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Discrimination against part-time workers

Patricia Maxwell

University of Ulster [email protected] (from mid-1995)

Copyright © 1995 Patricia Maxwell. First published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

This article examines the recent extension of employment protection rights to part-time workers in Great Britain. This is set within the context of developments in Europe, including approaches taken in other European countries, and Britain's recent veto of the latest EU proposal for a Directive on atypical workers. The use of the concept of indirect discrimination as a vehicle to secure rights for part-time workers is also discussed, acknowledging its achievements, culminating in the House of Lords decision in R v Secretary of State for Employment ex parte Equal Opportunities Commission ("ex parte EOC") but at the same time highlighting its limitations.

• Introduction
• Background: The United Kingdom
• Background: Other EU States
• European Community developments
• The use of anti-discrimination legislation
• The Employment Protection (Part-time Employees) Regulations 1995
• Conclusion
• Footnotes
• Bibliography

Introduction

The matter of employment protection rights for part-time workers is thus high on the agenda, both at European level and on the domestic front. It is an issue which throws into sharp focus the tension between the social and the economic objectives of the European Union, and which raises fundamental questions about the relationship between the law on sex equality and labour law. The House of Lords ruling has demonstrated dramatically the power of Community law standards to inspire challenges to the validity of British statutes. A reluctant British government has been forced to concede changes in employment protection rights which are completely at odds with the Conservative philosophy and policy of de-regulation.

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Background: The United Kingdom

The reasons for the expansion in part-time work include much greater flexibility for employers and lower labour costs. There may be no requirement to pay either employers' National Insurance contributions or contributions to an occupational pension scheme: traditionally part-time workers were appointed on basic grades and frequently failed to qualify for overtime pay, bonuses, paid holidays, sick pay, annual increments or training. Yet in spite of these drawbacks, there was a certain match between the new, flexible employment forms which employers sought to introduce and the new social preferences on the supply-side of the labour market, for forms of work other than full-time employment. Eighty-seven per cent of part-time workers in Great Britain are women, constrained by the multiple pressures of childbearing, domestic responsibilities and the need to make a financial contribution to the family budget.

In the UK part-time workers have not enjoyed the same statutory protection, in terms of employment rights, as their full-time colleagues. Some rights, such as those relating to discrimination, health and safety, and freedom of association, are regarded as so fundamental that access was never dependent on length of service or number of hours worked. However, in order to qualify for a wide range of other rights, including unfair dismissal and redundancy payments, an employee generally required a minimum of two years service working at least 16 hours each week, or five years service working at least 8 hours a week, continuously with the same employer. Those who worked fewer than 8 hours a week would never have qualified for these rights as formerly embodied in the Employment Protection (Consolidation) Act 1978.

There has been considerable debate about the impact upon the labour market of refusing such rights to part-time workers. The Government has long espoused the view that to extend employment rights to such workers would place a substantial additional burden on employers which would lead to a significant reduction in the availability of part-time work. In R v Secretary of State for Employment ex parte Equal Opportunities Commission [1994] 2 WLR 409, the Secretary of State argued that the whole purpose of the thresholds excluding part-timers was to bring about an increase in the availability of part-time work, and, therefore, that any indirect discrimination was "objectively justified". This argument was rejected by the House of Lords because no evidence had been led in support of the assertion, although it had found favour in the Court of Appeal [1993] 1 WLR 872 and the Divisional Court [1992] ICR 341. In his written Commons answer, Mr Portillo continued to maintain that the removal of the thresholds would "make employers more reluctant to create new part-time jobs and may indeed threaten some existing jobs." He went on to warn that the Government intended to monitor carefully the effect of the changes about to be introduced, and to "reconsider the position in due course if objective evidence of adverse effects emerges"(HC Deb 20/12/1994, 1101w).

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Background: Other EU States

Indeed many Member States of the European Union seem to have moved towards a hybrid formula which seeks to balance the employer's need for flexibility with a measure of regulation which reflects concerns about the welfare of workers. To most of these countries the European proposals to extend employment protection rights for atypical workers (discussed below) have come as less of a shock than they have in the UK. Italian law already gives to part-time workers a long list of rights, including rates of pay, proportional to those of full-timers; the employer must give them priority to full-time vacancies, can require overtime only within the terms of a collective agreement, and is encouraged to negotiate collectively on part-time jobs and hours (Wedderburn, 1991).

Very similar measures were instituted in Belgium in 1991 as part of a new regulatory framework for atypical work, which on the one hand facilitated the greater use of part-time and temporary workers, while on the other hand attempted to codify and make more transparent the legal rights of such employees. In particular, the law sought to regulate the amount of overtime to be performed by a part-time worker, to give such employees priority in respect of full-time vacancies, and to control the variation of hours worked by part-timers (Teague, 1995).

In France a similar initiative was launched in late 1992. As part of a wide-ranging package of labour market policies, the government introduced measures designed to encourage part-time working as a means of job-creation, while seeking to balance these new forms of employment with the desire to ensure a degree of protection for the employees concerned. Thus employer social security contributions were reduced by 30 per cent in respect of part-time workers whose contracts met specified minimum requirements, such as equal treatment in terms of working conditions with full-time workers, priority consideration for full-time vacancies, and a guaranteed minimum continuous duration of work. French courts have gone even further, holding for example, that a failure to provide the required written contract for a fixed term contract turned it into an open-ended employment contract of indeterminate length (Wedderburn, 1991 and EIRR 200 at p 27).

In 1991, again partially in response to the European developments discussed in the next section, the government of the Republic of Ireland extended much of its existing employment protection legislation to "regular part-time" workers. Thus legislation on redundancy, unfair dismissal, maternity protection, employer's insolvency, holiday entitlement and worker participation has been extended to employees who have worked continuously for the same employer for not less than 13 weeks, and who are normally expected to work not less than 8 hours a week for that employer. The adoption of an 8 hour threshold, as opposed to the former 18 hour qualifying standard, was prompted by its use as a threshold in the proposed (1990) EC Directives on atypical work. The 13 weeks continuous employment cut-off was chosen to exclude students and other short term temporary workers from the provisions, which might otherwise have acted as a disincentive to employers against offering short term or seasonal employment. However the provisions may not go as far as the Community proposals of either 1982 or 1990, in that they do not ensure the same pro rata entitlements to seniority allowances, wage rates or vocational training (Wilkinson, 1992, and Robinson, 1993).

Thus we can see that through a whole range of varied social and political policies a number of Member States have moved towards a more balanced formula which seeks to mix flexibility with a legitimate concern about the welfare of atypical workers. It is a formidable challenge for the European Union to establish an appropriate common level of regulation, in the face of such ad hoc and uneven approaches to the reform of employment laws. It is to this question that we now turn our attention.

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European Community developments

The justifications for such measures included two elements: social concerns about the welfare of the workers involved, and economic concerns about the creation of conditions necessary for undistorted competition. These two concepts are interwoven in the third Community Action Programme 1991-1995 (COM (90) 449 Brussels 6 November 1990) of which the three draft directives on atypical work were to form a central pillar. There is clearly a tension between the two objectives of welfare and competition, yet the Action Programme maintains that "the economic, industrial and social aspects of the internal market form a whole". (Part 1 para 9) The need for a level playing field of competition requires a broad equivalence of labour standards. Employers in one state will gain an unfair advantage if its labour or social laws permit it to engage in employment practices below the minimum standards required in others. Thus the Action Programme justifies the need to enforce such standards by appealing both to the welfare of workers and to preventing distortions of competition. There must be a common floor of regulation on atypical work relationships so as to avoid "problems of social dumping and...distortions of competition at Community level" (Action Programme pp 15-16).

An attempt to revive the draft Directives was made during the latter half of 1993, at the initiative of the Belgian government. This has not proved successful. At a meeting of the Labour and Social Affairs Council in December 1994 no agreement could be reached on the proposed draft Directive on the "Promotion of Employment and the Protection of Part-time and Fixed-term Employment Relationships", even though the proposal had by this stage been watered-down as a result of efforts to secure a compromise on the part of the German government. The proposal required unanimous approval but the UK government proclaimed firm opposition in principle, expressing fears about its potential negative effect upon employment. It appears that the draft has no chance of adoption on a Community-wide basis. The proposal will now be re-introduced during 1995 under the Social Protocol of the Maastricht Treaty, which means that it will have no application in the UK. There is a possibility that the proposals will be divided into separate texts on part-time and on fixed-term contracts, perhaps because of fears that they may provoke some opposition in Germany. Padraig Flynn, the Social Affairs Commissioner, speaking at a press conference after the December Council, hinted that the new proposals might be more rigorous than the German compromise text. (See the report in Europe of 8 December, 1994.) It seems likely that the proposals for part-time workers will be tackled first, and that the first stage of consultation of the social partners on a new proposal is likely in spring or summer 1995 (See EIRR 252 January 1995, p 30).

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The use of anti-discrimination legislation

The key concept here is indirect discrimination, that is, where an employer imposes a condition or requirement which is facially neutral, but which in fact has an adverse impact upon one sex, and which cannot be objectively justified by the employer. The argument is that to apply a requirement or condition of full-time working in order to qualify for a particular right or benefit, is to impose a condition with which a substantially higher proportion of men than women can comply. This may amount to unlawful indirect discrimination, either under domestic sex equality legislation, or as a contravention of Article 119 of the Treaty of Rome, the Equal Pay Directive (75/117/EEC) or the Equal Treatment Directive (76/207/EEC). Indirect discrimination is a highly complex and technical legal concept. In domestic legislation it is defined in a complicated and procedural fashion; it is not defined at all under the European legislation, but instead has been developed, somewhat unevenly, by the ECJ. The focus of attention in an indirect discrimination case is not the direct comparison of individuals, but rather the wider perspective of looking at women as a class compared with men as a class.

Indirect discrimination has been a vitally important source of legal protection for part-time workers. The ECJ has required equal treatment in respect of a wide range of terms and benefits including hourly rates of pay, access to pay increments, to occupational pension schemes, to sickness pay, entitlement to severance payments under a collective agreement, and the right to paid time off for training. (2) Currently there are three German cases pending before the ECJ concerning the payment of overtime rates to part-time workers (see EOR 49 p 33). There are also domestic cases raising the difficult issues of whether it is lawful to select part-timers first for redundancy. (3) and whether there is a right to workpart-time. (4) In Ireland a professional association, the Pharmaceutical Society of Ireland, has been held responsible for indirect discrimination as a result of its insistence upon a requirement of three years continuous full-time work in order to qualify for certification as a registered pharmacist (Irish Independent 2/12/1994 p 7).

In ex parte EOC the House of Lords set an agenda for radical changes in the reach of employment protection legislation. To some extent the decision has been overtaken by the new regulations, but it is worth noting that these do not extend to Northern Ireland, so that part-time workers in that part of the UK will still have to rely on the authority of ex parte EOC. Their lordships (Lord Jauncey dissenting in part) ruled that the minimum hours qualifying thresholds, which required part-time workers working between 8 and 16 hours each week to work for three years longer than full-timers before acquiring redundancy and unfair dismissal protection, amounted to unlawful indirect discrimination against women. Proportionately far more women than men were likely to be disadvantaged by this requirement. The onus of establishing that the indirect discrimination embodied in the provisions was objectively justified, and thus not an infringement of Article 119 or the Equal Treatment Directive, lay on the Secretary of State. The bringing about of an increase in the availability of part-time work could be regarded as a beneficial and necessary aim of social policy, and thus an objective justification of the provisions. Although this had been argued by the Secretary of State, no convincing evidence had been led, and it had not been shown, by reference to objective factors, to be requisite and suitable to maintain the thresholds in order to achieve the aim in question (see Bilka-Kaufhaus, reference in note 2).

There may be a difference between redundancy pay and compensation for unfair dismissal under European Community law. The case of Case C-262/88, Barber v Guardian Royal Exchange [1990] ICR 616 clearly established that redundancy payments fell within the definition of "pay" in Article 119. Industrial tribunals could therefore entertain claims for redundancy payments by part- time workers in both the public and the private sectors. Although the exclusion of part-time workers from the right to claim unfair dismissal clearly contravenes the Equal Treatment Directive, (and as such could be enforced directly by public sector employees) the question whether it amounts to "pay" within Article 119 is problematic. There is no European ruling directly on the point. In ex parte EOC Lord Keith favoured the view that it should be treated as "pay", as did both the Divisional Court and the Court of Appeal. In a subsequent English case the Employment Appeal Tribunal has ruled directly that unfair dismissal compensation is "pay" and that private sector employees with two years' service, working between 8 and 16 hours a week can bring unfair dismissal claims against their employer (Mediguard Services Ltd v Thame [1994] IRLR 504). The question had been referred to the ECJ by a Nottingham industrial tribunal in the case of Richardson v Barnes (9 May 1994, Case No. 4524/94) but this reference has now been withdrawn in the light of Mediguard. The recent ECJ decision in Case C-91/92, Faccini Dori v Recreb Srl (judgment of 14 July 1994, not yet reported) has confirmed that the delimitation of the respective ambits of Article 119 and of secondary legislation is crucial. Only the former will benefit from full-blown horizontal and vertical direct effect, and Bernard suggests that the ECJ has adopted a much narrower approach to direct effect of directives than has prevailed up to now (Bernard, 1995).

A further controversy surrounds the position of those who work fewer than 8 hours a week, an issue not raised specifically by ex parte EOC. It will be recalled that the 8 hour threshold was adopted by the European Commission when proposing the 1990 Directives, and that it was used in the Irish legislation of 1991. (Ireland is the only other country in Europe to use hours thresholds to restrict rights, according to the evidence submitted by the EOC in ex parte EOC, at p 422C.) In the Court of Appeal in ex parte EOC Lord Justice Dillon specifically stated that the 8 hour threshold was "objectively justified on the ground of administrative convenience, and is not offensive to EC law". However in the House of Lords, Lord Keith phrased his speech in the following terms: "the conclusion must be that no objective justification for the thresholds in the Act of 1978 has been established". Did the use of the plural "thresholds" refer just to the separate thresholds for redundancy cases and unfair dismissal cases, or did it imply that all the thresholds in the 1978 Act, including the 8 hour threshold, were indefensible? The EAT preferred the latter interpretation in Clifford v Devon County Council [1994] IRLR 628, though the point was not fully argued. Perhaps surprisingly the Government too has accepted this interpretation, and embodied the principle in the new legislation. Strictly, the remarks in ex parte EOC about those working fewer than 8 hours a week were obiter.

Ex parte EOC has decided issues of fundamental importance for both constitutional and anti-discrimination law. The EOC adopted the tactic of judicial review proceedings to attack primary legislation on the grounds of its incompatibility with European law, and succeeded in short-circuiting the infraction proceedings provided for in Article 169 of the Treaty of Rome. Once the difficult issue of locus standi was established there was never really any doubt about the outcome, in the light of the Factortame decisions [1990] 2 AC 85; [1992] QB 680. This litigation, in the context of the Common Fisheries Policy, had made it clear that an Act of Parliament subsequent to the 1972 European Communities Act would be subject to judicial review if it contravened the directly enforceable Community rights of an individual.

Ex parte EOC represented a clear ruling that our employment protection legislation was inadequate, and dramatically demonstrated the potency of the Community fundamental principle of equality. As such it may well have marked the high point of the use of the concept of indirect discrimination. It is important to remember that there are major limitations on the use of the concept as a vehicle to challenge the inadequacies of domestic labour law statutes. Disproportionate impact establishes only a prima facie case. The employer is permitted to defend such practices by arguing objective justification, although the ECJ has robustly emphasised that the employer must show a real, specific business objective to be served by the discriminatory practice, and that it is appropriate and necessary to meet the objective (see Bilka-Kaufhaus).

The domestic definition of indirect discrimination has given rise to enormous technical and procedural difficulties: what are the appropriate pools for comparison? Is the phrase "requirement or condition" wide enough to embrace an informal employment practice, a preference, a policy? What is the meaning of "considerably smaller proportion"? To what extent will a tribunal accept matters of common knowledge or social facts, or is detailed statistical evidence a prerequisite?

There are severe restrictions in relation to remedies, in that no compensation is payable in respect of unintentional indirect discrimination.(Sex Discrimination Act 1975, s 66(3)) It is interesting to note that a Northern Irish industrial tribunal has recently awarded compensation in such a case, relying directly upon Article 6 of the Equal Treatment Directive (Mulligan v Eastern Health and Social Services Board [1994] 1258/93). There may be no protection at all where there are statistically few female part-timers compared with male, or where employment is highly segregated so that no comparison can be made. There may be no protection for male part-time workers, though arguably once rights have been extended to female part-timers, to continue to deny them to men would involve direct discrimination.

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The Employment Protection (Part-time Employees) Regulations 1995

Secondly, the regulations have removed all the hours thresholds, including the 8 hour threshold. It is interesting to note that the right of Member States to preserve this threshold in relation to written particulars of employment was specifically allowed in the Proof of Employment Directive (91/533) in Article 1(2)(a). The British Government has chosen not to do so. As noted earlier it might have been possible to maintain a justification for keeping this lower threshold for access to employment rights generally, as was done in Ireland in 1991.

Some questions are not yet answered. What is the possibility of bringing a retrospective claim? The regulations are silent on this issue and must be presumed not to have retrospective effect. Not so Article 119! The ECJ first ruled that Article 119 had direct effect on 8 April 1976, in Case 43/75, Defrenne v Sabena [1976] ECR 455. Theoretically anyone dismissed since that date, who was denied a redundancy payment because they worked too few hours, has an arguable case. The situation of those claiming unfair dismissal is not so clear cut, as noted above, and may depend upon whether they work in the public or private sector. The latter may discover that their only remedy is to sue the Government under the principles established in Joined Cases C-6 and C-9/90 Francovich v Italian Republic [1992] IRLR 84. The time limits within which such claims must be brought are not clear either, though the better view would seem to be that time will only begin to run from the coming into force of these regulations, and in Northern Ireland from the date of the implementing legislation there (see Case C-208/90, Emmott v Minister for Social Welfare and the Attorney General [1991] 3 CMLR 894). The daunting complications likely to arise when individuals assert directly effective Community law rights to re-open old cases are a growing cause for concern.

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Conclusion

It is indeed ironic that this new legislation goes further than the European proposals rejected so recently by the Government. It is estimated that some 746,000 part-time employees in Britain work for less than 8 hours. Ex parte EOC did not decide anything about such workers, yet the new legislation is to apply to them. It is generally accepted that the arguments about objective justification carry more weight when applied to the 8 hour threshold, and such arguments have held sway with the European Council, Commission and Court, with the Irish government, and with the British courts. Attention must be paid to the Secretary of State's warning (noted above) that the Government intends to monitor closely the impact of the regulations upon the availability of part-time work. Is this a case of "give them enough rope"?

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Footnotes

(2) See the following cases: Case 96/80, Jenkins v Kingsgate (Clothing Productions) Ltd (No. 2) [1981] IRLR 388; Case 170/84, Bilka-Kaufhaus GmbH v Weber von Hartz [1986] IRLR 317; Case 171/88, Rinner-Kuhn v FVW Spezial- Gebaudereinigung GmbH and Co kG [1989] IRLR 493; Case C-33/89, Kowalska v Freie und Hansestadt Hamburg [1990] IRLR 447; Case C-360/90 Arbeiterwohlfahrt der Stadt Berlin eV v Botel [1992] IRLR 423; Case C-57/93 Vroege v NCIV Instituut voor Volkshuisvesting BV [1994] IRLR 651; Case C-128/93 Fisscher v Voorhuis Hengelo BV [1994] IRLR 662. Back to text

(3) Compare Clark v Eley (IMI Kynoch) Ltd [1992] IRLR 482 with Kidd v DRG (UK) Ltd [1985] IRLR 190. For a discussion of the issues see O'Donovan and Szyszczak, 1988, chapter 4. Back to text

(4) See Home Office v Holmes [1984] IRLR 299 and Mulligan v Eastern Health and Social Services Board (1994) NI Case No. 1258/93. Back to text

Bibliography

Bernard, N (1995) "The Direct Effect of Directives: Retreating from Marshall (No. 1)?" 24 Industrial Law Journal 97

Docksey, C (1991) "The Principle of Equality Between Women and Men as a fundamental Right under Community Law", 20 Industrial Law Journal 258.

O'Donovan and Szyszczak (1988) Equality and Sex Discrimination Law (Oxford: Basil Blackwell).

OECD (1994) Employment Outlook (Paris; OECD)

Robinson, O (1993) "Part-time Employment in the Economies of Ireland" Review of Employment Topics (Belfast; Labour Relations Agency).

Teague, P "Labour Market Institutions and Economic Performance in Europe", at the University of Ulster, January 1995 (mimeo)

Wedderburn, (1991) "The Social Charter in Britain - Labour Law and Labour Courts?" 54 Modern Law Review 1.

Wilkinson, B (1992) "Protection of Part-time Workers in Irish Law" 23 Industrial Relations Journal 1201.

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