Act signals end to self-regulation

Sunday Business Post - Recruitment Pages - Jan 13 2008

The new Employment Agency Act, to be introduced this year, will set about properly regulating the industry sector. But not all industry players are pleased with its introduction writes Dermot Corrigan.

The introduction of a new Employment Agency Act later this year will tighten the regulations governing the Irish recruitment industry.

The introduction of the new bill, first proposed four years ago, has been delayed by ongoing ‘Towards 2016’ social partnership negotiations, and concerns over possible conflict with the European Union Services Directive. However, a spokesperson at the Irish Department of Enterprise, Trade and Employment (DETE) has confirmed it is expected to be passed into law this year.

The most striking element of the new legislation will be the establishment of a government body to oversee the operation of a new statutory code of practice for companies and individuals operating in the recruitment sector in Ireland.

This statutory advisory and monitoring committee will include representatives from the department, employers’ groups, unions, the National Recruitment Federation, and a number of ministerial appointees. It will have the power to make proposals to the minister in relation to the suspension of registration - or prosecution - of employment agencies who breach the new code of practice.

Code of Practice
Frank Collins, president of the National Recruitment Federation (NRF), said he welcomed the setting up of the new committee. He added, however, that he did not see the need for a statutory code of practice.

"We feel the code of practice should be voluntary,” said Collins. “The code of practice proposed in the act is, by and large, what we have already, but my worry would be that if you make it statutory, it becomes inflexible - and makes it difficult for commercial services to change and adapt."

"(In the recruitment sector) we have to have licenses to operate, and most industries do not. Individuals need to pass a Garda check to get a license, which is only required in the security industry. There is a whole load of employment law out there that applies to us. So why we need more regulation, I do not know."

Collins said that, despite indications from the department to the contrary, he still hoped that the code of practice would be voluntary. However, Colman Collins, managing director, Collins McNicholas Recruitment and Human Resource Services Group, said that the present system of voluntary regulation was not working.

"I do not know of any industry that is able to regulate itself,” said Collins. “Statutory regulation is the only way forward. You have only to look at the legal, estate agent and accountancy professions to see that self regulation is a waste of time."

The NRF estimates that there are currently between 350 and 400 recruitment businesses operating in Ireland at the moment. Frank Collins believes the competition that exists between these businesses provides a sufficient means of maintaining high standards.

"The NRF was set up to improve and promote best practice,” he said. “That is a commercial thing, rather than a legal issue. We feel that the better service we provide, the more people will use us. Better companies will grow, and those providing a lower service will drop out. We are no different than any other sector."

Colman Collins said many recruiters operating in Ireland do not conform to best practice.

"There is no evidence to support the idea that competition will keep standards high,” he said. “There are more and more agencies chasing fewer and fewer CVs. It is hard to quantify, but our consultants continually bring issues to our attention that would suggest standards are not improving."

"To my knowledge the NRF has not thrown out any members as yet, and some of its members do not adhere to its guidelines,” said Colman Collins. “It has not succeeded in cleaning up the bad practice where it has come across it. It cannot really, as it is just a self regulating body."


Legal Delays

Existing legislation governing employment agencies in Ireland dates back to 1971. A discussion paper outlining plans to update this act was circulated in 2004. At the time, the department received submissions from industry stakeholders, including the NRF, Irish Congress of Trade Unions (ICTU), Irish Business and Employers Confederation (IBEC), the Revenue Commissioners, the Immigrant Council of Ireland, and a number of individual recruiters including Collins McNicholas, which is not a member of the NRF. This lead to the publication of a white paper in June 2005.


Frank Collins said the NRF had been involved in putting together the new legislation from the beginning.


"We have been fully involved in consultation process since 2004,” he said. “We were consulted when they came up with the white paper, and again in 2006 when they came up with the heads of bills."


He added, however, that the real nitty-gritty of the legislation was agreed during social partnership talks between government, unions and employers.


"We were not a part of that,” he said. “Effectively, the social partners agreed what should go into the act, and then the consultation we had was how to implement what the employers' groups, unions and government had agreed."


Frank Collins said the legislation has therefore not been written with the recruitment industry's interests at heart.


"The difficulty is that the employers have no problems putting all responsibilities onto agencies, and the trade unions have no problem putting responsibilities onto agencies as well,” he said. “We are given a huge amount of responsibility, for no benefit, so we were a bit caught in the middle."


The introduction of the legislation, he said, was held up by unrelated debates between unions and employers.


"The trade union movement came in looking for additional requirements, which delayed the process,” he said.


The DETE spokesman agreed.


“The Heads of a Bill were circulated for observations in October 2006, but progress was held up due to further demands from ICTU and SIPTU, in relation to a number of matters not forming part of the social partnership agreement,” said a department spokesperson.


A further hurdle was encountered last year, as the draft legislation did not conform to the EU Services Directive, which contains a distinction between businesses that fill temporary and full-time positions.


The department’s spokesperson said these matters have now been settled.


“The Department has engaged in detailed discussions with the EU Commission and the Office of the Attorney General relating to EU law in the area of freedom to deliver services,” he said.


“Following the recent conclusion of the protracted consultation process, ministers are now considering the various issues arising, in the context of finalising an early submission to Government,” said the spokesperson. “It is our intention that, following Government consideration of these issues, the bill will be finalised quickly.”


industry qualifications


Colman Collins said he hoped the new legislation would make it more difficult to establish recruitment businesses in Ireland.


"It is far too easy to set up a recruitment agency now,” he said. “When you consider how important the task is that it performs, it is outrageous that anybody can just put their sign up outside the door, with no previous qualifications or experience in human resources or recruitment. Just having no criminal record does not mean you are competent to run a recruitment agency."


However, Frank Collins said he expected the legislation to have no requirement for recruiters to have human resources qualifications.


“The initial version the act required anyone setting up an agency to have a recognised human resources qualification,” he said. “We felt that was not right, as often the best people to recruit are from the sector itself - for instance a financial background, for recruiting accountants.”


The existing legislation, introduced in 1971, contains a requirement for any recruitment business operating here to have a premises in Ireland. This is likely to be removed from any new legislation. Frank Collins said that, in practice, the old act had not deterred overseas agencies from operating here, and the NRF welcomed competition from other EU states.


“We do not think there should be any barriers to registration, but they should be regulated,” he said. “We have no problem competing on a level playing field."


A suggestion arising from the partnership negotiations was for the rights of agency workers to be enshrined in the Employment Agency Act. Frank Collins said this would add confusion to the legislation, and hoped the new act would keep the regulation and practice of recruitment agencies separate from the minutiae of existing labour law.


"There are thirty-something different pieces of employment legislation, sixty or seventy statutory instruments and hundreds of regulations that impact on employees,” he said. “It is not this particular act’s job to clear this up.”