The problem
As the owner of a thriving restaurant, you want to recruit temporary staff over the busy Easter period. You currently offer permanent staff a clothing allowance. You also provide contractual sick pay and pension contributions.
The Law
The Fixed-Term (Prevention of Less Favourable Treatment) Regulations came into force on 1 October 2002. The regulations make it unlawful to discriminate against staff employed under fixed-term contracts by treating them less favourably than staff on permanent contracts doing similar work, unless it can be objectively justified.
Fixed-term contracts are those lasting for a specific period or until the completion of a specific task or event - for example, employees covering maternity leave or peaks in demand, or working on task contracts.
To justify a specific contractual term that is less favourable, employers can take the "package approach": provided the overall package being offered to fixed-term employees is no less favourable than the one offered to permanent staff, a particular term that is less favourable will be justified.
Expert advice
In the example above, the employees that you recruit over Easter will be classed as fixed-term employees. You could try to avoid the regulations by making their contracts open-ended but, since working over Easter is a specific task, this would be difficult.
You will first need to compare the contracts of the temporary staff with those of the permanent staff who are doing broadly similar work. You should take into account their skills and experience, if these are relevant to the work they are contracted to do.
Any terms that are less favourable to fixed-term staff should be changed. For example, the clothing allowance could be pro-rated depending on the length of the fixed-term contract.
You can probably justify not providing pension contributions because they will be working for you for such a short period, so instead you might give fixed-term staff a pro-rated sum or increase their hourly rate. You might also be able to justify not paying them sick pay if they have been employed to work on particular days over the Easter period and are off sick.
However, the easiest way is to change the contracts of all staff by adding a qualifying period for each benefit. If the qualifying period is long enough - say, three months - then you would avoid having to pay the benefit to the fixed-term staff.
Check list
* When employing temporary staff, ask yourself whether it is necessary to employ them under a fixed-term contract, or whether it can be open-ended, so that the regulations are avoided.
* Review your benefits package and compare the contracts of fixed-term staff and permanent staff.
* Where there are any differences between the contracts, decide whether you can justify the less-favourable treatment - using the package approach, if appropriate - or whether you need to make any changes.
Beware!
A fixed-term employee who thinks that he or she has been treated less favourably can submit a request for a written statement of the reasons for the treatment. You must respond within 21 days.
If an employment tribunal finds that an employee has been treated less favourably, it can award as much compensation as it considers just and equitable, taking into account the benefit that the employee would otherwise have had.
If you dismiss a fixed-term employee because the employee has requested a written statement or brought proceedings under the regulations, or you think the employee may do so, the dismissal will be automatically unfair.
The employee does not need to have any qualifying service to bring a claim for automatic unfair dismissal and there is no limit on the amount of compensation that can be awarded.
The employee also has the right not to be subjected to any detriment as a result of requesting a written statement or bringing proceedings.
Contacts
Laura Casey, Lewis Silkin
020 7074 8000
laura.casey@lewissilkin.com
Employment Law and Industrial Relations Helpline
020 7396 5100