By Viðar Þorsteinsson, manager of Efling. Published in Fréttablaðið July 9th 2019.

With economic mergers taking place within Europe, the number of temporary work agencies with foreign workers has increased. Temporary work agencies exploit the economic differences between the work areas of the EEA by transferring workers from low wage areas to areas with higher wages, where there is great demand for cheap labor.

At temporary work agencies, not only do workers receive the lowest possible wages but constant attempts are made to curtail their basic rights even further, in the belief that imported workers are poorly advised of their rights and less likely to seek restitution. This creates a negative pressure on the wages and accommodations of all wage earners within a given country and undermines the various labor rights which have been won with struggle throughout the years.

Awareness and reputation

The news commentary program Kveikur on RÚV raised a lot of awareness in Icelandic society about the operations of temporary work agencies this past October, when it aired a detailed feature under the heading „Svarta hliðin á íslenskum vinnumarkaði“ (The dark side of the Icelandic labor market). One of the temporary work agencies covered there is called Menn í vinnu (Men at work), run by people who in the past years have been associated with other temporary agencies under different names and ID numbers. One of the predecessors of Menn í vinnu, Verkleigan, collapsed into bankruptcy in May of 2018 because of wage claims which Efling put forth on behalf of 78 of its members for a total sum of 24 million.

After temporary work agencies and their ill treatment of imported workers became a matter of common knowledge after the feature on Kveikur, many employers awakened from their oblivious state. Those who had done business with the temporary work agencies, so-called user-businesses, reacted accordingly. Some of the user-businesses mentioned in the feature – large companies such as Samskip and Brimborg – expressed disapproval, others sought to clean house. But the conclusion of the feature on Kveikur was clear: Companies which involve themselves in criminal activities in the labor market by renting cheap labor from temporary work agencies may have to endure harsh criticism and a tarnished reputation.

User-businesses are fully responsible

It’s not just public perception and societal discourse which have caused reduced tolerance towards the user-businesses of temporary work agencies. The legislative branch has also done its part by instituting so-called “chain-accountability.” In 2018, the wording of law no. 139 from 2005 regarding temporary work agencies was sharpened so that now the user-business is “fully responsible for the unpaid minimum wages, as well as for other default payments related to the employees of a temporary work agency.”

This means that user-businesses cannot plead ignorance or lack of knowledge if the temporary work agency is found to be guilty of violations; they are equally culpable. This undivided chain-accountability has not been tested in the courts in Iceland because it has only recently been enacted.

The scam of subtracting from wages

Considering the enactment of more stringent laws and the raise in awareness in the autumn of 2018, it is quite surprising that several Icelandic companies have continued renting employers from Menn í Vinnu. Menn í vinnu again became the subject of news coverage in February of 2019 when Romanian employees at the company spoke up about ill treatment, threats of being thrown out of their homes and more violations of their rights. Eight of them shared a room and probably paid almost half a million kronas per month for it. This rent was subtracted from their wages, according to their pay-checks, along with other subtractions which amount to over two hundred thousand from the monthly wages of each employee.

It’s plain that this practice of subtracting large sums from wages is a scam set up by the temporary work agencies to avoid having to pay the minimum wage as stipulated in collective agreements. While the predecessor of Menn í vinnu, Verkleigan, simply paid no wages, Menn í vinnu have learned their lesson after having been hounded by the lawyers of Efling and now pay the required wages on paper – the minimum wage according to the rates outlined on the paycheck – but systematically use subtractions to defraud their employees out of their pay. Paying employees in such a fashion goes against all norms and morality, as well as the laws for the buying of work from 1930, the labor movement having made it a singular priority at the time for workers to be paid in money, as opposed to withdrawals determined unilaterally by the employer.

Thus, it appears that the relationship forged between employer and employees in the case of Menn í vinnu has more in common with slavery than a free labor market. Compulsion and coercion seem to have been a daily practice at that company. The employees relied entirely on the company for their livelihood and resources, a company which lured them with false promises to come to live and work in Iceland. As soon as the employees were about to seek their legitimate rights the company exploited its advantage and supreme power to cow them into submission. Placing people in that position is not acceptable in the labor market. That is called forced labor.

Business with Menn í vinnu continued

Unfortunately, the case of the Romanian workers hired by user-businesses in the year 2019 shows that, a thorough exposé in October of 2018 notwithstanding, raised awareness and legislation are not enough to combat violations in the labor market. Some employers choose to overlook – or simply don’t care about – revelations of criminal activity and persist in doing business with notorious violators. One of those employers is Kristófer Júlíus Leifsson, CEO of the company Eldum rétt.

Efling has decided not to stand idly by while user-businesses maintain the demand for forced labor and other violations, which in the end undermine the security, rights and welfare of all who work in the Icelandic labor market. Therefore, Efling has approached the law firm Réttur to craft a claim against not only Menn í vinnu and its representatives, but also against user-businesses, in accordance with the abovementioned chain-accountability.

All admitted accountability – except for Eldum rétt

On April 17th, Réttur served four user-businesses, which utilized the services of Menn í vinnu, with a claim. It called for payment of unpaid wages, illegitimate subtractions and a moderate bill collector’s fee. Of the four user-businesses, three responded within the given deadline and cooperated fully. That is a positive development and hopefully it is indicative of the views of Icelandic companies regarding criminal activity in the labor market.

The only company to fail to respond to the claim within the given deadline was Eldum rétt. When a response finally arrived it was a rejection, written up by the company’s lawyer. It’s plain that Eldum rétt appears to have great confidence in Menn í vinnu and the CEO has stated on numerous occasions that he believes that the accommodations of the men in his employ have been quite satisfactory.

A settlement-offer rejected

Efling maintains that the employees of Menn í vinnu have been wronged and will not accept the evasion of responsibility by Eldum rétt as a user-business. Therefore, Efling stands by its claim, as it is an important test-case which will reveal how effective the protections afforded by the chain-accountability of user-businesses really are. On June 27th, Réttur filed an indictment against Eldum rétt, Menn í vinnu and the representatives of Menn í vinnu, where a claim is made for all parties to equally assume responsibility for the unpaid wages and illegitimate subtractions, as well as for damages in the amount of 1.500.000 kr. for forced labor and disrespectful treatment.

The CEO of Eldum rétt sought a meeting with Efling in the past week after the indictment had been filed. Efling believed the purpose of that meeting to be finding a solution to the matter without having to take it to court and submitted a settlement-offer which would have resulted it Efling withdrawing its indictment of Eldum rétt. Efling would have declared that the company had cleaned up its act while Eldum rétt would have paid the employees damages amounting to half of the original sum, as well as the unpaid wages, the illegitimate subtractions and a share of the legal costs. This offer was rejected by Eldum rétt, once again putting forth the same quibbles as the representatives of the temporary work agency.

Others blamed

Eldum rétt has subsequently issued statements and comments accusing Efling of “duress” and sent the email-correspondence between the author of this article and Kristófer, the CEO of Eldum rétt, to the media. It is implied that with proposals for settlements and a lowering of the damages Efling somehow wronged Eldum rétt. It is impossible to see what’s being meant or which purpose this treatment of email-correspondence is supposed to serve.

The fact is that, of the user-businesses which sought the services of Menn í vinnu after the revelations in the exposé on Kveikur, Eldum rétt is the only one to have flatly refused – not once but twice – to shoulder responsibility for its part in the forced labor and various violations against workers. The company uses legal acrobatics and has claimed its excessive wage subtractions, for instance for extortionate rent in industrial housing, to be acceptable. In addition, the CEO of Eldum rétt has tried to deflect responsibility onto the Directorate of labor (Vinnumálastofnun), without much success, as the director of Vinnumálastofnun has rejected those arguments.

Part of the problem or the solution

Eldum rétt has decided on a course of rejecting all settlement offers and negotiation efforts and evade responsibility entirely, despite having referred to its decision to do business with Menn í vinnu as “terrible” and “bad.” These statements do not seem to be made seriously and it is imperative for them above all else that Eldum rétt avoid shouldering any of the cost of compensating the employees for the disrespect, coercion and humiliation which they suffered.

In the end Eldum rétt knowingly sought the services of a known violator in the labor market – presumably to cut wage costs and further increase the profits of the company, which has amounted to hundreds of millions of kronas in the past few years. Efling will test the mettle of the chain-accountability legislation in court, but whatever the outcome, it is plain to see that Eldum rétt has decided to be part of the problem rather than the solution with regards to criminal activity in the Icelandic labor market. All wage-earners in Iceland will in the end suffer for that decision.

The author is the managing director of Efling

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