House of Commons - Education and Employment

Select Committee on Education and Employment Third Report

THIRD REPORT

The Education and Employment Committee has agreed to the following Report:—

THE DRAFT PART-TIME EMPLOYEES (PREVENTION OF LESS FAVOURABLE TREATMENT) REGULATIONS 2000

1. We published our Report on part-time working on 23 March 1999.[1] We received the Government's response on 18 June and published it on 29 June.[2] Our Report dealt with a wide range of issues related to part-time working, central to which was the forthcoming transposition of the Part-time Workers Directive into domestic legislation.[3]

The Draft Regulations and the Consultation Process

2. When we published our earlier Report, we understood that the Government was to publish a consultation paper on part-time working in the first half of 1999.[4] The Government's response suggested that the consultation paper would in fact be published in the second half of the year.[5] The consultation paper was eventually published in January 2000.[6] The new Parliamentary Under Secretary of State at the Department for Trade and Industry[7] appeared before the Employment Sub-committee on 1 March 2000 to answer questions on the consultation paper and the draft regulations contained in it. A number of organisations also sent us copies of their responses to the consultation, for which we are grateful.[8]

3. The Minister explained that there were two reasons for the delay in publishing the consultation paper. The first was that the Department had decided in the summer to have an extended period of private consultation with employers, unions and the Equal Opportunities Commission. The second was that when the DTI was ready to publish the consultation paper, shortly before Christmas 1999, some of the major employers' groups which would be affected by the Regulations, such as those representing the catering and hospitality industries, pointed out that it would be difficult for them to respond during a period which included Christmas.[9]

4. As a consequence of this delay, the period of public consultation was two months rather than the three months which was originally planned.[10] The Government is required to implement the Directive by 7 April 2000,[11] and it is the Government's intention to publish the Regulations in their final form as early as possible, in order to give those who will be affected sufficient notice to make the necessary changes before they come into force. The Minister did not see that the truncation of the public consultation exercise had been a particular problem and in fact described it as "beneficial".[12] He argued that the Government had a full agenda of employment-related measures, including some European Council Directives which had to be implemented before the Part-time Work Directive and that there had been "a continuing dialogue with the CBI, with the TUC, with the EOC" throughout the period the draft Regulations were being drawn up.[13]

5. We are not persuaded that the Government's reasons for delaying the publication of the consultation document were sound. It is not clear, for example, why a three-month consultation period beginning before Christmas should present a difficulty for potential respondents when a two-month period beginning in January does not. Although we recognise the value of private and informal consultation while draft statutory instruments are being prepared, we do not believe that it should be treated as a substitute for an open public consultation exercise.

6. The consultation paper contains, as well as the draft Regulations, notes covering the main changes which the Regulations would bring in and a summary of the regulatory impact assessment. The Minister told us that the summary of the regulatory impact assessment published with the consultation paper had been wrong. Whereas the version published in January estimated that 45,000 of the country's six million part-time workers—less than one per cent of the total—would benefit directly through increases in pay and non-wage benefits,[14] the actual figure was, according to the Minister, more than 400,000.[15] Although this is still less than ten per cent, it is substantially greater than the Government's original estimate. Likewise, by the time the Minister came to give evidence, the estimated cost per part-time employee had fallen from £260 to £50, another significant change.[16]

7. The TUC drew attention to the content of the notes accompanying the draft Regulations. The note on access to training reads:

"Under the regulations, there is an obligation on employers not to exclude parttimers as a matter of principle. However, there is no legal obligation on employers to structure their training in practice in order to accommodate parttimers. They should be aware that this may sometimes be covered by indirect sex discrimination.

To comply with the law:

Employers should not exclude parttime staff from training simply because they work parttime."[17]

The TUC argued that this form of words "appears to be an encouragement to employers to disregard the practical implications of employing parttimers".[18] The Minister agreed that the words could be open to this interpretation and said that he was "very concerned" about it.[19] The words also appear to contravene the intention behind Clause 5.3(d) of the Framework Agreement annexed to the Directive[20] which encourages employers, as far as possible, to give consideration to measures "to facilitate access by part-time workers to vocational training to enhance career opportunities and occupational mobility".

8. The substantive errors contained in the regulatory impact assessment, together with the unfortunate phraseology used in the notes, suggest that insufficient care was taken with the production of the consultation paper. They also cast further doubt on the rigour of the Government's private consultation with interested parties during the drafting of the document.

The Meaning of "Employee"

9. In our earlier Report, we recommended that a broad definition of "worker", such as the one contained in the National Minimum Wage Act 1998,[21] should be used in the Regulations.[22] The Government told us that the definition would be a matter for consultation.[23] The draft Regulations contained in the consultation paper use a narrow definition: " 'employee' means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment".[24]

10. The Directive applies to "part-time workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State".[25] Thompsons Solicitors argue that the definition of "employee" in the Regulations represents "defective implementation and breaches of the principles of effectiveness and equivalence".[26] They argue that the provision in the Directive, that Member States may "exclude ... part-time workers who work on a casual basis," would be unnecessary if the intention was that workers who did not have a contract of employment would be excluded anyway.[27]

11. NATFHE, UNISON and GMB have been advised by Counsel that "it is strongly arguable" that the narrow definition of "employee" contained in the draft Regulations does not properly implement the Directives.[28] The TUC also believes that the definition does not implement the Directive properly.[29] It argues that it is inappropriate for the Regulations to limit their coverage to employees when legislation governing the minimum wage and working time—areas which are both closely related to part-time working—uses a much broader definition.[30]

12. The Minister told us that the decision to use the narrow definition was a result of the Government's desire to implement the Directive with a light touch and in a way which was consistent with the implementation of the other Social Chapter rights, such as the directive on parental leave.[31]

13. The Employment Rights Act 1999 gives the Secretary of State power to extend the coverage of certain employment rights.[32] Employment legislation has developed piecemeal over a period of many years and some rights—such as the minimum wage and the right not to have unauthorised deductions made from wages—extend to a relatively broad description of workers while others extend only to employees as narrowly defined.[33] The Minister told us that the Secretary of State would be issuing a consultation paper on the exercise of this power in the summer of 2000.[34]

14. The narrow definition of "employee" used in the draft Regulations differs from the broader definition contained in equal pay and sex discrimination legislation and in the Working Time Regulations.[35] This is likely to cause confusion for workers who are seeking to decide under which legislation to pursue a claim.

15. We do not see any merit in introducing Regulations with a narrow application at this stage, only to widen their coverage later in the year. We believe that the arguments in favour of a broader definition of "worker" are persuasive, not least of all because the draft Regulations, as currently drafted, do not appear to meet the reflect the intentions behind the Directive and could be subject to a legal challenge. We welcome the Minister's assurances that the Government will re-examine the coverage of employment rights legislation but, in the meantime, we recommend that the coverage of the Regulations should be broader.

The concept of a hypothetical comparator

16. In our earlier Report, we drew attention to evidence of the occupational segregation of part-time workers—that is, the extent to which part-time workers tend to be concentrated in certain sectors and certain types of workplaces.[36] Because of this, we are concerned that the definition of a "comparable full-time employee" contained in the draft Regulations is unnecessarily restrictive, and we urge the Government further to consider the use of a hypothetical comparator, as we recommended in our earlier Report.[37]

The Code of Practice

17. The Secretary of State has the power to issue a Code of Practice for the purpose of eliminating discrimination in the field of employment against parttime workers; facilitating the development of opportunities for parttime work; facilitating the flexible organisation of working time taking into account the needs of workers and employers; and any matter dealt with by the Parttime Work Directive.[38] In its response to our earlier Report, the Government told us that a number of our recommendations would be the subject of such a Code, and the Minister of State told us in his covering letter that our Report was "a useful and timely contribution to our thinking on parttime work, especially as we draw up the draft regulations and code of practice to implement the PartTime Work Directive".[39]

18. In particular, the Government told us that the Code of Practice would:

We were also told that the Government would be "consulting widely before finalising the ... code of practice".[44]

19. The Government has now abandoned plans to produce a Code of Practice on part-time work. When we asked him about this, the Minister seemed to have formed an objection to the whole idea of codes of practice. He described them as "big, dense slabs of print ... which lead to a confrontational situation in workplaces".[45] He told us that the Government intended to proceed instead by issuing guidance, and suggested that this guidance would be a vehicle for implementing Clause 5 of the framework agreement on parttime work annexed to the Directive, a role which was originally envisaged for the Code of Practice.[46]

20. The TUC was "extremely disappointed" by the Government's failure to produce a Code of Practice and pointed out that the guidance, which can not be considered in the same way by employment tribunals, would do nothing to persuade the bad employer to adopt good practice.[47] Thompsons Solicitors pointed out that the purpose of the Directive was not only the removal of discrimination against part-time workers, but "to facilitate the development of part-time work on a voluntary basis and to contribute to the flexible organisation of working time in a manner which takes into account the needs of employees and workers".[48] They argued that the draft Regulations by themselves would not contribute to this end and that a Code of Practice would also help to clarify some ambiguities in the Regulations, such as when it would be appropriate to apply the principle of pro rata temporis.[49]

21. We are dissatisfied with the Government's decision not to produce a Code of Practice on part-time work. We recommend that the Government should re-consider its decision to replace the Code of Practice with guidance which will not have the same force in law. We would also welcome from the Government a new response to those recommendations in our Second Report of Session 1998-99 which it originally told us would be covered by a Code of Practice.[50] In particular we would welcome from the Government clarification of how it intends to implement Clause 5 of the Framework Agreement (Opportunities for part-time work), including Clause 5.2 which states that a worker's refusal to transfer from between part-time and full-time work should not in itself constitute a valid reason for termination of employment and Clause 5.3 which encourages employers, as far as possible, to give consideration to requests from workers to transfer between full- and part-time work.

1 Second Report from the Education and Employment Committee, Session 1998-99, Part-time Working, HC 346-I. Back

2 Third Special Report from the Education and Employment Committee, Session 1998-99, Government's Response to the Second Report from the Committee, Session 1998-99: Part-time Working, HC 609. Hereafter, "Government Response". Back

3 Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC. Hereafter, "the Directive". Back

4 Letter from the Director, Employment Rights and Tribunals, Department of Trade and Industry, to the Clerk of the Employment Sub-committee, dated 1 December 1998 (not printed). Back

5 For example, "whether part-time work regulations exclude casuals ... will be matters for consultation later this year", Government Response, p. ix. Back

6 Part-time Work Public Consultation, URN 99/1224, Department of Trade and Industry, January 2000. Hereafter, "the consultation paper". Back

7 Referred to hereafter as "the Minister". Back

8 They were the Low Pay Unit, the National Association of Teachers in Further and Higher Education, Thompsons Solicitors and the Trades Union Congress. Back

9 Q. 5. Back

10 Q. 6. Back

11 Council Directive 98/23/EC of 7 April 1998. Back

12 Q. 7. Back