One of the methods of performing dependent work is the case when an employer (employment agency) based on the special permit temporarily assigns its employee (assigned employee) to perform work for another employer (user) based on an agreement in the employment contract or an agreement on work activity. This type of work is called agency employment.
In the following text, we will try to introduce you to the essence of agency employment and present its advantages and disadvantages.
In general
Agency employment is a temporary assignment of an employee of the employment agency to perform work for a user. This institute thus complements the classic employment relationship and agreements on work performed outside the employment relationship. Due to its flexibility, it is increasingly popular and used in practice.
Agency employment is regulated both by Act No. 262/2006 Coll., the Labour Code, as amended (hereinafter the “Labour Code”), and by Act No. 435/2004 Coll., on Employment, as amended (hereinafter the “Employment Act”).
It is a specific legal relationship existing between three parties – an employee of an employment agency, an employment agency, and a user, i.e. an employer to whom an employee of an employment agency is temporarily assigned to perform work.
Activities of employment agencies
The employment agency is a subject of private law and, as a legal entity, it must have a permit for the relevant form of the employment. The permit is issued by the General Directorate of the Labour Office of the Czech Republic upon request. If the employment agency obtains this permit, it is entitled to mediate work in the Czech Republic and beyond.
The activities of employment agencies could be briefly summarized as the hiring of a work force for a consideration, but a broader definition can be found in Section 14 of the Employment Act. This provision directly specifies three forms how the agency mediates employment, namely:
- finding a job for an individual applying for a job and finding employees for an employer looking for a new workforce;
- employment of individuals to perform their work for users, which means another legal or natural person who assigns work and supervises its performance (user); and
- counselling and information activities in the field of job opportunities.
The first part of the legal relationship associated with the employment agency is the establishment of an employment relationships with agency employees. These arise based on an employment contract or agreement on work activity. The employment relationship cannot be established based on an agreement on the performance of work.
The Employment Act prohibits the temporary assignment of an employee to a user who is a foreigner and has been issued an employment card, blue card, or work permit.
The employment agency then mediates the work to job seekers or searches for suitable employees at the request of employers (users), where in case of finding a suitable opportunity and a candidate, the agency assigns an agency employee to users for a fee.
Assigning an employee to a user
By assigning of an agency employee to a user, the legal relationship becomes tripartite by concluding (a) a written agreement between the employment agency and the user on the temporary assignment of the employee and (b) giving a written instruction to the employee on the temporary assignment to a specific employer (user). The specific content of the agreement and the instructions are set out in the Labour Code.
During the temporary assignment of an employee to perform work for the user, it is the user who assigns employee work tasks, organizes, manages, and controls their work, gives instructions, creates favourable working conditions, and ensures safety and health at work. However, the user may not legally act on behalf of the employment agency towards the employee.
The conceptual feature for this relationship is mainly short-term nature or temporariness. The same employee may be assigned to one user for a maximum of 12 consecutive calendar months. Exceptions can be found for this rule as well – these are mainly cases where an agency employee performs work as a replacement for a permanent employee of the user who takes maternity or parental leave, or for a permanent employee who takes parental leave. The second possible exception is a situation where the assignment to a given user is requested by the agency employee themselves on their initiative. In both cases, however, it is a temporary assignment, not a permanent one.
The employment agency and the user are obliged to ensure that the working and salary conditions of the temporarily assigned employee are not worse than the conditions of a comparable employee at the user are or would be.
Advantages and disadvantages of agency employment
Agency employment is a flexible form of employment, for users, it is a relatively fast and efficient way to get the employee they need for a given job at a given time. The user also has the right to send the employee back to the employment agency and it is more flexible to terminate their assignment, the whole process is significantly easier than terminating the employment relationship with their own employee.
The employment agency provides the necessary documentation and bears all costs associated with the selection procedure of the employee. After the assignment of an employee, the user is allowed to try the given employee; after the end of the temporary assignment, there may be an opportunity to establish an employment relationship with the employee on the basis of an employment contract.
As the most significant disadvantage of agency employment, we consider an insufficient regulation of liability for damage that an agency employee may cause to the user. This is because the user and the agency employee do not enter into any contractual relationship with each other and the law as such does not regulate liability for damage in the field of agency employment. In practice, therefore, the responsibility for the damage lies with the employment agency and it is only up to it to what extent it is insured against similar cases.
At the same time, the obligation to maintain fair and non-discriminatory working and wage conditions of comparable employees with the user is a very sensitive topic. An agency employee is entitled to wages and other benefits in the same amount as their own employees, but the user’s costs are higher by the amount they pay the employment agency as a mediation fee.
Conclusion
The agency employment is the institute of temporary placement of an employee of an employment agency to perform work for a user for a fee based on an employment contract or employment agreement.
Thanks to its flexibility, it meets the needs of employers who, depending on their current needs for specific activities, can employ agency employees for a short time, but is also popular among employees as such, for whom it represents non-stereotypical employment and provides employees with the opportunity to find employment without dependence on the Labour Office.
However, in the application of agency employment, both the employment agency and the user must also keep in mind the limits of legal regulation, as described above.
Mgr. Jakub Málek, partner – malek@plegal.cz
Barbora Fuková, legal assistant – fukova@plegal.cz
15. 4. 2021