INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 15(1), PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT, 2003
REPRESENTED BY MR ANTHONY KERR B.L.
- AND -
MS DEIRDRE WADE & MR FINBARR MONAGHAN
(REPRESENTED BY CPSU)
Chairman: Mr Duffy
Employer Member: Ms Doyle
Worker Member: Mr Shanahan
1. Appeal of Rights Commissioner's Decisions R-118240-FT-11/JT & R-118237-FT-11/JT.
2. The Employer appealed Rights Commissioner's decisions R-118240-FT-11/JT & R-118237-FT-11/JT to the Labour Court on 7th June, 2012. A Labour Court hearing took place on the 4th September, 2012. The following is the Court's Determination:
This is an appeal by An Post against the decision of a Rights Commissioner in a claim by Finbarr Monaghan and Deirdre Wade, represented by CPSU, under the Protection of Employees (Fixed-Term Work) Act 2003 (the Act).
In this Determination the parties are referred to as they were at first instance. Hence Mr Monaghan and Ms Wade are referred to as the Claimants and An Post is referred to as the Respondent.
The Claimants contend that they were treated less favourably than a comparable permanent employee in respect to a redundancy payment made to them on the termination of their employment with the Respondent. This, they contend, contravened their right to equal treatment in respect to employment conditions enshrined in s.6(1) of the Act. The Respondent denies the claim.
The claim was investigated by a Rights Commissioner who found for the Claimants. He directed that the Claimants be paid a redundancy lump sum calculated on the basis of eight weeks reckonable pay per year of service. It is against that decision that the Respondent appealed to this Court.
There is no material dispute as to the facts of the case which can be summarised as follows: -
Both Claimants were employed on a series of fixed-term contracts between 20thOctober 2008 and 30thSeptember 2011. The purpose of their employment was to provide temporary cover for permanent employees on short-term absence. Due to reorganisation of the Respondent’s business the services of the Claimants were no longer required and their employment was terminated. In each case the termination of employment arose from the expiry of their fixed-term contracts without those contracts being renewed. Each of the Claimants was paid a redundancy lump sum calculated in accordance with the Redundancy Payments Acts 1967 to 2007.
The Respondent has in place what is referred to as a number of ‘Voluntary Severance and Voluntary Early Retirement Schemes, (VS/VER scheme) the application of which are restricted to permanent staff. The particular scheme in issue in this case applies to permanent staff with more than one years’ service but less than five years’ service. These schemes are applied in situations in which a surplus of staff is identified. The terms of the scheme in issue provides for a payment of 8weeks’ pay per year of service subject to a minimum of 20 weeks’ pay and a maximum of 40 weeks’ pay.
In or about May 2011 the Claimants’ Trade Union, CPSU, were advised by the Respondent that the employment of fixed-term workers, including the Claimants, was not being renewed. The Union sought to have the terms of the scheme applicable to permanent staff applied to the Claimants. The Union based its claim on the provisions of s.6(1) of the Act. The Respondent rejected this claim and asserted that the treatment of the Claimants was consistent with the relevant legislation.
Position of the parties
The Claimants’ case is that they were excluded from the terms of the scheme in issue because of their status as fixed-term employees. This, they say, contravened s.6(1) of the Act. They nominated as comparators two permanent employees who left the employment of the Respondent in circumstances of redundancy in 2010/2011 and who received the benefit of the VS/VER scheme. They contend that redundancy payments are pay and thus conditions of employment within the meaning of Act. They further contend that there are no objective grounds justifying the difference in treatment of which they complain.
The Respondent contends that the VS/VER scheme was introduced to encourage permanent staff, who have security of tenure up to age 65, to voluntarily relinquish their employment and that the terms of the scheme are intended to reflect the remaining potential service that they have with the Respondent. It was submitted that the scheme is restricted to permanent staff because they have security of tenure and not because of their employment statusper se. The Respondent contends that the difference in treatment, as between the Claimants and their comparator permanent employees, is objectively justified by reason of the purpose which the VS/VER scheme is intended to pursue. In advancing that argument the Respondent pointed out that since the Claimants did not have security of tenure and as their fixed-term employment would come to an end by effluxion of time there is no need to incentivise them to leave the employment voluntarily. The Respondent thus draws a distinction between situations in which voluntary redundancies are sought and situations of compulsory redundancy consisting merely of the non-renewal of fixed-term contracts, as arose in the instant case. It contends that in the former case there is a need to encouraged staff to voluntarily sever their employment. In the latter case no such encouragement is needed.
The entitlement of fixed-term workers to equal treatment with comparable permanent employees in terms of their conditions of employment is derived from s.6(1) of the Act. This section provides: -
- 6.—(1) Subject to subsections (2) and (5), a fixed-term employee shall not, in respect of his or her conditions of employment, be treated in a less favourable manner than a comparable permanent employee.
(2) If treating a fixed-term employee, in respect of a particular condition of employment, in a less favourable manner than a comparable permanent employee can be justified on objective grounds then that employee may, notwithstanding subsection (1), be so treated.
(3) A period of service qualification relating to a particular condition of employment shall be the same for a fixed-term employee as for a comparable permanent employee except where a different length of service qualification is justified on objective grounds.
(4) For the avoidance of doubt, the reference in this section to a comparable permanent employee is a reference to such an employee either of the opposite sex to the fixed-term employee concerned or of the same sex as him or her.
(5) Subsection (1) shall, in so far, but only in so far, as it relates to any pension scheme or arrangement, not apply to a fixed-term employee whose normal hours of work constitute less than 20 per cent of the normal hours of work of a comparable permanent employee.
(6) The extent to which any condition of employment referred to in subsection (7) is provided to a fixed-term employee for the purpose of complying with subsection (1) shall be related to the proportion which the normal hours of work of that employee bears to the normal hours of work of the comparable permanent employee concerned.
(7) The condition of employment mentioned in subsection (6) is a condition of employment the amount of benefit of which (in case the condition is of a monetary nature) or the scope of the benefit of which (in any other case) is dependent on the number of hours worked by an employee.
(8) For the avoidance of doubt, neither this section nor any other provision of this Act affects the operation of Part III of theOrganisation of Working Time Act 1997.
It is to be noted that the principle of equal treatment provided for by s.6(1) of the Act is subject, in accordance with subsection (2) of that section, to the absence of objective grounds for any less favourable treatment. Section 7 of the Act defines what is meant by objective grounds as follows: -
- 7.—(1) A ground shall not be regarded as an objective ground for the purposes of any provision of this Part unless it is based on considerations other than the status of the employee concerned as a fixed-term employee and the less favourable treatment which it involves for that employee (which treatment may include the renewal of a fixed-term employee's contract for a further fixed term) is for the purpose of achieving a legitimate objective of the employer and such treatment is appropriate and necessary for that purpose.
(2) Where, as regards any term of his or her contract, a fixed-term employee is treated by his or her employer in a less favourable manner than a comparable permanent employee, the treatment in question shall (for the purposes ofsection 6(2)) be regarded as justified on objective grounds, if the terms of the fixed-term employee's contract of employment, taken as a whole, are at least as favourable as the terms of the comparable permanent employee's contract of employment.
The question of whether redundancy payments, whether statutory orex gratiain nature, constitutes remuneration within the meaning of s.2 of the Act has been judicially considered in a number of cases.In Case C 262/88 Barber v Guardian Royal Exchange Assurance ECR 1-1889 the CJEU had to consider this question in the contest of the Equal Pay Directive. It held, at paragraph 13 of the judgment: -
- 13 As regards, in particular, the compensation granted to a worker in connection with his redundancy, it must be stated that such compensation constitutes a form of pay to which the worker is entitled in respect of his employment, which is paid to him upon termination of the employment relationship, which makes it possible to facilitate his adjustment to the new circumstances resulting from the loss of his employment and which provides him with a source of income during the period in which he is seeking new employment .
InGarland v BREL ECR 359, the Court of Justice considered if anex-gratiatravel facility offered as a concession after retirement constituted pay. In answering that question in the affirmative the Court formulated the now familiar definition of the term “pay”, which is largely repeated in the definition of “remuneration” contained at Section 2 of the Act of 2003. The Court said:-
- It is important to note in this regard that in paragraph 6 of its judgment of 25 may 1971 in case 80/70 Defrenne ( 1971 ) ECR 445 , at p . 451 , the Court stated that the concept of pay contained in the second paragraph of Article 119 comprises any other consideration , whether in cash or in kind , whether immediate or future , provided that the worker receives it , albeit indirectly , in respect of his employment from his employer .
Later, in concluding that the concessionary orex-gratianature of the payment was irrelevant, the Court said the following: -
- It follows that where an employer ( although not bound to do so by contract ) provides special travel facilities for former male employees to enjoy after their retirement this constitutes discrimination within the meaning of Article 119 against former female employees who do not receive the same facilities .
It is thus clear that what is in issue in the instant case constitutes remuneration for the purposes of the Act.
Conclusions of the Court
The Claimants’ fixed-term employment came to an end in circumstances in which their fixed-term contracts expired without being renewed. That came about in circumstances in which the Respondent was reorganising its business and the need for their services had ceased. The combined effect of s.7(2)(b) and s.9(1)(b) of the Redundancy Payments Act 1967 makes it clear that the termination of employment in these circumstances constitutes a redundancy. The Claimants were paid statutory redundancy lump sums in respect of their redundancy. Their comparators were paid lump sums calculated in accordance with VS 1 scheme equating to eight weeks pay per year of service. Thus,prima facie, the Claimants were treated less favourably that their permanent comparators in respect to the redundancy payments which they received.
In defence of its position the Respondent advanced two net arguments. Firstly it submitted that the Claimants while treated differently to the comparators but were not treated less favourably. In advancing that argument the Respondent relied on the decision of the High Court inSunday Newspapers v Kinsella and Bradley.That case involved an appeal on a point of law from a determination of this Court under the Act of 2003. The defendants in that case were fixed-term employees who were made redundant when the premised in which they were employed closed. A redundancy package was available to permanent employees which included a term providing a minimum entitlement of one years’ pay regardless of service. The scheme did, however, contain a term to the effect that an employee could not receive more by way of redundancy compensation than their potential earnings up to their normal retirement age. The defendants were paid an amount equal to the wages that they would have earned for the unexpired portion of their contracts. This was significantly less than one years’ pay. In reliance on s.6(1) of the Act they claimed the same by way of redundancy pay as was paid to comparable permanent employees. This Court found for them on that point and the Plaintiff appealed to the High Court.
Smyth J held that this Court has erred on that point. The Judge found that since the redundancy package applicable to permanent employees contained a limitation based on potential earnings to the expiry of their tenure of employment at age 65, the defendants were not treated less favourably in being paid up to the end of their tenure of employment.
The facts of the instant case are entirely different to those considered by Smyth J inSunday Newspapers v Kinsella and Bradley.In that case the High Court found that both the Claimants and the comparators were subject to the same condition, namely, that neither could obtain more by way of redundancy pay than they would earn if they remained in employment up to the natural ending of their employment. In this case the Claimants were paid statutory redundancy only. None of the various options under the VS/VER scheme provided that a permanent employee would receive statutory redundancy only. Consequently the Court is satisfied that the decision in that case does not avail the Respondent.
The second point taken by the Respondent is that the purpose of the VS/VER scheme is to incentivise permanent employees in leaving the employment voluntarily. It was submitted that in the case of the Claimants no such incentive was required as their employment came to an end by effluxion of time.
The general scheme of the Act is to afford a fixed-term employee equality of working conditions, including pay, with a comparable permanent employee. A permanent employee is comparable in relation to a fixed-term employee if they are both engaged in like work as defined by s.5(1) of the Act. There is no issue in this case as to the fact that the Claimants and their nominated comparators are comparable within that statutory meaning. Where a fixed-term employee and a comparable permanent employee are remunerated differently the only defence available to an employer is to show that there are objective grounds justifying the impugned differences. Except in that context the factual criterion for the difference in treatment is irrelevant. In that regard it is noteworthy that the framers of the Act have chosen not to provide a saver similar to the‘grounds other than a protected ground’defence available under employment equality law.
The employment of the Claimants came to an end in circumstances of redundancy. The employment of the comparators was likewise terminated on grounds of redundancy. Because the comparators were permanent employees the Respondent considered it necessary to provide a financial incentive for them to leave. Because the Claimants were fixed-term employees the Respondent considered it unnecessary to pay anything beyond the statutory terms. That, in essence, is the justification relied upon for applying different redundancy terms as between them.
Section 7(1) of the Act provides, in effect, that a ground shall not be regarded as an objective ground for the purposes of s.6(1) of the Act unless it is based on considerations other than the status of the employee concerned as a fixed-term employee. The operative consideration relied upon by the Respondent to justify the different treatment in issue in this case is indissociable from the Claimants’ status as fixed-term employees. Consequently it cannot be relied upon as an objective ground for the purpose of s.9(4) of the Act.
In these circumstances the Claimant are entitled to succeed in their claim.
For the reasons set out herein the Court is satisfied that the Respondent’s appeal must be disallowed and the decision of the Rights Commissioner affirmed.
Signed on behalf of the Labour Court
21st September 2012______________________
Enquiries concerning this Determination should be addressed to Sharon Cahill, Court Secretary.