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Term used in Europe

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Deregulering Beoordeling Arbeidsrelaties (DBA) Law

As of May 1, 2017, the VAR in the Netherlands is replaced by the DBA system of clients and contractors entering into model agreements to reflect the working relationship they have with each other. Not all freelancers need a model agreement. When it is obvious that they are self-employed, they can work without a model agreement. Under the DBA, both parties are responsible for compliance with laws and regulations in the event that the relationship is misclassified as self-employment. (See VAR Declaration)

Transfer of Staff

Refers to the transference of staff under outsourcing arrangements. Most countries have legislation in place which determines the obligations of the employer, the responsibilities of the outsourcing firm and the rights of workers. These principles are enshrined under EU law within the Business Transfers Directive and under UK law under the Transfer of Undertakings Protection of Employment (TUPE) legislation. See Transfer of Undertakings Protection of Employment (TUPE)

Works Council

An organization representing workers that functions as a local/firm-level complement to national labor negotiations. Works councils exist with different names in a variety of related forms in a number of European countries. Works councils can also be formed in non-unionized companies. Works council representatives may also be appointed to the Board of Directors. The aim of works councils is to reduce workplace conflict by improving and systematizing communication channels; to increase bargaining power of workers by means of legislation; and to correct market failures by means of public policy. In 1994, the European Union passed a Directive (94/45/EC) on the establishment of a European Works Council (EWC) or similar procedure for the purposes of informing and consulting employees in companies which operate at European Union level. The EWC Directive applies to companies with at least 1,000 employees within the European Union and at least 150 employees in each of at least two Member States. The Agency Workers Directive includes the requirement that Agency Workers should be included in employee headcount for this purpose. In some markets, temporary workers may actually be represented on Works Councils (sometimes after a qualifying period).

Working Time Regulations (WTR)

United Kingdom legislation that regulates the time employees can be required to work and the rests and breaks to which they are entitled. It also applies to Agency Workers.

VAR Declaration

A Verklaring arbeidsrelatie (VAR) was a declaration of independent contractor status that defined the status of a freelance worker (see ZZP) in the Netherlands. VARs were obtainable on application from the Dutch Tax & Customs Administration. The VAR declaration provided freelancer and the principal/ company with clarity regarding the withholding and payment of taxes and employers’ contributions, and protected the principal from liability in the event of misclassification. The VAR is being phased out from May 2017 and is being replaced by the use of model or standard contracts (Wet Deregulering Beoordeling Arbeidsrelaties DBA), which should accurately reflect the work arrangements, and which provide no protection for the employer or the contractor in the event of misclassification.

Umbrella Company

In the UK and the Netherlands, an umbrella company acts as an employer to contingent workers, in exchange for a fee paid by the workers, who are free to find their own work, usually through one or more staffing agencies. The umbrella company invoices the staffing firm for the services of the workers and and handles all administrative, taxation, payrolling and legal issues pertaining to employing workers.

Temporary Work Agency (TWA)

Formal legal description in Europe used to describe a staffing firm.

Temporary Agency Worker (TAW)

Formal legal description in Europe used to describe a temporary supplied via an intermediary such as a staffing firm.

Supply Teacher

A person who teaches at a school on a temporary basis when the regular teacher is unavailable because of illness or personal leave. The provision of Supply Teachers in the UK by staffing firms is a thriving business, although this sector is less prevalent (to non-existent) in other staffing markets. In the US, Supply Teachers are more commonly referred to as Substitute Teachers and, elsewhere in the world as Relief Teachers.

SNA Hallmark

The Stichting Normering Arbeid (SNA) is an important hallmark for staffing companies established by the Labour Standards Foundation in the Netherlands, safeguarding a buyer if a staffing supplier does not pay mandatory taxes and duties. The SNA hallmark makes hiring temporary labor and subcontracting a lot easier and safer for the client, simply because they enjoy better protection against fraud. The SNA hallmark is partly based on the NEN-4400 quality mark.(See: NEN-4400)

Secondment

Temporary loan, attachment or detachment of an employee to another company (external) or department (internal), for a specified task and predetermined length of time. While assigned elsewhere, the secondee stays on the payroll of his employer and the employer will charge the receiving company or department a fee. In some countries, temporary agencies may (e.g. the Netherlands) or be legally obliged to (e.g. Germany, Denmark) assign temporary workers as secondees, meaning that the temporary worker will be entitled to receive payment even if no assignment is available.

Reasons of Use

A legal term used in some European countries (i.e., Spain, Belgium and France) to denote the fact that the use of temporary workers must by justified by certain pre-defined “reasons of use,” such as replacement of absent workers, absorption of activity peaks, etc. Both the scope and approval process for Reason of Use differ by country.

Qualifying Clock

A concept within the UK Agency Workers Regulations (See “Agency Workers Regulations”) that provides for a number of circumstances in which breaks in the assignment of a temporary agency worker do not prevent them from completing the 12-week qualifying period upon which they benefit from parity in basic employment and working conditions with equivalent permanent workers. These provisions can best be explained by thinking of the qualifying period as a clock that runs from 0 to 12. Sometimes a gap between assignments – or a move to a new assignment - will mean that the clock is reset to 0 and must start again. In other circumstances a break will merely ‘pause’ the clock, which will then continue to tick when the agency worker returns. In some limited circumstances, the clock will continue to tick even if the agency worker is not working on an assignment.

Pseudo-independence

Pseudo-independence is false self-employment disguised to avoid paying employment taxes and social charges. The term has particular resonance in Germany (‘Scheinselbstständigkeit’) where new temporary labor legislation and collective agreements have made the use of temporary agency workers both more complex and more expensive, leading to the increased usage of independent contractors or freelancers. German unions are suspicious that many such independent contractors are, in fact, pseudoindependent.

Precarietà

Statutory cost in Italy. See Indemnification Payment.

Precariedad

Statutory cost in Spain. See Indemnification Payment.

Précarité

Statutory cost in France. SeeIndemnification Payment.

NACE

Nomenclature Générale des Activités Economiques: (See: North American Industry Classification System.)

NEN-4400

NEN-4400 is a national standard developed by the Netherlands Standardization Institute (NEN) that establishes requirements for Dutch organizations hiring temporary employees, like employment or secondment agencies. NEN-4400-1 and 4400-2 are applicable to staffing companies, describing tax and duty payment rules. Employers, unions and the government participate in the NEN.

Margin only Model MSP

This is an alternative to the standard Principal Model for MSP used in markets where the MSP is legally prohibited from acting as a Principal intermediary. Here, the MSP appoints local staffing agencies to source contingent workers. The MSP will have contracts with individual agencies, but once candidates are identified, the MSP contracts directly with the contingent workers and supplies them to the end user acting as the contractual intermediary. Under this Model, the MSP will assume responsibility for paying the contingent workers and will also pay a margin to the staffing agency that sourced the contingent workers. A prerequisite of the Margin only model is that the MSP is properly licensed as a staffing agency. (See also: Principal Model MSP and Agency Model MSP.)

Limosa Declaration

Landenoverschrijdend Informatiesysteem Migratie Onderzoek Sociaal Administratief (Limosa) is a mandatory declaration for foreign employees, self-employed persons and apprentices in Belgium, including those working on a temporary basis. As of July 1, 2013, all foreign selfemployed workers must make a Limosa declaration prior to starting work. Limosa is used to fight against fraud and the unfair competition of foreign workers who accept work at below-market wages and disregard Belgian labor laws and regulations. Failure to follow Limosa legislation correctly can lead to sanctions against the employee and the employer.

International Labour Organization (ILO)

The ILO is a tripartite U.N. agency that brings together governments, employers and workers in common action to “promote decent work throughout the world”. As such, the ILO is the only international regulatory body drafting conventions and recommendations on employment-related matters. Adopted in 1997, ILO Convention n°181 on Private Employment Agencies represented a dramatic reversal of the ILO position regarding the Agency Work industry: from prohibition (Convention n°96) to legal recognition and support of the development of the activities of private employment agencies.

Employment Business

Disclosure and Barring Service (DBS)

Formerly known as the Criminal Records Bureau (CRB), the Disclosure and Barring Service (DBS) is an executive agency of the UK Home Office set up to help organizations make safer recruitment decisions. The DBS acts as a “one-stop-shop” for organizations, checking police records and, in relevant cases, information held by the Independent Safeguarding Authority (ISA). In the United Kingdom, staffing companies are legally obliged to undertake DBS checks for candidates put forward for any temporary assignments that include working with children or vulnerable adults. Note: In contrast, within some markets, such as the Netherlands, criminal record (and health checks) are forbidden by law.

Collective Labor Agreement (CLA)

A CLA is a labor contract between an employer and one or more unions and is common throughout continental Europe. Collective bargaining consists of the process of negotiation between representatives of a union and employers (represented by management, or in some countries by an employer organization) involving terms and conditions of employment, such as wages, hours of work, working conditions and grievance-procedures, and about the rights and responsibilities of trade unions. The parties often refer to the result of the negotiation as a collective bargaining agreement (CBA) or as a collective employment agreement (CEA). CLAs can be negotiated at a company, regional or national level. Staffing agencies in the Netherlands have their own Collective Labour Agreement, which applies to temporary staffing and which is administered by ABU, the Dutch staffing association.

CDD

Contrat à Durée Determinée: French legal equivalent of a temporary employment contract, concluded directly between the employer and an employee. Legally, a CDD does not differ a lot from a contract for a temporary worker hired through a temporary agency, except that the latter requires three participants: the user company, the temporary agency and the temporary worker. In practice, CDDs are often used for longer assignments.

CDI

Contrat à Durée Indéterminée; French Legal equivalent of a permanent employment contract.

AUG (Arbeitnehmerüberlassungsgesetz)

AUG is the German employment agencies law that requires each separately incorporated entity that wishes to lease employees to obtain an AUG license from the appropriate state labor office. Licenses are valid for one year and may be renewed. Many German end user hirers will only contract with foreign agencies that are in possession of an AUG license. However, the provision of independent contractors falls outside the scope of the AUG and a number of foreign staffing firms focus on this area of provision in order to avoid the licensing requirements. Failure to follow the licensing rules correctly exposes the agency to fines and criminal proceedings while end users will find that an employee who works for an unlicensed agency, and not as a true independent contractor, will be deemed to be the hirer’s employee at the point in time they started to work for the hirer.
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Atypical Employment

Work that is other than full-time and permanent, including part-time, evening and weekend work, fixed-term work, temporary or sub-contract home-based work, telework (telecommuting in the US) and outwork. (See also: Alternative Staffing.)

Alliance

A business relationship between a supplier and a customer, or among two or more suppliers, usually involving joint product development or joint marketing efforts.

Agency Workers Regulations (AWR)

A UK law, effective Oct. 1, 2011, in order that UK legislation complies with the EUI Agency Workers Directive (See: “Agency Workers Directive). The AWR provides temporaries supplied through a staffing agency with entitlement to the same basic employment and working conditions as if they had been recruited directly, if and when they complete a qualifying period of 12 weeks in the same job.(See also: “Qualifying Clock.”). The AWR also grants certain rights to such temporary workers from the first day of their assignment such as access to facilities (i.e. canteen) and information on job vacancies.

Agency Workers’ Directive (AWD)

A European Union Directive agreed upon in November 2008 that seeks to improve the quality of temporary agency work by applying the principle of non-discrimination and to address unnecessary restrictions and prohibitions on the use of temporary agency work in the European Union. Under the Directive, an agency worker will be entitled to equal treatment (at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that undertaking to occupy the same job. “Equal treatment” relates only to basic working and employment conditions of temporary agency workers (e.g., pay, working time) and does not affect the employment status of temporary workers. As with all EU Directives, the purpose of the AWD is to harmonize the law across the common market. Though it was originally proposed in 2002, the British government and others blocked its enactment until 2008. However, the UK government was successful in negotiating a derogation whereby equal treatment will only apply in the UK after 12 weeks in a given temporary job. All EU member states were obliged to amend laws and regulations to comply with the AWD by Dec. 5, 2011; however, there are examples of non-compliance in certain countries.

Agency Worker

A UK legal term used to refer to an individual who is engaged by an Employment Business(see definition) to perform labor for one or more of the Employment Business’ clients. (See also: Agency Work)

Agency Work

Preferred terminology used by the World Employment Confederation (WEC) and by certain European social partners to describe temporary staffing provided through a staffing company. Hence “Agency Work Business” (AWB) and Agency Worker. There is a contractual relationship between the Agency Worker and the Employment Business and the Agency Worker is paid by the Employment Business. There is no contractual relationship between the Agency Worker and the end user client. Direction and control of the Agency Worker is exclusively the responsibility of the user client.

Agency Model MSP

Refers to an alternative contractual arrangement for the supply of MSP found in those markets where having the MSP act as Principal is not lawful. In certain markets (i.e. France, Germany and Italy), legislation prevents second tier suppliers from supplying through an intermediary as local agency license requirements determines that the license holder contracts directly with the end user. Under the Agency Model, the MSP sits beside the supply chain rather than in the middle of it providing administrative services. The hirer has to continue to contract directly with individual supplying staffing companies, but the MSP administers those contracts on their behalf. Administrative services provided by the MSP may also include supplier selection, negotiating and standardizing contracts, processing requisitions, management of time reporting, compliance services, and managing invoicing requirements such as consolidated invoicing and invoice tracking. It will not include billing second tier staffing suppliers.(See also: Principal Model MSP and Margin only Model MSP.)
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