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Lord Razzall: My Lords, I thank the noble Lord, Lord Wedderburn, for his intervention. He said very much what I intended to say in responding to what the Minister said. When moving the amendment I suspected that, ultimately, this would come down to differing legal interpretations of the directive and the clause.
I understand the Minister's confirmation that the Government are reviewing the whole issue of what "employment" means. I welcome that because I suspect—as I am sure that various of the Minister's noble friends suspect—that there are genuine employees out there who are required to work either as fixed term workers or as self-employed when the real nature of their relationship is one of employment. It is that group of "quasi" employees to whom the noble Baroness, Lady Turner, referred. I am concerned about the effect that this Bill and the absence of protection will have on them.
The noble Baroness referred to people in the building and construction industry who are "on the lump". I suspect that even in modern, high-technology industries there are equivalent people who are in reality employees but are on fixed-term contracts. Under the current drafting of the clause, those people would not be protected. Dare I say it while looking straight at the cameras, there are probably many people in the television and media world who are equally affected. Having said that, I shall read what the Minister said between now and Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon moved Amendment No. 112:
- Page 50, line 8, at end insert—
The noble Baroness said: My Lords, in moving Amendment No. 112, I shall speak also to Amendments Nos. 113, 115, 116 and 117 even though they appear in three different groupings. I have made sure that the Minister knows that I shall be speaking to these amendments together. There is an error in the way the amendments were grouped.
Amendments Nos. 112 and 116 are identical, one applying to fixed term work in England, Scotland and Wales and the other to Northern Ireland. Clause 45(4)(a) and Clause 46(4)(a) each enable the Secretary of State to make regulations enabling the implementation of the European Council Directive 99/70/EC, which relates to terms and conditions of employment for fixed term work. It is right that the Secretary of State should have such a power. However, experience since 1997 has shown us that the Government frequently take EC directives and gold plate them—that is, they make them more stringent than our international obligations require and put the United Kingdom at a commercial and competitive disadvantage.
Hence, these two amendments, which are specific to, and limited to, the regulations made under subsection (4). They require the Secretary of State not to make regulations purporting to comply with the EC directive but which in fact exceed the requirements of that directive.
The opening words of both Clause 45(4)(a) and Clause 46(4)(a) read as follows:
As I pointed out in Committee, that is in direct contradiction to the phrase in Clauses 45(4)(a) and 46(4)(b). This is not the time or place to go into the matter in greater detail. Elsewhere, I shall propose an amendment that will ensure fair play for fixed-term employees, with a minimum of regulation, and nothing further is needed.
The Minister ignored this point in his reply in Committee. He simply said:
Amendments Nos. 113 and 117 again apply in tandem to England, Scotland and Wales under Clause 45 and to Northern Ireland under Clause 46. The provision is one of absolute simplicity. In exchange for the Government not gold-plating the EC directive, these two amendments stipulate that an employee on a fixed-term contract shall not be deemed to be treated less favourably than other employees if he receives money or money's worth in lieu of the benefits received by permanent employees of the same employer which cannot reasonably and practicably be accorded him.
I have mentioned the impossibility of admitting an employee to a company pension scheme when he will be working for the employer for only a couple of months. Annual holiday, a company car, even an invitation to the annual outing may all be impossible to give to a temporary employee—one who is perhaps engaged as a locum for a permanent employee who is taking his paternity or adoption leave.
I have proposed that recompense for the absence of such benefits should be compensated for, but I believe that it would be right to do so by cash or money's worth. It is very simple. A fixed-term employee who is dissatisfied with the cash compensation he is offered still has exactly the same remedy before the employment tribunal as any other employee whose rights under this legislation are not complied with.
It would certainly be a lot easier for employee and employer alike—who are the only two people involved—to calculate the employee's rights and to
I turn finally to Amendment No. 115, which seeks to add a further subsection to Clause 45, which I imagine would become subsection (7). Before speaking to the amendment, I should mention that there is not a similar amendment down to Clause 46 dealing with Northern Ireland. If the Minister were to accept the amendment, naturally we could introduce a suitable further amendment to Clause 46 at Third Reading—not that I have any great hopes that the Minister will accept my amendment. I cannot believe that he has not accepted a single amendment that I have tabled through the long and lengthy process on this Bill.
Clause 45 sets out detailed rights for a fixed-term employee and detailed machinery for implementing them. I acknowledge that one of the purposes of these provisions is to prevent unscrupulous employers from using a series of consecutive short fixed-term contracts to deprive an employee of certain of his legal rights.
However, some people voluntarily take up fixed-term employment for a variety of reasons, frequently to suit their own convenience or personal circumstances. In the same way, employers often take on employees for fixed terms for genuine commercial reasons—to carry out a specific project, for example; to set up a computer or book-keeping system; to handle a particular piece of work for a client; or to replace a permanent employee who is temporarily away.
Assuming that the employer is genuinely acting in good faith and is employing someone on a fixed-term contract, and then decides that he would like to employ him permanently, he should be able to make an offer of permanent employment under the stringent conditions set out in the proposed new subsection, leaving that employee to decide for himself whether he does or does not want the job. If he takes it, then he should get the same benefits as the other permanent employees, which is what this provision aims to give him. If he chooses to stick to his fixed term for his own reasons, clearly he cannot have his cake and eat it; he cannot stick to his fixed term and continue to enjoy the new privileges being granted to fixed-term employees. I beg to move.
Lord Sainsbury of Turville: My Lords, I shall deal with all the amendments the noble Baroness has put forward, beginning with Amendments Nos. 112 and 116. These amendments would have the effect of preventing the regulations under Clauses 45 and 46 from imposing any obligations beyond those required by the EC fixed term work directive. This would mean that the regulations made under the clauses would allow employers to pay their fixed-term employees less
In our view, the fixed term directive does not require us to prevent pay and pensions discrimination against fixed-term employees. The noble Baroness quoted words which she said gave the game away; she said that we were acting under the pretext of implementing the directive. There is no question of "giving the game away"; there is no question of doing this under the pretext of implementing the directive. If that were the situation, primary legislation would not be required. I believe that everyone in this House will be able to recognise that we are doing it under primary legislation for just this reason. We are quite open. We want to include this provision because we believe that it is the right thing to do.
Following a full public consultation last year on the implementation of the directive, we had evidence of pay disparities between fixed-term and permanent employees and anecdotal evidence that fixed-term employees had been excluded from pensions even though they had been employed on a series of fixed-term contracts for many years and would no doubt have benefited from pension provision. This evidence, I believe, justifies using primary legislation to prevent pay and pensions discrimination against fixed-term employees.
I am aware that the noble Baroness has some concerns about the operation of the regulations if pay and pensions are covered.
The draft Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 on which we recently consulted do not necessarily require fixed-term employees to be admitted to occupational pensions schemes; they simply require that fixed-term employees are not less favourably treated than comparable permanent employees. I believe that these regulations will help to ensure that employers no longer refuse fixed-term employees access to an occupational pension scheme purely because they are on a fixed-term contract.
Some employers may have objective reasons that justify denying fixed-term employees access to a pension scheme and can therefore exclude them. Others may seek to ensure that a fixed-term employee's overall employment package is not less favourable than that of a comparable permanent employee. The regulations also allow for that situation. There will be situations where an employer will be able to justify excluding an employee on a short-term contract from an occupational pension scheme if including him has disproportionate cost and/or is of no benefit to him.
This will not mean that employers have to offer alternative compensation or change established pension schemes to meet special needs of fixed-term employees. It is important that an appropriate balance between business requirements and employee protection is struck and that fixed-term employees'
The noble Baroness, Lady Miller, also asked at what point a fixed-term employee can gain access to a pension scheme. The answer is that employers will need to look at what point they offer pensions to their permanent employees. The fixed-term regulations require that any period of service qualifications for benefits, including pensions, should be the same for fixed-term employees as for permanent employees unless a different period can be objectively justified. Employers will not therefore be required to offer fixed-term employees access to schemes at an earlier point than they would offer access to permanent employees.
It is probably worth noting here that, when we transposed the part-time work directive, we also decided to cover pay and pensions, despite our view that this was not a requirement of the directive. Fixed-term employees are in a similar position to part-time ones. They work for the same employer as comparable permanent or full-time employees but have a different contractual arrangement. Fixed-term employees have an important part to play in our labour market and they are entitled to a fair deal.
As I explained in Grand Committee, giving fixed-term employees a fair deal by preventing pay and pensions discrimination will not place UK business at a competitive disadvantage compared with European counterparts. Most other EU member states have already stopped pay discrimination against fixed-term employees and we expect others to do so in the near future. Preventing pay and pensions discrimination will protect about 1.2 million fixed-term employees in Britain. We do not see why British fixed-term employees should be treated as second class.
I turn now to Amendments Nos. 113 and 117. As they have the same aim, I shall speak to them together. These amendments would mean that regulations on fixed-term work have to provide that fixed-term employees are not considered to be "treated less favourably" if they receive an adequate amount of money or money's worth in lieu of benefits received by permanent employees of the same employer which cannot reasonably and practically be accorded to them. I shall explain why I consider this amendment to be unnecessary and why it is not the best way to introduce the flexibility which the noble Baroness, Lady Miller, seeks for employers and employees.
Such amendment is unnecessary because the draft fixed-term regulations—on which we recently consulted, and a copy of which has been placed in the Library—already achieve the aim of this amendment. The means of applying the equal treatment principle to fixed-term employees is best dealt with in regulations, and the powers in Clauses 45 and 46 allow this to be
The noble Baroness seems to be concerned that the enabling powers in Clauses 45 and 46 would require the Secretary of State to regulate every term of a fixed-term employee's contract. This is certainly not the case. The powers as currently drafted allow the Secretary of State to make regulations which will allow a fixed-term employee's benefits to be looked at "in the round" when considering whether he is being less favourably treated than a permanent employee. The draft regulations already do this. They provide that less favourable treatment of a fixed-term employee is permitted if it is justified on objective grounds. The regulations specifically provide that where the value of a fixed-term employee's total package of employment conditions is equal to or higher than that of a comparable permanent employee, less favourable treatment in respect of one or more employment conditions will be objectively justified.
This means that employers can balance a less favourable condition with a more favourable one. For example, an employer and a fixed-term employee may agree that the employee would not benefit from access to an occupational pension scheme, but should receive a higher salary instead. Alternatively, the employer could pay the fixed-term employee a higher salary to compensate him for having fewer days' paid holiday than a comparable permanent employee, provided he received at least four weeks' paid annual leave per year in accordance with the working time regulations.
Alternatively, the draft regulations provide that employers need not give fixed-term employees a particular benefit—and will not be obliged to compensate them for it by alternative means—if excluding them is objectively justified. Where fixed-term employees are on very short contracts, their exclusion from an occupational pension scheme may be objectively justified, for example. I am not convinced that the amendments would allow less favourable treatment where it is objectively justified. Since objective justification is provided for in the directive, the proposed amendments could be described as gold-plating.
I turn to Amendment No. 115. The intention of this amendment seems to be that the regulations made under Clause 45 should not apply to fixed-term employees who have been offered suitable permanent employment at any point in their employment and refused the offer. This would mean that the Government fail to comply with their European Community obligations and incorrectly implement the EC fixed-term work directive.
I am extremely concerned that there is a risk that employers could ask fixed-term employees early on in their contracts to accept permanent jobs knowing full well that the fixed-term employee will reject such an offer, the possible bonus of this for unscrupulous employers being that the fixed-term regulations would no longer apply. The fundamental provision of the regulations—"preventing discrimination against
Allowing fixed-term employees to sign away their right to a permanent job would really be allowing them to sign away protection under fixed-term regulations. I am very concerned that it would cause there to be a loophole that allowed the regulations to be circumvented. That would put off students, older people and parents from working on a fixed-term basis.
The EC fixed-term work directive confers certain rights on all fixed-term employees. These include the right not to be treated less favourably than comparable permanent employees and not to be employed on a succession of fixed-term contracts, which is abusive. These rights apply to all fixed-term employees, with a couple of exceptions permitted by the directive, regardless of whether they have been offered or refused permanent employment. This amendment would result in inadequate implementation of the directive by allowing fixed-term employees to sign away their rights to a fair deal.
I hope that the noble Baroness accepts my explanation of why these amendments should not be pressed and that she kindly withdraws Amendment No. 112.
"( ) No regulation made by the Secretary of State under subsection (4) shall exceed the requirements of Directive 99/70/EC or any amendment, modification or re-enactment thereof for the time being in force."
"for the purpose of implementing Council Directive 99/70/EC".
That is the objective to which the Government should stick. But the Government give the game away in the Explanatory Notes, which state:
"The Government takes the view that, on account of its legal base, this directive does not apply to pay and pensions . . . the Government intends to prevent pay and pensions discrimination against fixed-term employees, in addition to implementing directive 1999/70/EC".
Let me repeat those words:
"in addition to implementing [the] directive".
"Other EU member states have already stopped or are expected soon to stop pay discrimination against fixed-term employees".—[Official Report, 11/4/02; col. CWH 513.]
That is not the point. They are not doing it under the pretext of complying with the directive; and, as I have said, my Amendments Nos. 113 and 117, to which I shall speak next, resolve the problem with a degree of legislative succinctness that the Government would do well to emulate.
5.45 p.m.
"specify circumstances in which employees in fixed-term employment are to be taken to be, or not to be, treated less favourably than employees in permanent employment".
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