintracarcol, Sintracarbon, Sintraquim y Fenaltec announced an organising campaign for contract and agency labour workers. Target companies chosen for the effort were multinational companies such as Endesa, Owens Illinois, Union Fenosa, BHP Billiton, Xstrata, Anglo American, Smurfit and Linde. The unions said that within these companies - most of which are not necessarily the worst employers in the country - there is an average of around one contract and agency worker for every permanent employee. Specific efforts are ongoing by Sintracarbon at the Carbones de Cerrejon mine, where there are about 5,000 contract workers. Sintracarbon has 3,200 members. Through the ICEM project, research has been undertaken on contract and agency labour in Colombia looking into the overall legal situation, but also, and mainly, to collect detailed information on the target companies of the campaign. The document gives a detailed overview of the CAL situation, company by company. Issues treated include the number of CAL workers for each company, what kind of jobs contract and agency workers are doing, what the relationship is between the union at the company and the CAL workers, whether the union has been able to undertake action on their behalf, etc. All of the Colombian ICEM affiliates are engaged in defending, or trying to defend, CAL workers at their workplaces, even though these are most often not their members. Some of the unions have managed to include clauses in their collective agreements on CAL giving the union the right to, for examICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

TRADE UNION APPROACHES & STRATEGIES ple, approach the company about a particular problem, which then leads to an examination by the company of the issue. Other clauses are on the right of CAL workers to affiliate to the union or on the right of (certain) contract workers to get the same benefits as the workers covered by the collective agreement. Another approach has been to provide certain services to CAL workers, such as legal assistance, training sessions, or simply a meeting room. One union’s members share meals with CAL workers since permanent workers have a right to a food allowance and CAL workers do not. What comes out clear in the Colombian document is that organising or defending CAL workers is a difficult exercise. More than one example is given where workers lost their contract (or were told that this would be the consequence) as soon as they showed interest in a union. Another clear conclusion was that, also in Colombia, CAL workers routinely work in extremely precarious jobs. The story is getting to be familiar: permanent workers have health and safety provisions, pension rights, transport and food allowances, a relatively good salary, bonuses, etc. CAL workers have a minimum wage, no benefits or allowances, longer working days and they are forced to change jobs frequently.



8 Efforts by other



EFFORTS BY OTHER GUFs This coordination at the Global Unions’ level will be sustained and increased, in no small part because several of the issues being considered are promising. In addition to the exchange and sharing of information between the different GUFs, the ITUC and TUAC, other potential areas for cooperation include working with agencies at the international level, joint work with and related to the ILO, and/or action in the area of framework agreements. The ICEM is by no means the only GUF that is actively looking into ways to improve labour conditions for contract and agency, or other precarious workers. A considerable number of examples of what other GUFs, and/or their affiliates, are doing have been included in the examples provided earlier in this Guide.


Several other GUF headquarters have initiated action with regard to precarious work, outsourcing or contract and agency labour. The IMF (International Metalworkers’ Federation, is running a campaign on precarious employment, as is the EMF (European Metalworkers’ Federation Both organisations are also working on organising activities related to precarious work around the International Day of Action on Decent Work. The IMF also regularly publishes on the issue; see their web-site for more. The IUF is another organisation that has print publications available on the issue, including an educational manual “Outsourcing & Casualization in the Food & Beverage Industry: The Threat to Workers and Unions & Union Strategies for Fighting Back”, published in 2006. The manual has been translated in a number of languages. Extracts of the manual can be found in the text box below. The full version can be found on the IUF site. Another GUF with printed material is UNI, who prepared a guide on precarious work under the title “insecurity and precarious work, and what to do about it”.

OUTSOURCING & CASUALIZATION IN THE FOOD & BEVERAGE INDUSTRY: THE THREAT TO WORKERS AND UNIONS & UNION STRATEGIES FOR FIGHTING BACK The IUF manual focuses largely on experience at Nestlé, as the document grew out of a global IUF organising project in the company. Among many other, the manual contains an interesting, detailed and comprehensive chapter on “Fighting Outsourcing and Precarious Work: The First Steps”, which concentrates on what can be done practically, what arguments can be used, what kind of information might be needed, and what strategies could be considered. ICEM GUIDE ON CONTRACT AND AGENCY LABOUR 2008

EFFORTS BY OTHER GUFs A few extracts from the IUF manual >> Maximising flexibility: Employers want to maximise the company’s ability to respond to market fluctuations with minimum overhead costs. Flexible or ‘lean’ productions systems like “just-in-time” or “zero inventory” involve maintaining a small ‘core’ workforce and a large pool of ‘reserve’ labour or precarious workers that can be called whenever they are needed, and abandoned when they are not. An essential part of this flexibility involves not having to negotiate with the union over hiring and firing, and also being able to reassign workers, send them home early or force them to do overtime without having to deal with the union or comply with laws or collective agreements. >> At the Nestlé plant in Cagayan de Oro, in the Philippines, 20 contractual workers are brought into the plant everyday on standby – just in case regular workers don’t come to work, or extra hands are needed. The contractual workers are under a no work, no pay arrangement, so that they only get paid if there is work, otherwise they are on “standby” at relieving time for at most an hour and go home without pay or allowance if no work is available. >> It is a common strategy of management in the food and beverage industry to speed up the destruction of regular jobs by encouraging regular workers to leave - and leave behind them a very different job for the next person to fill. Sometimes incentive packages for early retirement are very attractive, and unions end up seeing a lot of their members willing to take the retirement package - including union officers. For the company, the cost of these ‘generous’ early retirement packages is offset by the big savings they will make in the long-run by reducing wages and benefits, and weakening the union. >> Many unions have found that the first stage in negotiating permanent status for non-permanent staff is to win broad support for the position that the precarious workers must be given priority when new regular positions need to be filled.




+41-22-304-1840 +41-22-304-1841


Fons Vannieuwenhuyse, ICEM GRAPHIC DESIGN

Carolien van Mulken ( EDITING AND PRODUCTION

Greenmonday ( 102 © ICEM September 2008


ICEM manual  

A manual for negotiators on contract labour worldwide.

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