Employment Act 2002

The Employment Bill received Royal Assent on 8 July and became the Employment Act 2002. In addition to the new maternity, paternity and adoption rights, there are a number of other significant employment rights that will come into force over the coming year. A short description of these provisions, their current status and their likely implementation dates are given below.

Fixed-term working

The European Fixed Term Work Directive will be brought into force in the UK from 1 October 2002 by means of The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002. Although the Directive does not impose any obligations on member states to take pay and pensions into consideration when deciding whether fixed term workers are treated less favourably than permanent workers, the UK Government has introduced that requirement in the Employment Act. Also effective from 1 October is a change to the Part Time Workers Regulations to prevent fixed-term working from being a factor that prevents a part-time worker making a comparison with a full-time worker.

The DTI has published guidance on fixed term work, available at www.dti.gov.uk/er/fixed/fixed-pl512.htm .
Payroll Briefing 5 - 28 August 2002

Fixed Term Work

The Fixed Term Work Directive was due to be brought into UK law on 10 July 2002. Implementation depends on measures that are included in the Employment Bill, currently completing its final stages in the House of Lords. As the Employment Bill is not expected to receive Royal Assent in time, the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 will not now come into force until 1 October 2002. Full details are available at www.dti.gov.uk/er/fixed/index.htm .
Payroll Briefing 2 - 20 June 2002

Fixed term work (2)

Following a consultation period in early 2001 and the publication of some draft Regulations, the Government decided to delay the UK's implementation of the Fixed Term Work Directive until 10 July 2002. New draft Regulations have now been issued and there will be a final period of consultation up to 15 April 2002.

The key elements of the draft Regulations are as follows:

1. Fixed term employees will have the right not to be less favourably treated than comparable permanent employees, unless the less favourable treatment is justified on objective grounds. "Less favourable treatment" relates to contractual terms, including pay and pensions, and to other detrimental treatment by the employer.
2. The treatment of any fixed term employee will be compared to that of any permanent employee who does the same or similar work for the same employer in the same establishment, or in a different establishment if no there is no permanent comparator in the same establishment.
3. Whether or not the treatment of fixed term employees may be justified on objective grounds will depend on all the circumstances of the particular case, but specific provision is made that will allow differences in particular contractual terms to be justified where the overall package of terms and conditions is not less favourable than that of the comparable permanent employee.
4. "Detrimental treatment" will particularly include treatment in relation to any qualifying periods for benefits, opportunities to receive training, and opportunities to secure permanent employment with the employer. In order to be able to exercise the last of these rights, fixed term employees will have the right to be informed by the employer of current vacancies.
5. Fixed term workers will be able to make a complaint to an employment tribunal if they believe they have been denied any of these rights. In advance, they may ask the employer for a written statement giving the reason for the less favourable treatment they believe has occurred and the employer must reply within 21 days. The statement may be used in any legal proceedings.
6. The use of successive fixed term contracts will be limited to a maximum of four years, unless their use for a longer period is objectively justified. However, no limit is placed on the length of a first fixed term contract.
7. The four-year maximum may be replaced by provisions under collective or workplace agreements which, in order to prevent abuse, specify a maximum duration of successive fixed term contracts, a maximum number of contracts, and/or objective reasons justifying renewals of fixed term contracts. Agreements may provide for contracts to be renewed in excess of the limit where it is objectively justified to do so.
8. Contracts are only viewed as "successive" if the employee has been employed continuously throughout the series of contracts.
9. Fixed term employees will have the right to receive from their employers a written statement, either confirming that their contracts are to be regarded as permanent, or giving reasons why it continues to have effect as a fixed term contract.
10. If a fixed term contract is renewed in breach of the limitation, the term of the contract limiting it to a fixed term will become invalid and it will be regarded as a permanent one.
11. The Regulations will apply equally to Crown servants (except members of the armed forces), Parliamentary staff and police officers. They will not apply to apprentices, some people employed on training programmes supported by the government or European Social Fund; and agency workers (employees employed by an employment business to work for a third party employer).
12. The Regulations will come into force on 10 July 2002 but they will not apply to service on successive fixed term contracts before that day.

In addition to these new rules, some of the existing statutory provisions relating to fixed term workers will be amended or removed.

1. Fixed term employees on contracts of two or more years will no longer be able to waive their statutory right to receive redundancy payments if they are made redundant at the end of their contracts. This will apply to contracts signed, extended or renewed after the regulations have come into force.
2. Fixed term employees will be given the right to receive guarantee payments, medical suspension payments and statutory sick pay on the same basis as permanent employees.
3. Although "fixed event" or "task" contracts, i.e. those that terminate automatically on the completion of a particular task or on the occurrence or non-occurrence of a particular event, fall within the new definition of fixed term work, the employment legislation will also be changed so that the termination of such contracts will be treated as dismissal. The employees concerned will, therefore, enjoy the right not to be unfairly dismissed, the right to a written statement of reasons for dismissal, and the right to statutory redundancy payments. They will also have the right to the same minimum notice periods as permanent and fixed term employees.

Employers or individuals wishing to comment on the draft Regulations should write to Verona Bailey, Department of Trade and Industry, UG82, Employment Relations Directorate, 1 Victoria Street, London SW1H 0ET. Her email address is verona.bailey@dti.gsi.gov.uk .
Payroll Briefing 217 - 4 February 2002

Employment Bill update

The Government has published a new Employment Bill, covering a broad range of provisions that are due for implementation over the next 18 months, including the new maternity and related entitlements, and fixed term working. The Bill clarifies many aspects but still allows for further Regulations to be made to fill in the fine detail. Descriptions in the following notes about the contents of future Regulations are based on the explanatory notes that accompany the Bill. As this is a Bill, any part may be amended before it comes into law. Equally, the provisions of any future Regulations may differ from those described below.

The Government originally intended to implement the European Directive on fixed term work by 10 July 2001. However, it announced that advantage would be taken of a provision to delay the implementation for up to a year where "special difficulties" were identified. The Government is of the view that the Directive does not provide protection for fixed term workers with regard to their pay and pension entitlements. The public consultation earlier this year identified that there are significant pay disparities between permanent and fixed term workers. Therefore, new primary legislation is set out in the Employment Bill that will prevent pay and pensions discrimination against fixed term employees.

No date has yet been fixed for the introduction of this entitlement, but it must be brought into force before 10 July 2002.
Payroll Briefing 213 - 29 November 2001

Fixed term work (1)

The provisions of the European Fixed Term Work Directive were due to be implemented by 10 July 2001. The UK Government has decided, however, to delay implementation until a number of problems identified during the consultation period have been resolved. The Directive allows up to one extra year for member states that have 'special difficulties'. No commitment to a timetable has yet been given, other than an assurance that businesses and employees will be given "ample time" to prepare for the changes.

A set of draft Regulations have been published, but the DTI has been careful to state that the text "should not be taken to indicate a Government preference on issues being consulted on". Nevertheless, a few key points are clearly made in the draft:

1. A "fixed-term" contract is defined as 'an employment contract that is made for a specific term which is fixed in advance, or which terminates automatically on the completion of a particular task or upon the occurrence or non-occurrence of any other specified event'.

2. In defining the right of a fixed-term employee not to be treated less favourably than a comparable permanent employee as regards "the terms of his contract", those terms do not include the amount of pay due under the contract, or membership of, or rights under, an occupational pension scheme.

3. If an employee has been continuously employed under one or a series of fixed-term contracts for a period of four years or more, any renewal will be under a permanent contract, unless there are objective grounds for doing otherwise.

Excluded from the scope of the Regulations will be apprentices, employees working under Government training or work experience schemes, and agency workers. - Payroll Briefing 206 - 19 July 2001

Fixed term workers

The government is obliged to implement the provisions of the European Directive on fixed term work into UK law by 10 July 2001. In preparation, the Department of Trade and Industry has published a consultation document outlining the government's thinking. The deadline for feedback on the proposals is 31 May 2001.

Fixed term workers are those with employment contracts that are determined by objective conditions, i.e. that end when a specified date is reached, or a specified task is completed, or a specified event happens. This definition does not cover agency workers but would cover some employees who have "casual" or "temporary" contracts.

The European directive requires member states to:

• prevent employers from treating fixed term employees less favourably than comparable permanent employees, e.g. with respect to
their terms and conditions, unless this can be objectively justified
• take some measures to prevent abuse of fixed term contracts arising from successive renewals
• require employers to inform their fixed term employees of vacancies in their organisations on the same basis as permanent
employees.

The government's preferred approach is to follow in general terms the manner in which the part-time worker directive was implemented from July 2000. For example, 1) a fixed term worker would be able to make comparisons with a comparable permanent employee working for the employer. Comparisons could be made between each term and condition of employment, although the government would like views as to whether an overall comparison should be made instead, i.e. the overall employment package would be compared rather than its individual components.

2) most terms and conditions of employment would be covered, but the government believes that the Directive does not apply to pay and pension benefits. It is not ruling out their inclusion but that would require a change to primary legislation. Views are sought on whether pay disparities between fixed term and permanent employees are an issue and whether, if a fixed term worker were paid more than a comparable permanent worker, that should be allowed to compensate for the provision of less favourable non-pay terms and conditions.

3) a fixed term worker would be able to request a written statement explaining the reasons for the unfavourable treatment

4) aggrieved employees may make a complaint to an employment tribunal, and compensation awarded, although an option under consideration would be for the tribunal to convert the fixed term contract into a permanent contract

5) it would be a defence for an employer to show that there was an objective reason for less favourable treatment, e.g. a loan for a season ticket, repayable over a year, being offered to a worker with a fixed term contract for three months.

Comments are also sought on a range of issues related to fixed term workers:

• removal of the redundancy waiver for fixed term contracts
• how renewal of fixed term contracts should be limited, e.g. by limiting the number of renewals, or by limiting the total period of
successive fixed term contracts, or by having to provide an objective reason for not renewing on a permanent contract
• how "successive" should be defined, to determine whether renewal constitute continuous service
• who should be excluded from the provisions, e.g. temporary agency workers who are employees of the agency.

A full copy of the consultation document can be downloaded from the DTI's website, at www.dti.gov.uk/consultations/. It includes a detailed questionnaire on the issues raised. - Payroll Briefing 199 - 17 April 2001