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GOVERNMENT
RESPONSE TO THE FINAL CONSULTATION ON THE DRAFT FIXED TERM EMPLOYEES’
(PREVENTION OF LESS FAVOURABLE TREATMENT) REGULATIONS 2002
Introduction
This
document outlines the government’s response to the issues raised in the final
consultation on the draft Fixed Term Employees (prevention of less favourable
treatment) Regulations 2002 that took place from 22 January – 15 April 2002.
The
final consultation sought technical comments on the draft regulations and gave
interested parties a further opportunity to comment on the draft Fixed Term
Regulations. It was sent to those who responded to last year’s fixed term
public consultation, individuals on departmental consultation lists and it was
also placed on the DTI website.
There
were 138 responses to the consultation. This document summarises and responds to
comments made on the detailed drafting of the draft Fixed Term Regulations,
regulation by regulation, unless there were no comments on a particular
regulation or the points raised have been addressed before in the “Government
Response to the 2001 Public Consultation on the EC Fixed Term Work Directive”.
(The response gives a full explanation of the policy decisions taken on the
content of the draft Fixed Term Regulations following the 2001 consultation).
Main
issues raised and the Government’s response
Regulation
1 – Citation, commencement and interpretation
Several
employer groups argued that as the government only decided to cover pay and
pensions last November the Fixed Term Regulations should not come into force on
the Directive’s transposition deadline of 10 July 2002 because employers need
more time to meet the requirements of the regulations. Employers said they
should have at least three months to study the regulations before they come into
force, in line with government best practice guidelines on laying regulations.
An alternative suggestion was that regulations should come into force on 10 July
2002, yet fixed term employees should not have the right to access pensions on
the same basis as comparable permanent employees until the start of 2003
(generally employers’ main concerns were regarding fixed term employees’
access to pension schemes). Some responses from individuals, trade unions and
worker representatives, however, stated that the regulations are long overdue.
The Government now intends to
lay the regulations once the Employment Bill has received Royal Assent and aims
to bring them into force on 1 October 2002. This
short delay will give employers, employees and unions ample time to prepare for
the regulations.
Some
respondents suggested that applying the regulations to employees could conflict
with the Part-time Workers’ (Prevention of less favourable treatment)
Regulations 2000 as they allow fixed term (non employee) part timers to
compare conditions with permanent (non employee) full timers where as the
Fixed Term Regulations only allow fixed term employees to compare
conditions with permanent employees. The Government does not anticipate a
conflict between the Fixed Term and Part-time Regulations as a result of the
different definitions used, since the purposes of these two sets of regulations
are different. The Part-time Regulations will only allow fixed term part time
non-employees to compare their terms and conditions with full time non-employees
(who are permanent or fixed term).
It
was pointed out that regulation 1(2) does not include a definition of
“associated employers” although under regulation 8 placement with associated
employers is included in determining the length of continuous employment.
Several respondents called for a definition of “associated employers” to be
included in regulation 1(2) and for clarification on whether fixed term
employees can seek a comparator in an associated employer’s establishment for
the purposes of regulation 3. Fixed term employees’ service at associated
employers is covered when considering continuity of service for the purpose of
regulation 8, however, fixed term employees cannot compare their conditions with
that of a comparable permanent employee at an associated employer’s
establishment. This is consistent with
the Part-time Regulations. A definition
of “associated employer” is not required in regulation 1(2) because the term
is not used in the regulation; the position is that it is defined in Chapter XIV
of the Employment Rights Act 1996, the provisions of which are applied in
regulation 8 to determine whether a fixed term employee has been employed on
successive fixed term contracts.
While most who responded
supported the use of the “Pro Rata Principle” some thought it might be
possible to improve the drafting of the definition of “Pro Rata Principle”.
The definition of pro-rata
principle has been amended slightly, to increase clarity.
A definition of
“renewal” will be inserted into regulation 1(2).
Some
respondents queried the drafting of the definition of “fixed term contract”
in regulation 1 (2). The regulations should apply to any contract that is
clearly for a fixed term, even if this is not agreed at the outset since the
fixed term may be inserted as a variation of the contract. The drafting of the
definition will be amended to reflect this.
Regulation
2 – Comparable employees
Regulation
2(a)(ii) stated that a fixed term employee’s comparator must be engaged in the
same or similar work, having due regard where relevant to whether he has a
similar level of qualification, skills and experience. While no respondents
questioned the use of the terms qualification and skills some believed that the
EC Fixed Term Work Directive does not allow for experience to be
considered. The term experience has been removed from regulation 2(a)(ii) since
the Fixed Term Work Directive does not provide for experience to be taken into
account.
Regulation
3 – Less favourable treatment of fixed term employees (rights and remedies)
Although
the overwhelming majority of respondents supported fixed term employees’ right
not to be treated less favourably than comparable permanent employees in terms
of opportunities to secure permanent employment, a few respondents questioned
why such a right was required. Most good employers already have open recruitment
and selection procedures, however some may give preferential treatment to
permanent employees by offering them information about internal vacancies before
providing this information to fixed term staff. This right is intended to
implement articles 4 and 6 of the framework agreement implemented by the
Directive, and employers may accordingly continue to give preferential treatment
to permanent staff where this is objectively justified.
Regulation
4 – Objective Justification
Many
respondents sought further clarification on what might be objective
justification for treating a fixed term employee differently to a comparable
permanent employee or renewing fixed term contracts beyond the statutory limit
on the use of successive fixed term contracts. Some respondents suggested that
it should be objectively justified to exclude fixed term employees on very short
contracts of three months or on contracts for less than the vesting period of an
occupational pension scheme from occupational pension schemes. It is not
possible to create an exhaustive list of possible objective justifications as
objective justification depends on all the circumstances of a particular case.
The Government is confident, however, that “objective justification” has the
same meaning here as it does elsewhere in Community law; different treatment of
fixed term employees would need to be achieve a legitimate business aim that it
was necessary to achieve and be an appropriate way to achieve it.
Several
trade unions and worker representatives who responded thought that the
regulations should require fixed term employees’ conditions to be compared
term by term rather than allowing for overall employment packages or term by
term comparison as is currently provided for in regulation 4. One respondent
recommended the package approach only be allowed where it has been agreed by
collective or workforce agreements. As outlined in the government response to
the 2001 public consultation on fixed term work the regulations will allow
employers to use either a package or term-by-term approach to equal treatment in
order to offer flexibility to both employers and employees.
Regulation
6 – Unfair dismissal and the right not to be subjected to detriment
It
was suggested that regulation 6(3) should have a further point added that made
specific provision so that fixed term employees have the right to take a case to
tribunal if their employer has dismissed them specifically to avoid their
contract being regarded as permanent under regulation 8(9)(2). The Government
does not believe such a measure will be necessary as the regulations give fixed
term employees the right not to be unfairly dismissed or suffer other detriment
for enforcing or seeking to enforce their rights under the regulations.
Some
worker representative groups called for a point to be added to regulation 6(3)
that protects employees from action they take or do not take as elected
representatives of the workforce group in line with other pieces of employment
legislation in which workforce agreements can be made such as the Parental Leave
and Working Time Regulations. Regulation 6(3) will be amended to give employees
similar protection.
Regulation
7 – Complaints to employment tribunals etc
Trade
unions and worker representatives called for regulation 7(7)(c) to be amended so
that an employment tribunal may make orders and not just recommendations on how
employers could obviate or reduce the adverse effect of a complaint. It was also
suggested that regulation 7 be amended so that employment tribunals have the
discretion to reduce the amount of compensation awarded to a fixed term employee
by an appropriate amount where it would be just and equitable to do so. The Government
believes that regulation 7 gives tribunals all the necessary discretion to
consider what would be just and equitable amounts of compensation to award fixed
term employees according to the circumstances of their cases.
Regulation
8 – Successive fixed term contracts
Some
respondents thought that the current wording of regulation 8(4) only gives an
explanation of the purpose of using a collective or workforce agreement rather
than making it a requirement that agreements actually prevent the abuse of
successive fixed term contracts. Some trade unions argued that only collective
agreements should be used to alter the statutory limit as non-union members may
not have the training, skills, and support needed for such a role, plus there
would be a risk that such employees would not be sufficiently independent from
their employer. Calls were made for guidance on which type of agreement would
have precedent and when fixed term employees could use the statutory minimum
instead of the conditions set out in an agreement. The Government believes that
regulation 8(4) is clear that any collective or workforce agreement must prevent
the abuse of successive fixed term contracts. It is important that employees who
are not in a collective agreement have the chance to enter into their own
agreement if they wish to alter the fall back mechanism for preventing abusive
use of successive fixed term contracts. A fixed term employee would not be able
to choose between a workforce or collective agreement as the first is only
possible for employees who are not covered by collective agreements.
Some
employers thought it would be difficult to convert a fixed term employee’s
contract, whose contractual terms taken as a package are more favourable than
the terms of a comparable permanent employee’s, into a permanent contract. It
was suggested that in such circumstances fixed term and permanent employees’
contracts be harmonised. There is nothing in the regulations that requires fixed
term and permanent employees’ contracts to be harmonised or requires a fixed
term employee to accept a lowering of his remuneration package as a result of
permanent status. It is for employers and employees to agree a suitable package.
Regulation
9 – Right to receive a written statement of variation
Clarification
was sought on why regulation 9(4) of the fixed term regulations, which draws
substantially on regulation 6(3) of the part-time regulations does not contain
the words “including an inference that the employer has infringed the rights
in question”. The words “the right in question” are omitted because
regulation 9(4) is not about specific rights, but whether the contract is to be
regarded as permanent or not.
It
was suggested that if an employer failed to produce the written statement within
the 21 days required then the fixed term employee should be awarded a “free
standing” two weeks pay. The regulations provide that if employers
deliberately, and without reasonable excuse, omit to provide a written statement
or the written statement is evasive or equivocal a tribunal may draw any
inference that it considers is just and equitable to do so. The Government
believes this should ensure that employers do provide written statements.
Some
employer responses recommended that a provision be inserted into regulations so
that an employee who proceeds with a claim that obviously has no merit, after
receiving a written statement by an employer, runs the risk of having a costs
order made against him by a tribunal. Employer groups suggested a template of a
written statement be available and others that the written statement sections to
be removed and replaced with the grievance procedure in Schedule 2 to the
Employment Bill. The Government believes that employers and employees should use
internal grievance procedures to settle disputes. Fixed term employees have the
right to receive a written statement unlike employees in other grievance
situations because their grievance is based on the belief that they are being
discriminated against. However, the written statement should be seen as an
opportunity for employers to clarify why a fixed term employee’s treatment is
not discriminatory. Regulation 9(6) of the regulations makes it a requirement
for fixed term employees to ask for the written statement before proceeding to
tribunal, otherwise cases will not be considered. This will help ensure that
fixed term employees ask employers to explain their treatment and should reduce
misconceived claims of less favourable treatment.
It
was pointed out that while regulation 9(2) uses the term “renewal” without
defining it, the word is defined in regulation 8. A definition will be inserted
in regulation 1(2) replacing the one in regulation 8.
Regulation
11 – Amendments to primary legislation (contained in schedule 2)
The
TUC called for the regulations to amend sections 188(duty of employer to consult
representatives on the handling of collective redundancies) and 282(1) of the
Trade Union and Labour Relations (Consolidation) Act 1992 to end the current
exclusion of employees on fixed term contracts of three months or less from the
requirements. The Government takes the view that the exclusion is objectively
justified. Fixed term employees on contracts of three months or less do not
count towards redundancy consultation thresholds because their contracts would
generally have terminated before the end of the periods mentioned in the
provisions.
Statutory Sick Pay
The Institute of Payroll
and Pension Managers recommended that employers be given adequate time to amend
their payroll systems to take account of the changes to Statutory Sick Pay (SSP).
The changes to SSP will come into force on 1 October 2002 and guidance will be
issued well in advance of this date.
Regulation 19 –
Government training schemes etc
Several
trade union and worker representatives suggested that the wording of Regulation
19 needed improving so that only those on genuinely publicly funded training and
labour market reintegration schemes were covered. It was suggested that many
employees working on European Social Fund (ESF) projects that were not meant to
be excluded from the regulations would be under the current wording. Some
respondents recommended that gap year students also be excluded and that the
provision for excluding students undertaking work experience as part of a higher
education for “one year” be removed as some student placements are longer.
Gap year students will not be excluded from the regulations, unless the aim of
their job is to provide training as part of their university course since the
directive would not allow this. Regulation 19(2) covers employees on ESF funded
projects that aim to provide training or labour market reintegration.
Workforce
Agreements – Schedule 1
There
were a few points raised regarding Schedule 1 and Workforce Agreements. It was
suggested that employers should be required to exercise their right to determine
the number of representatives reasonably, that paragraph 3(f)(i) be
amended as it will not always be reasonably practical for employees to vote on a
workforce agreement in secret and that paragraph 3 state that no one should be
listed as a candidate in an election unless they freely consent to it. The Government
believes that Schedule 1 should not differ from that used in the Working Time
Regulations 1998 in order to ensure consistency and ease of use. The reference
to “workers” in paragraph two on workforce agreements in the Fixed Term
Regulations will be replaced with “employees.”
Other
matters raised
Some
respondents raised issues (listed below) which were also raised in response to
the 2001 consultation on the Fixed Term Work Directive. Please see the Government
Response to 2001 Public Consultation on the EC Fixed Term Work Directive for
an explanation of the policy decisions taken regarding each of the points.
-
The
regulations covering fixed term employees rather than the broader category
of workers.
-
The
comparator used in Regulation 2.
-
he
regulations covering pay and pensions
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The
regulations not covering apprentices and temporary agency workers.
-
Regulation
8 – preventing the abuse of successive fixed term contracts.
-
Repeal
of the redundancy waiver
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The
length of time in which an employer must produce a written statement of
reasons for different treatment.
Guidance
The
majority of respondents called for guidance to be issued with the Fixed Term
Regulations. Guidance will be issued with the Fixed Term Regulations.
Part
Time Work Regulations
In a parallel with its
consultation on the Fixed Term Work Regulations, the Government also consulted
on two proposed amendments to the existing Part-time Workers (Prevention of Less
Favourable Treatment) Regulations 2000.
Comparators
(Regulation 2)
Under
the current regulations, part-timers must compare themselves to full-timers
employed under the same type of contract.
This means, for example, that a part-timer on a fixed term contract must
compare herself with a full-timer on a fixed term contract, and cannot compare
herself with a full-timer on a permanent contract.
The
Government believes that this is likely to amount to less favourable treatment
of part-timers on the grounds that they are fixed-term, and must therefore now
be changed. The legal obligation in this respect was queried by one respondent,
but the Government has considered again in the light of responses received and
remains of the view that the amendment is legally necessary.
The
Government also believes that (although the legal arguments are not quite the
same) it would be sensible to allow part-timers on permanent contracts to
compare themselves with full-timers on fixed term contracts. In determining what
comparisons are allowed under the new fixed term regulations it will be
irrelevant whether either the individual fixed-termer, or the permanent
colleague to whom she is comparing herself, is working on a part-time or
full-time basis.
It therefore seems logical in future under the part time regulations to
allow an individual part-timer to compare herself to a full-time colleague
irrespective of whether either party’s contract is permanent or fixed-term.
Comments
on these proposal were largely supportive. Several employee representative
groups suggested that the changes did not go far enough, and the opportunity
should be taken to extend permitted comparators under the regulations to include
hypothetical comparators. This is, however, an option which was explicitly
rejected by the Government at the time of the introduction of the original
regulations and the Government sees no reason to change its view now. It was
also suggested that comparators should allow for non-employees to compare
themselves with employees, but the Government does not propose to make this
further change, which would not be motivated by the introduction of the fixed
term regulations, and might indeed be confusing in that respect (as discussed
earlier in this document)
.
Some
employer groups were concerned that this amendment should not undermine the
principle behind certain other existing legislation which excludes various
categories of people from coverage (e.g. certain exclusions from the full
provisions of the National Minimum Wage). The Government does not believe that
it does so.
Access
to Occupational Pension Scheme (Regulation 8)
The
two-year time limit in this regulation was originally inserted to ensure
consistency with existing equal pay and pensions legislation, which provides
that employer contributions to a pension scheme may not be backdated by more
than two years. In the light of a House of Lords judgment on 6 February 2001 the
two year backdating limit was held to contravene European law.
Responses
from both employer and employee groups were supportive of the Government’s
proposal to remove the two-year limit from the part time regulations. One
respondent pointed out – correctly – that the House of Lords judgment had
not in itself created a direct obligation on the Government to amend the part
time work regulations. However, the majority of respondents agreed with the
Government’s view that, given the necessary changes to other legislation
implied by that judgment, it is no longer sensible to maintain the time-limit in
respect of this one element of the various remedies under the part time
regulations.
Some
respondents were however concerned whether the effect of the amendment would be
to allow remedies in respect of pensions to be backdated indefinitely. This is
not the case. Backdating cannot in any event go back beyond the date at which
the original regulations came into force – 1 July 2000 – before which the
discrimination to which the regulations provide a remedy would not have been
unlawful.
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