Closed consultation

Hiring agency staff to cover industrial action

Published 16 November 2023

Consultation on repealing the ban on agencies supplying agency staff during periods of industrial action.

Introduction

The purpose of this consultation is to seek views on whether government should repeal regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Conduct Regulations”). This prevents employment businesses supplying agency workers to cover the duties normally performed by a worker who is taking part in a strike or other industrial action.

The prohibition contained in regulation 7 of the Conduct Regulations has, except for the period referred to below, been in force since 1976 (although not always in the current regulations). However, there are questions over whether such a wide-ranging and blanket restriction, that prevents employment businesses offering their services to hirers facing strike action, remains appropriate given the shape and nature of the modern UK economy.

A previous government included the repeal of regulation 7 in its manifesto for the 2015 General Election and consulted on this proposal in 2015, concluding it was not the right time to proceed.

The issue was looked at again last year and the-then Secretary of State decided that it was right to repeal regulation 7. In doing so he relied on the consultation carried out in 2015 to discharge his statutory obligation under section 12 of the Employment Agencies Act 1973 (“the 1973 Act”) to consult ahead of repealing regulation 7. He concluded that the fundamental issues were unchanged, and that no new information was likely to emerge from a further exercise.

In July 2023, however, the High Court ruled that this course of action was not sufficient to comply with the specific legal duties on consultation set out in section 12 of the 1973 Act and, accordingly, quashed the regulations. The Court did not, however, make any finding on the compatibility of repealing the regulations with Article 11 of the European Convention on Human Rights (“the ECHR”), which was also being challenged.

The Secretary of State’s provisional view, for reasons that are set out later in this consultation document, is that repealing regulation 7 for all sectors is the most appropriate course of action.

The purpose of this consultation is to ensure that before reaching a final decision on whether to repeal regulation 7 the Secretary of State is aware of all relevant views and evidence.

Consultation details

Issued: 16 November 2023

Respond by: 16 January 2024

Enquiries to: agencyworkersconsultation@businessandtrade.gov.uk

Consultation reference: Hiring agency staff to cover industrial action

Audience

We are particularly interested in views from employment businesses and hirers, agency workers themselves, employees/workers who may be on strike and replaced by agency workers as well as business and worker representatives. We do, however, welcome views from all interested parties.

Territorial extent

The Employment Agencies Act 1973 and its associated Conduct Regulations apply to Great Britain. Employment law is devolved to Northern Ireland. A potential repeal of regulation 7 would apply across England, Scotland, and Wales but not in Northern Ireland. However, section 2 of the Trade Union (Wales) Act 2017 (“the 2017 Act”) would limit the effect of any potential repeal in the public sector in Wales.^{[footnote 1]} The 2017 Act prohibits devolved Welsh authorities from hiring agency workers to cover strikes, although employment businesses there would still be permitted to supply them.

How to respond

Respond online or email to: agencyworkersconsultation@businessandtrade.gov.uk

When responding, please state whether you are responding as an individual or representing the views of an organisation.

Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome.

Confidentiality and data protection

Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018, and the Environmental Information Regulations 2004).

If you want the information that you provide to be treated as confidential, please tell us, but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request.

We will process your personal data in accordance with all applicable data protection laws.

We will summarise all responses and publish this summary on GOV.UK. The summary will include a list of names or organisations that responded, but not people’s personal names, addresses or other contact details.

For more information on how we will process your personal data when carrying out this consultation, please refer to the privacy notice published on GOV.UK alongside the consultation.

Quality assurance

This consultation has been carried out in accordance with the government’s consultation principles.

The proposal

Legislative context

The recruitment sector is regulated by the Employment Agencies Act 1973 (“the 1973 Act”) and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (“the Conduct Regulations”).

This legislation defines two types of work-finding service: employment agencies which introduce individuals to be directly employed by a business; and employment businesses, which employ or engage people to work under the control of a hirer for the duration of an assignment. The precise legal definitions can be found in section 13 of the 1973 Act. This legislation applies to all employment agencies and employment businesses operating in England, Scotland, and Wales.

Not all aspects of this framework apply to both employment agencies and employment businesses. Regulation 7, which is the subject of this consultation, prohibits an employment business from supplying an agency worker to replace a worker engaged in an official strike or other official industrial action. This restriction only applies to employment businesses.

An employment business that breaches regulation 7 is guilty of a criminal offence under section 5 of the 1973 Act.

Detail

We are proposing to remove regulation 7 across all sectors. Employment businesses (EBs) would be permitted to supply agency workers to hirers to cover strikes in any sector. This would include, for example, supplying agency workers to hirers in hospitality, retail or construction which are big existing markets for the recruitment sector.

It would also include supplying agency workers to hirers operating in relevant or important public services. These are defined in section 234B (as added by the Strikes (Minimum Service Levels) Act) and section 226(2E) of the Trade Union and Labour Relations (Consolidation) Act 1992 (“the 1992 Act”) respectively.

It would be a permissive measure. Employment businesses would be permitted, but not required, to supply agency workers to their hirers to cover strikes. Similarly, agency workers would be free as they are now to turn down any assignment they are offered.

It would not affect a trade union’s ability to call workers out on strike or prevent an individual from voting in favour of strike action when balloted by their union. Additionally, workers on strike would retain the full range of protections they currently enjoy, such as in relation to unfair dismissal.

Wider health and safety requirements and other provisions in the Conduct Regulations that require employment businesses to satisfy themselves that any worker they supply is suitably qualified would be unaffected by this change.

Implementation

If the government took forward this option, we would use an affirmative statutory instrument (SI) to repeal regulation 7 of the Conduct Regulations. The draft legislation would be subject to debate and approval in both houses of Parliament before it became the law.

Rationale

The starting point for this government is that it is only right to regulate and therefore restrict business freedom to operate when doing so is necessary and proportionate.   Regulation 7 is a significant interference in the operations of private companies and other employers. It also prevents work seekers being offered certain assignments that they may otherwise wish to take. The Secretary of State’s provisional view is that this interference is unnecessary and disproportionate.

It is already the case that employers can bring in replacement workers to provide cover if they employ them directly or contract out the service. There may be some employers who want to maintain basic elements of their business, who would benefit from the flexibility that repealing regulation 7 would offer but who lack the capacity or capability within the current legal framework to do so.

The government continues to believe in the importance of an individual’s ability to strike and the ability of trade unions to advocate for their members’ interests through industrial action, where other means of resolving disputes have failed. The proposal to repeal regulation 7 does not do anything to prevent this or remove any of the existing protections that trade unions and individuals benefit from when taking lawful industrial action. This proposal is, however, about balancing the ability to strike with the rights and freedoms of the general public (including employers, workers and service users) not party to the dispute.

Any decision by the Secretary of State, after this consultation, to repeal regulation 7 would not place any obligations on employment businesses to supply agency workers to replace workers taking part in industrial action. What it would do is offer employment businesses more freedom to make their own choices.

We do, however, recognise that the proposed change is likely to be strongly opposed by some who argue that it will, have a “chilling effect” on workers’ ability to strike. In our view the evidence does not currently support this. For example, during the time regulation 7 was repealed, there was a significant increase in the number of working days lost to industrial action which would suggest there had not been a material chilling effect.

We are also aware of concerns from business representative bodies and some of some of the biggest businesses in the recruitment sector that repealing regulation 7 may somehow bring the industry into disrepute. We also note their concerns that repealing regulation 7 may put businesses in difficult situations, placing them in the middle of disputes between employers and other workers.

We are not, in the absence of more detailed views and evidence, convinced by these arguments. Repealing regulation 7 has the potential to lessen the disruption that would otherwise be caused by individuals exercising their ability to strike (and so the effectiveness of industrial action). But it would not affect in any way the ability to strike. In our view, the potential impact repealing regulation 7 could have on the effectiveness of strike action is proportionate and justified in the interests of achieving the correct balance between the rights of trade union members and those of the wider public. Our provisional view is that repealing regulation 7 would help to achieve that balance and we would welcome views on this from all interested parties.

Sectors

The proposal we are consulting on is removing regulation 7 completely, so there would be no restrictions on employment businesses supplying agency workers to cover industrial action in any sector of the economy.

It is possible that we could achieve our aims by limiting the repeal of regulation 7 to a smaller number of sectors such as, for example, those listed in the recent Strikes (Minimum Service Levels) Act.

The main argument in favour of this is that it would reduce any potential interference in the rights of trade unions and their members. That interference would also be more easily justified if the ability to supply agency workers was only available in services which bodies such as the ILO recognise as being important or essential, such as healthcare.

There are, however, arguments against doing this. One of these is complexity. Repealing regulation 7 in all sectors is the most straightforward and simple thing to do, and would be easy to understand for hirers, employment businesses and workers.

Another is that it would lessen the potential positive impact of any change and its value to employers and the public. Indeed, some of the areas where this new freedom may be most useful are not the same as the services listed in either the Trade Union Act 2016 or the Strikes (Minimum Service Levels) Act 2023.   

Finally, and most fundamentally, this change is based on the idea that unless there are good reasons to the contrary businesses should have the freedom and flexibility to decide how to run their affairs. This idea applies to all sectors of the economy and to date we have seen limited evidence to justify such restrictions in any sector.

While we consider at this stage that limiting the repeal in any of these ways would not meet our objectives or create a regulatory framework appropriate for the current labour market, we would welcome views on this point through the consultation.

Impact

This consultation is accompanied by an impact assessment, that outlines potential cost and benefits of this change, which we would also welcome comments on. Businesses were not required to notify government when they supplied agency workers to cover strikes and therefore there is no centralised record of use during the period that regulation 7 was repealed between July 2022 and August 2023. We are also not aware of a strike being called due either to the proposed or actual use of agency workers.

We have also considered the equality impacts at paragraphs 86 to 97 of the impact assessment. This equality analysis will be reviewed (and updated where necessary) once the consultation closes.

We welcome any comments and evidence that may develop or further inform our assessment and therefore invite respondents to include any evidence they have relating to the impact of repealing regulation 7 between July 2022 and August 2023 in their response.

Questions

Your response will be most useful if it is framed in direct response to the questions posed below.

However, we would still encourage you to include further comments and evidence that you feel the Secretary of State and ministers should consider when making their decision.

1. Can you provide views and evidence on the effect that regulation 7 has on employment businesses, hirers, and agency workers? If so, please elaborate.

2. What impact do you think the repeal of regulation 7 would have on workers and the wider economy and society?

3. What are the sectors where repealing regulation 7 would be most applicable and do you think there are sectors it should not apply to? Please give reasons for your views.

4. Do you have any views on the methodology used in the Impact Assessment provided alongside this consultation and does it represent all the likely costs and benefits?

5. Do you have any other comments not covered by or evidence not provided in your response to the questions above that we should consider?

Please provide your name and an email address we can contact you on if you are happy to be contacted regarding your responses to this consultation.

Next steps

The closing date for the consultation is 16 January 2024. The Secretary of State will carefully consider the detail of the responses they receive. The government will then aim to publish its decision, including a summary of the representations it receives. If the government decides to proceed, the draft legislation will be accompanied by an explanatory memorandum and impact assessment to support effective parliamentary scrutiny.

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1. Trade Union (Wales) Act 2017 ↩