FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 17(1), PROTECTION OF EMPLOYEES (PART-TIME WORK) ACT, 2001 PARTIES : ESB - AND - CHRISTOPHER MC DONNELL (REPRESENTED BY UNITE THE UNION) DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Grier Worker Member: Ms Ni Mhurchu |
1. Appeal against Rights Commissioner’s Decision PT16590/03/MR.
BACKGROUND:
2. The issue before the Court arises from a claim by Christopher McDonnell,(the Claimant) who is employed by the Company at Ardnacrusha Station, Limerick that the ESB breached the provisions of the Protection of Employees (Part-Time Work) Act 2001 through its failure to grant him pro-rata access to the Company's Employee share Ownership Plan (ESOP).
The Claimant is employed as a seasonal full-time day worker on fixed-term contracts for a period of seven months each year. During the employment period the Claimant works a normal 39-hour week in line with non-seasonal full-time employees and also works a certain amount of overtime as is also the case with non-seasonal employees.
As part of the cost and competitiveness review dated 1st March 1996, qualifying employees in employment with the Company were granted an allocation of shares under the Company's ESOP Scheme.
An employee must satisfy the "Qualifying Period" criteria, agreed as a fundamental rule of the Scheme. The "Qualifying Period" is defined as"a period of twelve months Continuous Service ending on a share allocation date."In order to qualify under the scheme an employee must have 12 months unbroken service ending on a share allocation date or alternatively such service which is interrupted only by an "Allowed Absence."
The Claimant brought a claim to the Rights Commissioner under the Protection of Employees (Part-Time Work) Act, 2001. The Rights Commissioner issued his decision on the 21st June, 2007,as follows:-
"In accordance with the terms of Section 16(2) of the Protection of Employees (Part-Time Work) Act, 2001, I hereby declare that Christopher McDonnell's complaint was not well founded."
On the 2nd August, 2007 the Company and Christopher Mc Donnell appealed the Decision to the Labour Court, in accordance with Section 17(1) of the Protection of Employees (Part-Time Work) Act, 2001. A Labour Court hearing took place on the 13th December, 2007.
WORKER'S ARGUMENTS:
3. 1.The Union contends that it is simply untenable to argue that, under the relevant statutory provision that the Claimant is not a Part-Time employee.
2. The Claimant has given long service to the Company and should not be denied a pro-rata allocation of shares due to the fact the he is a Part-Time employee.
3. It is unfortunate that a quirk of the qualification criteria has been deemed to disqualify the Claimant from the allocation of shares he is entitled to in all natural justice and fairness.
COMPANY'S ARGUMENTS:
4. 1.The Company strongly contends that the current claim cannot proceed as the Claimant does not come within the terms of the definition of a"part-time employee"as set down in the 2001 Act.
2.The rules of the ESOP require that in order to be eligible to benefit from the scheme, an individual must be "an employeeor director in Continuous Service for the qualifying period."The rules also state that a "qualifying period" means a period of twelve months continuous service ending on a share allocation date.
3. The Claimant has been refused access to the scheme because of the fact that he does not satisfy the applicable eligibility criteria which were agreed by the group of Unions with the ESB including the ATGWU/UNITE, of which the Claimant is a member.
DETERMINATION:
The Complainant is a seasonal worker employed by ESB at Ardnacrusha Station, Limerick. He has been employed in that capacity for over 30 years and has been required to work approximately 7 months each year. The seasonal nature of the work coincides with the peak in work activity outside of the winter season. He normally works 39 hours per week plus overtime corresponding to the overtime worked by permanent staff. The Complainant contends that he was treated less favourably in respect of his conditions of employment than a comparable full-time employee of the Respondent when he was excluded from participation in the ESB Employee Share Ownership Plan (ESOP). ESB contends that he is not a part-time employee within the meaning of the Protection of Employees (Part-Time Work) Act, 2001 (the Act).
The Rights Commissioner held that he was a part-time worker within the meaning of the Act and further held that his exclusion from the ESOP scheme resulted solely from his failure to meet the eligibility criteria of the scheme and was not related to his status as a part-time employee, accordingly, he held that ESB did not contravene Section 9 of the Act.
The ESB appealed the decision of the Rights Commissioner’s finding that the Complainant was a part-time worker. The Union appealed the decision of the Rights Commissioner’s findings concerning the Complainant’s eligibility criteria for the ESOP scheme. The Union sought an award of compensation for the denial of shares to the Complainant.
For ease of reference, Mr. McDonnell will be referred to as “the Complainant” and ESB as “the Respondent”.
The first issue to be determined by the Court is whether the Complainant is a "part-time employee" within the meaning of Section 7 of the Act. If the Complainant was not a part-time employee as so defined he lackslocus standito maintain the present proceedings and the Court has no jurisdiction to adjudicate on his claim.Section 7(1) contains a number of definitions as follows:
- “normal hours of work” means, in relation to an employee, the average number of hours worked by the employee each day during a reference period;
- "part-time employee" means an employee whose hours of work are less than the normal hours of work of an employee who is a comparable employee in relation to him or her"
“Reference period” is defined as a period, which complies with the following conditions:
(a) the period is of not less than 7 days nor more than 12 months duration,
(b) the period is the same period by reference to which the normal hours of work of the other employee referred to in the definition of “part-time employee” in this section is determined, and
(c) the number of hours worked by the employee concerned in the period constitutes the normal number of hours worked by the employee in a period of that duration:The Respondent submitted that a reference period of 12 months could not be considered in his case, as the Complainant was only employed for approximately 7 months each year. It held that when each of the Complainant’s seasonal contracts came to an end he was dismissed thus breaking his continuity of service.
The Court is thus asked to consider the question of whether for the purposes of the Act, the Complainant’s contract continued for the months when he was not working or whether such periods broke his continuity of employment. Can these periods be classified as periods of “lay-off”, which is a well-established concept in employment law?
The Act quite simply states that any one who works less hours in a reference period than a comparable full time employee is a part-time employee. The complainant in a 12-month period worked less hours than a comparable full time employee and therefore is a part-time employee within the meaning of the Act. The Court is of the view that the contract of employment does not have to extend over the entire reference period for the employee to be considered a part-time employee under the Act. Therefore on a literal construction of Section 7 the Court is satisfied that the Complainant is a part-time employee within the meaning of the Act
In any event, the question of whether the periods between the expiry of one contract and the commencement of another were periods of lay-off and whether such periods break continuity of employment, is covered in the Protection of Employees (Fixed Term Workers) Act, 2003, which the Court is satisfied can be construed asin pari materiawith the 2001 Act, as they both form part of the same legislative scheme.
- Section 9 of the 2003 Act provides, in relevant part, as follows: -
- (5) The First Schedule to the Minimum Notice and Terms of Employment Acts 1973 to 2001 shall apply for the purpose of ascertaining the period of service of an employee and whether that service has been continuous.
The First Schedule to the Minimum Notice and Terms of Employment Acts 1973 to 2001 provides as follows: -
Continuity of Service
- 1. The service of an employee in his employment shall be deemed to be continuous unless that service is terminated by—
( a ) the dismissal of the employee by his employer or
( b ) the employee voluntarily leaving his employment.
- 2. A lock-out shall not amount to a dismissal of the employee by his employer.
3. A lay-off shall not amount to the termination by an employer of his employee's service.
4. A strike by an employee shall not amount to that employee's voluntarily leaving his employment.
5. An employee who gives notice of intention to claim redundancy payment in respect of lay-off or short-time shall be deemed to have voluntarily left his employment.
6. The continuous service of an employee in his employment shall not be broken by the dismissal of the employee by his employer followed by the immediate re-employment of the employee.
7. If a trade or business is transferred from one person to another (whether or not such transfer took place before or after the commencement of this Act) the continuous service of an employee in that trade or business at the time of the transfer shall be reckoned as continuous service with the transferee and the transfer shall not operate to break the continuity of the service of the employee.
- 1. The service of an employee in his employment shall be deemed to be continuous unless that service is terminated by—
Furthermore, section 11(6) of the 2001 Act, which defines continuity of service in the context of part time employees who work on a casual basis: -
- (5) for the purposes of subsection (4) (a), the service of an employee in his or her employment shall be deemed to be continuous unless that service is terminated by-
- ( a ) the dismissal of the employee by his employer or
( b ) the employee voluntarily leaving his employment.
- ( a ) the dismissal of the employee by his employer or
The Respondent told the Court that it was generally understood that at the commencement of each season the Complainant would be recalled for work. The Court notes that he was recalled each April for a period of thirty years without fail. The Court is of the view that given these circumstances the period each year during which the Complainant was not employed can only be described as a period of lay off and accordingly the Complainant was a part-time worker within the meaning of the Act.
Accordingly, the Respondent’s appeal on this point cannot succeed.
Is the benefit from the ESOP scheme a “condition of employment”
In its supplemental submission to the Court, the Respondent accepted that the benefits from the ESOP scheme constitute a consideration (in kind and in cash) that the employee receives indirectly from the ESB and fall within the definition of “remuneration” contained in the Act.
Eligibility for Participation in ESOP
Without prejudice to its argument on the issue that the Complainant was not a part time worker, the Respondent held that the Complainant failed to satisfy the agreed eligibility criteria governing participation in the ESOP scheme. The Respondent stated that the fact that the Complainant was not eligible could be justified on objective grounds, within the meaning of Section 9(2) of the Act. The ESOP scheme defines “employees” as:
- “Any person who is an employee of one or more Participating Companies including apprentices, job sharers, part-time, regular reduced hours staff, temporary and fixed term employees.”
1) an employee must satisfy the “Continuous Service” criteria agreed by the parties as a fundamental rule of the scheme. As per Appendix 3 “Continuous Service” is defined as “service with the Company or a Participating Company as an Employee or Director being either a regular staff member or a temporary Employee or director, which is unbroken or which has been interrupted for an Allowed Absence. Service is deemed broken by a Disallowed Absence provided that where an Employee or a Director remains an Employee or a Director, throughout such period of Disallowed Absence his period of Continuous Service before and after such Disallowed Absence will be aggregated for the purpose of determining his Continuous Service completed.
2) An employee must satisfy the “Qualifying Period” criteria, agreed as a fundamental rule of the scheme. As per Appendix 3 “Qualifying Period” is defined as “a period of twelve months Continuous Service ending on a share allocation date”.
In defending the ESOP scheme at issue, the Respondent has placed particular emphasis on the rules of the scheme which it maintained applied equally to all employees irrespective of employment status and which it held operated in a non-discriminatory manner. Therefore, in order to qualify an employee must have 12 months unbroken service ending on a share allocation date or alternatively, such service which is interrupted only by “Allowed Absences” – maternity leave, prolonged disability, special leave and sick leave. The Respondent submitted that it had legitimate objective grounds for limiting what amounts to an equitable stake in the Company to those workers what are properly regarded as part of the permanent workforce and who have clear and undivided duties of loyalty to the Company, therefore eligibility was limited to those with one years continuous service. It also told the Court that the scheme is now closed. The entire 5% shareholding comprised by the scheme was fully and irrevocably allocated on 28th May 2003; the entire benefit of the scheme has been exhausted.
The Union on behalf of the Complainant, submitted that it was through no fault of his own that he did not satisfy the eligibility criteria and held that this was the intention of parties when drafting the criteria.
The Court having found that the periods during which the complainant did not work formed part of his employment with the Respondent, in that they were periods during which the employee was laid off rather than dismissed, it follows that the employee did have the requisite service for eligibility for the Scheme and therefore should have been entitled to receive benefits comparable with his status as a permanent part-time employee.
Furthermore, the provisions of Section 14 of the Act provide for the voidance of certain provisions in a contract, which purport to limit the application of, or is inconsistent with the Act. It provides as follows: -
- "14. Save as expressly provided otherwise in this Act, a provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of the provision concerned of this Act) shall be void in so far as it purports to exclude or limit the application of, or is inconsistent with, any provision of this Act."
It will be seen that any provision in a contract is void not only if it purports to exclude or limit the application of any provision of the Act, but also if it is inconsistent therewith. It follows that if the factual result of a contractual term is to frustrate or defeat the achievement of the result envisaged by the Directive and the Act, it is to that extent void and of no effect, therefore the provisions of the Act must prevail.
In relation to the present case a key question for consideration is whether the eligibility criteria contained in the ESOP scheme is consistent with the result envisaged by the Act, namely that by implication, certain part time employees (in this case a seasonal worker) should not be treated less favourably than full-time employees.
Having concluded that the Complainant is a part time worker and his employment with ESB must be regarded as continuous within the meaning of the Act, the Court therefore concludes that the application of the eligibility criteria within the ESB ESOP scheme, which prohibits him from benefiting, is indissociable from his status as a part time worker. Therefore, its application to him is prohibited under the Act and he must be treated no less favourably than a comparable full-time employee with more than thirty years continuous service
Determination
The Court believes that the appropriate form of redress in this case is an award of compensation pursuant to section 16 (2) (c) of the Act in an amount which is just and equitable having regard to all the circumstances of the case.
The Court does not propose to fix the quantum of compensation to which the Complainant is entitled at this time. It will adjourn this aspect of the case so as to afford the parties an opportunity to negotiate on the matter. If agreement is not reached the Court will make a further order fixing the quantum of compensation on application being made to it in that behalf and on hearing such submissions as the parties wish to make.
The Court determines that the Union’s complaint is well founded and the decision of the Rights Commissioner in accordingly varied.
Signed on behalf of the Labour Court
Caroline Jenkinson
6th March, 2008______________________
MG.Deputy Chairman
NOTE
Enquiries concerning this Determination should be addressed to Madelon Geoghegan, Court Secretary.