Protection of Employees (Fixed-Term Work) Bill, 2003

Second Stage - Dail Eireann - Thursday 26 June 2003

Speech by the Minister for Labour Affairs - Mr. Frank Fahey T.D.

I move that the Protection of Employees (Fixed- Term Work) Bill 2003, as passed by Seanad Eireann be read a second time.

At the outset, I should say that I am particularly pleased to have the opportunity to present this important Bill to this House. The Bill has been the subject of lengthy and fruitful debate in the Seanad. I believe the amendments made to the Bill in the Seanad have improved the Bill and I want to thank the members of the Upper House for their time and effort in this regard. I have absolutely no doubt that members of the Dail will also approach our work on this Bill in a positive and proactive manner

I also want to thank my colleague Minister Michael Ahern for bringing the Bill through the Seanad while I was away on official business earlier this month.

As he pointed out in the Seanad, it is widely acknowledged that Social Partnership involving employers, employees and Government has been the driving force of change in the work place over recent years. This Social Partnership process has been backed up by a well-balanced range of employment rights/labour legislation which, together with measures designed to stimulate employment, provides an appropriate framework for the purpose of achieving an efficient and competitive business environment.

Employment Rights legislation covering a range of areas such as Conditions of Employment has an important role to play in promoting labour market stability and minimizing conflict.

In keeping with Ireland's voluntarist tradition, collective agreements are generally, the primary method of determining conditions of employment. The role of statute law has generally been limited to that of setting minimum levels of protection or entitlement.

Ireland has over the last twenty to thirty years, been to the forefront in ensuring that reasonable conditions of employment exist which set out clearly for both employers and employees their respective entitlements. Successive Governments have enacted legislation in the area of employment rights reflecting changes in society and the workplace at both national and international levels through for example, the transposition of EU Directives, and reflecting in Irish domestic law, the standard setting activities of the International Labour Organisation (ILO) and the Council of Europe.

Such legislation has covered a wide range of areas including:

• Minimum Notice and Terms of Employment
• Protection Against Unfair Dismissal
• Payment of Wages
• Organisation of Working Time,
• Safeguarding of Employees Rights on the Transfer of Undertakings
• Protection of Young Persons at Work
• Safety, Health and Welfare
• Redundancy and Insolvency Entitlements
• Minimum Wage Entitlements
• Protection of Part-Time Workers

One area where employment rights legislation has dramatically affected peoples' work and lifestyles is that of the Organisation of Working Time. This area covers issues such as holiday entitlements, rest periods, maximum working time and night work. Changing social needs and technological advances have influenced the way we work and the length of time in terms of days and hours per week we spend in the work place.

Nowadays, employers want a well educated and flexible work force that allows their companies to be competitive in what are becoming increasingly globalised markets.

Employees also want the flexibility that enables them to balance work and family life; allows them to be able to move within and across employments - thereby enhancing their work skills and educational needs through Life -Long Learning Programmes. Many such employees do this by means of temporary employment - either through the auspices of employment agencies or through fixed-term contract work.

In particular, fixed-term contract work provides these employees with both opportunities and challenges. Many of their contracts are fixed-purpose based or time based to coincide with the completion of a specific task or an event. This often involves meeting deadlines by the employee on the one hand, whilst giving employers increased productivity through clearly identifiable targets or outputs, on the other. The combination of job satisfaction for fixed-term employees and increased productivity for employers on the other has in many ways, changed the environment in the Irish labour market in recent years.

All of these changes in employment rights legislation have also influenced employment trends and the numbers in employment. According to Central Statistics Office figures for the last quarter of 2002, the number of persons in employment has risen from 1.22 million in 1994 to 1.77 million in 2002 - an increase of 45%.

Part of this number includes 294,000 part-time workers. This number represents 17% of the work force with the majority of these being women. In addition to atypical workers such as part-time workers, there is also the category of fixed-term contract workers. While the CSO does not at present have figures for these workers, it is estimated that there are some 70,000 fixed-term contract workers - or just 4% of the work force.

I should indicate to the Dail that the CSO has been requested as part of its Review of the Quarterly National Household Survey 2003-2006 to include in its questionnaires a series of questions to ascertain the numbers and trends in relation to fixed-term workers.

Despite these increasing and welcome figures, we have in Ireland over the last few years, been experiencing severe skills shortages in our economy. This is also happening right across Europe. To address this major problem, the European Commission and the European Council has since 1998 under the Luxembourg Process each year requested Member States to prepare an Employment Action Plan setting out their respective Government's proposals on how to improve the overall economic environment in terms of people at work. As part of this process Member States respective annual Employment Action Plans are required to set out policies which, inter alia, facilitate

• opportunities for women who have raised their families and are keen to come back into the work place.
• formulate Family-Friendly policies which facilitates in particular, greater female participation in the work force.

In particular, the European Commission Guidelines for 2002 (which is the fifth year of this process) set out a number of horizontal objectives aimed at building conditions for full employment in a knowledge-based society. These detailed Guidelines require Member States to formulate policies involving:

• a more employment friendly approach through a review, where necessary, of benefits, taxes and training systems

• positive measures to maintain the skills and working capacity of older workers in particular, through sufficient access to education and training and flexible working conditions such as part time work and contract work.

In relation to the taxation system, this Government has over the last number of Budgets substantially reduced the burden of PAYE thereby making the option of working more attractive all round.

The scenario that I have just painted sets us all both a challenge and an opportunity. In this context, the timing of our discussions on this Bill before the House, namely the Protection of Employees (Fixed-Term Work), Bill, 2003 is therefore opportune.

The proposed Bill seeks to implement the provisions of EU Council Directive 1999/70/EC of 28 June 1999 concerning the Framework Agreement on Fixed-Term Work concluded by the general cross-industry organisations at European level - UNICE (the Union of Industrial and Employers' Confederations of Europe), CEEP (the European Centre of Enterprises with Public Participation) and ETUC (the European Trade Union Confederation).

The objectives of the Directive are to:

• improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination (i.e. fixed-term workers must be treated not less favourably than comparable permanent workers),
• remove discrimination against fixed-term workers where such exists and
• establish a framework to prevent abuses arising from the use of successive fixed-term employment contracts.

The target date for implementation of this Directive was 10 July 2001.

A Tripartite Working Group, including representatives from the Social Partners (IBEC and ICTU) - who, broadly, support the intent of the Directive - and from relevant Government Departments and State Agencies was set up to discuss the measures necessary for the implementation of the Directive in this country. The deliberations of this Group have contributed to and influenced the composition of the Bill.

Article 2 of the Directive allows for the implementation of the Directivein an individual Member State by means of a collective agreement between the social partners. Both IBEC and ICTU, however, declined this option as regards the implementation of the Directive in Ireland. Accordingly, it was necessary to prepare the Bill before us today.

I want to take this opportunity to thank both ICTU and IBEC for their work at both European and National levels in framing the Bill, which I believe will have a major social impact in Ireland over the years ahead. I also want to thank them for their contributions to my Department over the last few weeks since the Bill passed through the Seanad. A number of important and constructive amendments have emerged which are currently being examined by my Department in consultation with the Office of the Parliamentary Council to the Government. I hope to be in a position to table a number of Government amendments at Committee Stage next week designed to reflect some of these concerns and which should ultimately improve the intent of the Bill and result in its speedy enactment.

The scope of the Directive is expressed as applying to fixed-term workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State. In this context, Irish labour law covers persons employed under contracts of service.

The Bill - which implements the terms of the Directive - provides for measures guaranteeing that fixed-term workers may not be treated less favourably than full-time workers. It also requires the removal of discrimination against fixed-term workers where such exists and contains measures aimed at improving the quality of fixed-term work.

The Fixed Term Work Directive, on which the Bill is based, provides that the quality of work be improved by the application of the principle of non-discrimination which means that people on fixed term contracts are not treated in a less favourable manner than comparable permanent workers.

One aspect of the Bill that I would like to specifically mention to the House is the inclusion of Pay and Pension entitlements of Fixed-Term Workers. This entitlement is covered under the definition of "remuneration" set out in the Interpretation section of the Bill - section 2. The Government has decided to include pay and pensions in the Bill as a deliberate policy initiative - without prejudice to continuing to maintain the validity of the legal advice received to the effect that, because of the wording of Article 137(6) of the Treaty such inclusion cannot be regarded as obligatory under Directive 99/70.

The Government's decision on pay and pensions means that fixed-term workers should be treated in a similar manner to comparable permanent workers with immediate effect insofar as pay and pension entitlements are concerned. This is entirely consistent as the Government has already granted similar pay and pension entitlements to part-time workers under the Protection of Employees (Part-Time Work) Act, 2001.

In addition, the granting of such entitlements to fixed term workers will have the effect of increasing overall pension coverage levels. As the House is no doubt aware, all parties to the new "Sustaining Progress" Social Partnership Agreement share the objective that the level of coverage of occupational pensions schemes should be increased and are committed to co-operating to promote improvements in the coverage of schemes towards the National Pensions Policy Initiative target of 70% of the workforce over 30 years.

In that context, I might just take the opportunity to point out that employers who exclude employees from their pension scheme, or who limit eligibility for a scheme, must, from 15th September 2003, provide access to at least one Standard Personal Retirement Savings Account (PRSA).

The cost to the Exchequer of the inclusion of pay and pension entitlements in the Bill in relation to the wider public service is estimated at €50m annually. However, the economic and social benefits that will accrue, particularly in relation to workplace relationships and the promotion and encouragement of the process of change in work relationships - which will benefit both employers and employees alike - will be considerable.

For example - and as touched on earlier - fixed term work can help people achieve a work-life/"family-friendly" balance and fit in caring responsibilities (for example term-time only contracts can benefit parents). It would be important that those with caring responsibilities are able to make provision for retirement. In addition, women are significantly more likely than men to be in fixed term employment between the ages of 25 and 44, which are often their most important years for accruing pension benefit.

Section 8 of the Bill as passed by the Seanad, indicates that fixed-term workers must, be advised by their employer in writing of the objective grounds justifying the renewal of the contract of employment on a fixed-term contract basis.

Section 9 of the Bill as passed by the Seanad,specifically addresses the issue of the use of successive fixed-term contracts by employers. The effect of this Section is to provide in future, that - following a period of continuous service of at least three years by a fixed-term employee - an employer may, in effect, renew a fixed-term contract once only. Thereafter, any further renewal of the fixed-term contract concerned shall be deemed to be a contract of indefinite duration. The thinking behind this is that a period of three years service, followed by one renewal, which incidentally, as currently drafted - can be of any duration - provides a linkage to permanency in an employment for fixed-term workers.

I should also mention that section 9 of the Bill provides those who have accumulated three years service at a minimum with an employer will only have to complete one further contract before being deemed to be in a contract of indefinite duration.

Employers are, of course, free to give such workers permanent employment through open-ended contracts of indefinite duration - before the three-year period required expires based on the performance of that fixed-term worker.

I might at this point, inform the House that Senator Joe O'Toole tabled an amendment at Committee Stage in the Seanad in relation to this section which was essentially designed to put a limit - in terms of time - on how long fixed-term workers could be employed on fixed-term contracts before being offered a contract of indefinite duration. I want to thank Senator O'Toole for this amendment. This amendment is currently being considered by the Office of the Parliamentary Counsel to the Government and I will come back to the House on this issue at Committee Stage next week with a package of amendments aimed at clarifying the intent of this section of the Bill.

Sections 15 to 17 of the Bill provide that where fixed-term contract workers are concerned about their treatment by employers, they will have recourse to redress procedures to the Rights Commissioner Service of the Labour Relations Commissioner Service - in the first instance and then, on appeal, to the Labour Court - with a further appeal on a point of law to the High Court. These redress procedures are a standard provision in Employment Rights legislation.

Turning now, Ceann Comhairle, to the other provisions of the Bill, I wish to advise the House that many of the provisions in Part 2 of the Bill entitled "Fixed-Term Work and Rights of Fixed-Term Workers", mirror the provisions of the Protection of Employees (Part-Time Work) Act 2001, which also arose from a similar Framework Agreement agreed at European Social Partner level in relation to that category of atypical workers.

Other provisions in the Bill in relation to complaints to rights commissioners and enforcement procedures reflect what might be described as "standard" provisions in other employment rights legislation generally.

I would hope Ceann Comhairle that against this background, we should be able to progress this Bill through the Dail expeditiously. I would invite Deputies to provide constructive criticism of the proposals in the Bill, as appropriate but I would also urge a positive and proactive approach so that we can secure enactment of this important Bill by the Summer Recess as is the intention of the Government.

While I have already highlighted key areas of the Bill, I would now like nonetheless, to take the opportunity to outline in detail to the House the Main Provisions of the Bill as passed by Seanad Eireann and to highlight by way of information to the House, details of the various sections amended and adopted by the Seanad.

Part 1

Preliminary and General

Section 1 is a standard provision dealing with the short title of the Bill.

Section 2 sets down the main definitions associated with the Bill.

With regard, to the definitions in this section, I should appraise Deputies at this point, that during the debate on the Bill in the Seanad the Government accepted an Opposition amendment which brought the definition of "remuneration" into line with the Protection of Employees (Part-Time Work) Act 2001.

In addition, the exclusion of agency workers from the scope of the Bill was specifically raised by a number of Senators.

In response, Minister Ahern gave a commitment that the Government would report on this matter at Committee Stage in the Dail and update the Seanad of any developments after passage of the Bill through this House.

For the record, I wish to clarify for the House that this exclusion was done in accordance with the terms of the Framework Agreement on Fixed-Term Work annexed to Directive 1999/70/EC which provided that that Agreement "applies to fixed-term workers with the exception of those placed by a temporary work agency at the disposition of a user enterprise."

This was done for a variety of reasons not least the intention, since the very beginning, to deal with part-time, fixed-term and temporary agency workers separately. Although the first two agreements by the Social Partners at European level finally reached were similar in nature - i.e. in the cases of the Part-Time and Fixed-Term Workers Directives - this was achieved after a thorough discussion over each `type' of work.

However, negotiations on a Temporary Agency Workers Directive between the Social Partners at European level broke down in May 2001 and a draft Directive in the area was subsequently published by the European Commission in March 2002. This draft Directive remains under detailed discussion in Brussels.

While it is somewhat unclear at this stage as to how the Italian Presidency proposes to advance the temporary agency dossier, we understand that they will continue work on the proposal with a view to possibly reaching political agreement in their Presidency ending next December.

Accordingly, under the definition of "contract of employment" in section 2 of the Bill, agency workers who agree "with another person, who is carrying on the business of an employment within the meaning of the Employment Agency Act 1971 and is acting in the course of that business, to do or perform personally any work or service for a third person (whether or not the third person is a party to the contract)" are excluded from the ambit of the legislation because of the above provision in the Framework Agreement on Fixed-Term Work.

However, agency workers who have a contract of employment directly with an employment agency are covered by the Bill as in those cases, the employment agency would be the "employer" as defined in the Bill.

Section 3 empowers the Minister for Enterprise, Trade and Employment to make regulations and orders prescribing any matter or thing which is referred to in the Bill as prescribed or to be prescribed or for the purpose of enabling any provision of the Bill to have full effect.

Section 4 is a standard provision stating that the expenses incurred by the Minister in connection with the administration of the Bill shall be paid out of moneys provided by the Oireachtas.

Part 2

Fixed-Term Work and the Rights of Fixed-Term Employees

Section 5 provides that an employee is a comparable permanent employee in relation to a fixed-term employee if-

the permanent employee and the fixed-term employee are employed by the same or associated employer and one of the conditions referred to in (i),(ii) or (iii) below is met,

where (a) above does not apply (including a case where the fixed-term employee is the sole employee of the employer) the permanent employee is specified in a collective agreement, being an agreement that for the time being has effect in relation to the relevant fixed-term employee, to be a comparable employee in relation to the fixed-term employee, or

where neither (a) nor (b) above apply, the employee is employed in the same industry or sector of employment as the fixed-term employee (and one of the conditions referred to in (i), (ii) or (iii) below is met).

The following are the conditions (i), (ii) and (iii) referred to above-

both employees perform the same work under the same or similar conditions or each is interchangeable with the other in relation to the work,

the work performed by one of the employees concerned is of the same or a similar nature to that performed by the other and any differences between the work performed or the conditions under which it is performed by each, either are of small importance in relation to the work as a whole or occur with such irregularity as not to be significant, and

the work performed by the relevant fixed-term employee is equal or greater in value to the work performed by the other employee concerned , having regard to such matters as skill, physical or mental requirements, responsibility and working conditions.

Section 6 provides that, generally, a fixed-term employee shall not be treated less favourably than a comparable permanent employee in respect of his or her conditions of employment. Section 6(2) provides that a fixed-term employee may, in respect of a particular condition of employment, be treated less favourably than a comparable permanent employee if that treatment is based on objective grounds. Section 6(3) provides that except where a different length of service qualification is justified on objective grounds such a qualification in relation to aparticular condition of employment shall be the same for a fixed-term employee as for a comparable permanent employee.

Section 6(4) of the Bill was amended at Committee Stage in the Seanad to bring it into line with section 9(5) of the Protection of Employees (Part-Time Work) Act 2001so that a comparator for a fixed-term employee should be of the same or opposite sex to such an employee.

Section 7 provides that a ground for treating an employee less favourably shall not be regarded as an objective ground for that purpose unless it is based on considerations other than the fixed-term status of the employee. The less favourable treatment involved for the employee must be for the purpose of achieving a legitimate objective of the employer and such treatment must be appropriate and necessary for that purpose.

Section 8(1) provides that a fixed-term employee shall be informed in writing by his or her employer as soon as practicable of the objective condition determining the contract i.e. (a) arriving at a specific date, (b) completing a specific task, or (c) the occurrence of a specific event. Section 8(2) provides that where an employer proposes to renew a fixed-term contract the employee shall be informed in writing, not later than the date of renewal, of the objective grounds justifying the renewal of the fixed-term contract and the failure to offer a contract of indefinite duration. Section 8(3) provides that the written statements referred to in section 8(1) and section 8(2) are admissible as evidence in any proceedings under the Act. Section 8(4) provides that a rights commissioner or the Labour Court may draw any inference he or she considers just and equitable if it appears to him or her that (a) an employer omitted to provide a written statement, or (b) a written statement is evasive or equivocal.

As I mentioned earlier, Section 9 of the Bill is currently being revised by the Office of the Parliamentary Counsel to the Government and I hope to table a package of Government amendments in relation to this Section of the Bill at Committee Stage next week.

Section 10 provides that in order for a fixed-term employee to have the same opportunity as other employees to secure a permanent position, an employer shall inform him or her in relation to relevant vacancies which occur. This information may be provided by means of a general announcement at a suitable place in the employee's place of employment. This section also provides that, as far as practicable, access by a fixed-term employee to appropriate training opportunities shall be facilitated by the employer.

Section 11 provides that when calculating the threshold above which employees' representative bodies may be constituted in an undertaking in line with section 4 of the Transnational Information and Consultation Of Employees Act 1996, fixed-term employees shall be taken into account. Employers shall, as far as practicable, consider informing employees' representatives about fixed-term work in the undertaking.

Section 12 provides that a provision in any employment agreement shall be void in so far as it is inconsistent with any provision of this Bill.

Section 13 provides thatan employer shall not penalise an employee for invoking his or her right to be treated in relation to his or her employment in the manner provided for in this Part of the Bill. Penalisation of an employee is also forbidden for having lawfully opposed an act which is unlawful under this Bill or for giving evidence in any proceedings under this Bill. Penalisation for this purpose includes dismissal, unfavourable change in conditions of employment or any unfair treatment including selection for redundancy.

Part 3

Enforcement

Section 14 provides that a complaint by an employee, or by a trade union of which the employee is a member, that the employer has contravened any provision of the Bill in relation to that employee, may be presented to a rights commissioner. The rights commissioner shall issue a written decision in the matter and communicate that decision to the parties. The decision of the rights commissioner may require the employer to pay compensation, subject to a limit of two years of the employee's remuneration. A complaint to a rights commissioner must be made within six months of the date of contravention of the Bill or the date of termination of the contract of employment concerned, whichever is the earlier. This period may be extended by a further 12 months if the commissioner is satisfied that failure to refer the case within 6 months was due to reasonable cause. The hearing before the rights commissioner shall be conducted in private.

Section 15 provides that a decision of a rights commissioner may be appealed to the Labour Court within six weeks of the date of the decision. The Labour Court shall issue a determination in writing affirming, varying or setting aside the decision of the rights commissioner. The Labour Court may request the Minister to refer a question of law arising in proceedings before it under this section to the High Court for final and conclusive determination. Where a decision of the rights commissioner has not been carried out by the employer, and an appeal against the decision has not been brought within the time allowed for doing so, the employee may refer the complaint to the Labour Court and the Labour Court, without hearing any evidence make a determination to the like effect as the decision of the rights commissioner.

Section 16 provides thatwhere an employer fails to implement a determination of the Labour Court within 6 weeks from the date it is communicated to the parties and the determination has not been appealed within the appropriate time limit, the Circuit Court shall, on application to it by the employee concerned, a trade union of which the employee is a member, or the Minister and without hearing any evidence make an order directing the employer to implement the determination.

Part 4

Exclusions and other Provisions

Section 17 provides that the Bill shall not apply to a member of the Defence Forces, a trainee Garda or a trainee nurse.

Section 18 provides that relief may not be granted to an employee, in respect of a penalisation in contravention of section 13(1) of this Bill which constitutes a dismissal of an employee within the meaning of the Unfair Dismissals legislation, both under Part 3 of this Bill and under those Acts. It also provides that a person who is a fixed-term employee under this Bill and a part-time employee under the Protection of Employees (Part-Time Work) Act 2001 may not obtain relief in respect of the same circumstances under both this Bill and the 2001 Act.

Section 19 raises the fines of £50 and £10 provided for in section 10(1) of the Employment Agency Act 1971 to €2,000 and €1,000 respectively. It also amends section 28(8) of the Organisation of Working Time Act 1997 and section 17(8) of the Protection of Employees (Part-Time Work) Act 2001 by removing the time limit of 6 weeks which applies at present to referrals of rights commissioners' decisions to the Labour Court. It further provides for a technical amendment of section 39(2) of the Organisation of Working Time Act 1997 (relating to the powers of a rights commissioner, the Employment Appeals Tribunal or the Labour Court to amend decisions in certain cases).

In conclusion, I would like to say, that I am satisfied that the right to reasonable conditions of employment should continue to be enshrined in employment rights legislation. It is our duty as elected and accountable legislators to play a proactive approach in ensuring that any such future legislation:

• reflects the needs and expectations of both employees and employers;
• is framed in such a way as to respond to the needs of society as a whole, and
• reflects the ongoing changes taking place at an enormous pace in the labour market.

This Bill - the Protection of Employees (Fixed-Term Work) Bill, 2003 is without doubt, a welcome addition to our Employment Rights Legislation and will, I believe, have a major impact on our employment landscape in the years ahead.

Accordingly, Ceann Comhairle I commend the Protection of Employees (Fixed-Term Work) Bill, 2003 as passed by Seanad Eireann to the House.

ENDS