Home Research Projects The Vulnerable Worker Publications Is Work Working - Discussion Paper Chapter 2

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The Vulnerable Worker

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Is Work Working? Work Laws that Do a Better Job

PART I — WORK AND VULNERABILITY TODAY

Chapter Two — Temporary Agency Workers

Temporary work is another form of non-standard employment. It is work that is limited in duration and offers very little, if anything, in the way of security of employment tenure. Many temporary workers are classified as self-employed workers or independent contractors for the purposes of labour and employment rights, benefits and protections. Thus, they share the same concerns and issues as Ginette Leduc.

However, within the category of temporary work, we find workers affiliated with temporary help agencies, which sell the labour of temporary workers. There is evidence this subcategory of temporary workers is particularly vulnerable.

Catherine O’Donnell — Temporary Agency Worker

Catherine O'Donnell is a 30 year-old mother of four children living in St. John's, Newfoundland and Labrador, with her husband and family. Her husband, Hugh, a fisherman, was injured on the job several years ago and has had trouble getting back to full-time work. Catherine has her Grade 12 diploma and has completed one year of a two-year program at a community college in administrative support. She has been working for the same personnel agency for five years and, although she would like to have permanent work, there are few prospects right now. The O'Donnell's fourth child is severely disabled as a result of a birth injury and requires special programs, assistive devices and other supports. This puts quite a strain on the family's personal and financial resources.

Catherine felt fortunate that the manager of her agency was very understanding when she was unable to take an assignment, because of the pressures at home. To Catherine, this was the real advantage of temporary work: she could refuse an assignment if necessary. However, this flexibility comes at a price. Catherine does not receive any supplementary benefits, sick days or vacation pay. Furthermore, Catherine has learned that she is paid less than the permanent staff in the places where she has worked.

Until recently, Catherine was prepared to accept the costs of working with a temporary agency in exchange for the flexibility it provided. However, in the last seven months she has become caught in a legal battle that has made her reconsider the advantages of temporary work. Catherine was on the same assignment for eight months working in a small family-owned business where she was responsible for running the office. Initially, she loved the feeling of being part of “the family,” sharing the joys and disappointments of contracts won and lost. However, by the fourth month Catherine began to resent the large amounts of unpaid overtime required of her. When she approached the owner of the company to ask that she be paid for at least some of the overtime or receive time off in lieu of pay, she was surprised at his angry response. The owner told her that if she could not handle the job, then he would put in a request for another “girl.” When Catherine spoke with her manager at the temporary agency, she was told that, due to the length of the assignment and the fact that it was the company that was paying her salary, the company was her real employer and therefore, she would have to file a complaint against the company with the Labour Standards Division.

On filing her complaint, Catherine was promptly relieved of her assignment. She has had a few brief jobs, but she suspects the temporary agency is now viewing her as a “whiner” and is reluctant to assign her to any of its major clients. Between dealing with the complaint and the ensuing legal battle over who the real employer is, and her family, Catherine feels she does not have the where with all to work full time. Still, the family finances are in bad shape, and the likelihood of turning to welfare is looking more and more real.

Temporary employment agencies play a useful role in the economy, especially in the labour market. They allow businesses to deal efficiently with temporary difficulties by supplying qualified, rapidly available labour for an agreed price, relieving the employer of the need to engage in the time-consuming and costly tasks of screening, interviewing and hiring additional staff. From the worker's point of view, temporary work may be a useful way of familiarizing oneself with different kinds of work before making a career commitment. It may also offer the flexibility needed when family demands like those of Catherine's make full-time permanent work difficult to sustain.

The advantages of using temporary agency staff are such that temporary agencies have become a permanent feature of the labour market. It is difficult to estimate the size of the temporary agency workforce, but there is evidence that about 1,300 temporary agencies operated in Canada between 1990 and 1993, and the size of this industry has remained constant, if not grown.¹⁶ Moreover, an increasing number of employers use temporary agency workers on a long-term basis. Although this three-party relationship may have some advantages for all parties, it creates problems and may easily lead to abuses.

In spite of case law that has attempted to clarify the law, workers are often uncertain about the identity of their real employer. Is the agency responsible for ensuring that Catherine is paid for the overtime or is it the owner of the business where she has been performing her duties? The contract is between the temporary agency and the temporary worker and, as such, the client business would not appear to have any contractual responsibility toward the worker. However, decisions such as Pointe Claire v. Quebec (Minister of Labour)¹⁷ call this point into question. In that case, the Supreme Court of Canada held that the client business and not the temporary agency was to be treated as the employer for the purpose of labour relations legislation in Quebec.

In general, a determination of who the real employer is will depend on the purpose of the law in question. It will also depend, to some extent, on the length of the assignment. Unfortunately, uncertainty regarding the identity of the real employer may be to the disadvantage of workers like Catherine. Although temporary agency workers are employees and, as such, are generally covered by employment standards legislation guaranteeing certain minimum working conditions (although not in all cases), they must often engage in time-consuming and sometimes costly litigation to determine their real employer. As in the case of Catherine O'Donnell, this may have a very negative impact on their relationship with both employers and further increase their vulnerability in the workplace.

The second difficulty with the temporary agency employment arrangement relates to wage discrepancies between equally qualified workers who perform similar or equivalent work within the same establishment. Research reveals permanent workers enjoy higher average hourly wages than temporary help in every occupational grouping surveyed.¹⁸ A big part of the difference relates to the “mark-up,” that is, the portion of the service fee that goes to the temporary help agency. Temporary help workers also have limited access to extended benefits, compared to their counterparts engaged in permanent employment and other temporary (non-agency) work. Only 8.2 percent of temporary help workers, versus 64.3 percent of permanent workers reported having extended health coverage in 1995. Very few have paid sick leave or dental coverage.¹⁹

Moreover, although the flexibility of the temporary assignment is, for some workers like Catherine, of great benefit in permitting them to balance family and work demands, in reality, many temporary help workers are pressured to accept each and every assignment that comes their way.

Most temporary workers are unable to find permanent work. However, the temporary employment agreement usually prohibits them from taking a position with a client company even if offered one. In reality, provided the client firm pays the agency a “buy-out” fee, they may hire a worker permanently. However, the buy-out fee is an effective disincentive to hiring temporary workers on a permanent basis. Moreover, agencies use other kinds of mechanisms to restrain client firms from hiring temporary workers on a permanent basis. This is particularly significant for immigrants who will work for temporary agencies to gain the required “Canadian experience,” but are then thwarted from using this Canadian experience to obtain permanent employment.

Since temporary workers are dispatched to different and multiple work sites, it is nearly impossible for them to organize collectively. Some temporary workers are covered under collective agreements when they are placed on assignment in a unionized workplace, and these workers tend to have higher wages than their counterparts who are not covered by collective agreements. However, most temporary workers in Canada are not covered by a collective agreement, and the barriers to organizing these workers are significant.

Finally, certain employment standards and benefits have eligibility requirements based on length of employment that many temporary agency employees are not able to meet. These include general holidays with pay, vacation leave, notice of termination and rights to severance pay. Pension benefit laws require private pension plans to vest benefits in employee plan members only after a stipulated time, usually two years. As a result, many temporary employees are not legally protected against the loss of pension benefits on termination of their employment.²⁰ In addition, qualifying requirements under public retirement and disability plans and the national Employment Insurance program effectively exclude many temporary workers.

Questions:

· Does the law respond adequately to the problems associated with temporary agency work?

· If not, what needs to change?

· Are there other problems with temporary agency work that have not been identified?