New protection for part-time workers

New record keeping requirements for employers

Filing obligations under the Company Law Enforcement Act 2001

Radical overhaul of pension schemes proposed

When dot.coms go dot.bust

The Protection of Employees (Part-Time Work) Act, 2001 outlaws any discrimination in employment conditions against part-time workers because of their part-time status and provides that all employee protection legislation applies to a part-time employee in the same manner and subject to like exceptions as it applies to a full-time employee.

A part-time employee is defined as someone whose normal hours of work are less than the normal hours of work of a comparable employee. As a result, the previous provisions under the Worker Protection (Regular Part-Time Employees) Act, 1991 requiring that a part-time worker should be in continuous hourly employment for not less than 13 weeks and should normally be expected to work not less than eight hours a week, no longer apply.

A comparable employee is a full-time employee to whom a part-time employee compares himself, where:

1. they are both employed by the same or an associated employer, or
2. the full-time employee is specified in a collective agreement to be a comparable employee in relation to the part-time employee, or
3. neither of the above apply but the full-time employee is employed in the same industry or sector of employment as the part-time employee.

In the case of (i) and (iii) above, one of the following three conditions must be met, namely:

1. both employees perform the same work under the same or similar conditions or each is interchangeable with the other in relation to the work;
2. the work is of the same or a similar nature and any differences are of small importance and irregular; and
3. the work performed by the part-time employee is of equal or greater value with regard to skill, physical or mental requirements, responsibilities and working conditions to that performed by the comparable employee.

The Act says that the part-time employee cannot be treated less favourably than a comparable full-time employee in relation to conditions of employment. These include all terms and conditions of the employment contract, whether statutory or otherwise, including, for example, any consideration (whether in cash or in kind) which the employee receives directly or indirectly in respect of the employment, such as voluntary health contributions, sick pay, use of sports facilities and entitlement under a pension scheme.

It is important to note that a part-time employee cannot claim exactly the same conditions of employment as a comparable full-time employee but only a pro-rata entitlement. In other words, the entitlements should be related to the proportion which the normal hours of work of that employee bears to the normal hours of work of the full-time comparable employee. Employers clearly need to consider this in relation to overtime payments in that if the full-time comparable employee is paid overtime after working his maximum hours per week, then the part-time employee is also entitled to overtime if he has also worked his maximum hours per week.

The Act also provides that a part-time employee may be treated less favourably than a comparable full-time employee where such treatment can be justified on objective grounds (which would mean considerations other than the status of the employee as a part-time worker) and that the less favourable treatment is for the purpose of achieving a legitimate aim of the employer and such treatment is necessary for that purpose. It should also be noted that there is a provision in the Act which provides that a part-time employee may be treated less favourably in relation to any pension scheme or arrangement where he normally works less than 20% of the normal hours of the comparable full-time employee.

There is no obligation on an employer to allow his staff to work on a part-time basis, although the general principal at a European level is that an employer should as far as possible give consideration to a request by workers to transfer from full-time to part-time work and vice versa, and provide information on the availability of such positions to all staff.

Employers should also ensure that they do not penalise staff for refusing to accede to a request to transfer from full-time work to part-time work or vice versa. Examples of such penalties would include the dismissal of the employee, an unfavourable change in the conditions of employment or selection for redundancy. However, there is an exception to the penalisation provisions in the Act in that an employer will not be considered to have penalised an employee in relation to a request by the employer that the employee transfer from full-time work to part-time work or vice versa if:

1. the employer has substantial grounds both to justify making the request and for taking any action consequent on the employee's refusal to transfer, and
2. taking the action is in accordance with the employee's contract and with employment rights legislation.

An employee may refer a dispute in relation to an entitlement under the Act to a rights commissioner, who may require the employer to pay compensation not exceeding two years' remuneration.

For further information please contact Jennifer O'Neill.

Companies will have to be a lot more diligent in keeping employee records following the introduction of new regulations last November. The regulations were made under the Organisation of Working Time Act, 1997 and set out the types of information that employers must record. These include:

1. The name and address of each employee, their RSI number and a brief statement of their duties.
2. A copy of the statement of terms and conditions of employment provided to each employee.
3. Details of the days and total hours worked each week by each employee.
4. Details of leave taken by each employee by way of annual leave and public holidays, and the payment made to each employee in respect of that leave.
5. Details of any 'additional days' pay' paid to an employee in respect of the public holiday entitlement.
6. A copy of any notice given to an employee under section 17 of the Act (which deals with giving employees information about starting and finishing times and any requirements to work additional hours).

Days and hours worked

If there are no clocking-in facilities, the employer must record the days and hours worked by each employee each week (excluding meal breaks and rest breaks) using a prescribed Form OWT1. However, the employer and employee may agree that the employee will complete the Form OTW1, which can be signed and retained by the employer each week.

Exemptions

An employer is exempted from keeping records of rest breaks and rest periods if he uses electronic record-keeping facilities, or manual record-keeping facilities using Form OTW1, as long as he:

1. Notifies each employee in writing of their entitlement to the rest breaks referred to in sections 11, 12 and 13 of the Act (daily rest entitlements, rest breaks at work and weekly rest entitlements)
2. Implements procedures and notifies employees in writing of these procedures whereby employees can notify the employer (in writing within one week of the break in question) of any break/rest period which was not availed of and the reason for not availing of the break
3. Keeps records of having notified each employee of his or her rest entitlements o
4. Keeps records of any notifications made to the employer by the employee regarding missed breaks.

Once notified of missed rest, the employer must allow the employee to have a rest period or break equivalent to the missed break as soon as possible, taking into account work circumstances and the employee's health and safety. But if the employee decides not to avail of this rest entitlement, it will not constitute a breach of the legislation by the employer.

The general records which must be kept by employers who are exempt from keeping specific records of rest breaks must include the name and address of each employee, his or her RSI number and with a brief description of their duties. Failure to keep records under the terms of the Organisation of Working Time (Records) (Pre-scribed Form and Exemptions) Regulations 2001 is an offence and the employer may be held liable, on summary conviction, to a fine of up to €1,900.

For further information please contact Michael Kavanagh or Aoife Bradley.

Company law enforcement has a new face and a new regime, with the appointment of Paul Appleby as the Director of Corporate Enforcement and the enactment of the Company Law Enforcement Act, 2001 (CLEA). Part 6 of the Act contains provisions expressly designed to improve compliance with filing annual returns and accounts.

The Act contains express provisions for imposing different fees for documents dependant on when they are filed. From 1 January, a filing fee of €30 applies to an annual return filed with accounts. The accounts that are attached to the annual return should not be more than nine months old. The penalty for filing late is €100 plus €3 per day thereafter.

Under the current regime, 77 days are allowed for delivery of the annual return to the Companies Registration Office; on day 78, the filing penalty becomes due. The new Act changes this and with effect from 1 March 2002, an annual return date (ARD) will be introduced for each company. The ARD is a specific date in every year to which a company will be obliged to make up its annual return.

After 1 March 2002, a company must file its annual return with accounts no later than 28 days after the date to which the annual return has been made up to. The ARD will be determined by reference to the anniversary of the company's most recent annual return date. Where a company has not filed an annual return and it is in existence prior to 1 March 2002, the ARD will be six months after the anniversary of incorporation.

The ARD for a company incorporated after 1 March 2002 will also be six months after the anniversary of incorporation, but no accounts will have to be annexed to this particular annual return.

A company will be able to extend its ARD by up to six months on any one occasion during the first 12 months after the commencement of the relevant section of the Company Law Enforcement Act, 2001 on 1 March 2002. The optimum ARD dates for companies will, of course, be nine months after the year-end of the company.

In support of the new filing requirements and penalties referred to above, the Registrar of Companies has been granted greater powers. The Company Law Enforcement Act, 2001 provides that a certificate from the Registrar detailing the facts as to filing or non-filing will be admissible in court as proof. In addition, where the Registrar has reasonable grounds for believing that a person is in default of filing an annual return or similar document required under the Companies Acts, he may serve a notice on the company or its officers. The notice will request them to remedy the default and pay a prescribed amount. If this is done during the period specified in the notice, then prosecution of the person to whom the notice is delivered will not be instituted.

The Company Law Enforcement Act, 2001 has also increased the maximum fine for all summary offences under the Companies Acts to €1,905 and the term of imprisonment on conviction on indictment has been increased to five years. In addition, where the Companies Acts provide that an officer of a company is in default and shall be liable to a fine or penalty, the officer shall be presumed to have permitted a default by the company unless he can establish that he took all reasonable steps to prevent it.

In summary, the Company Law Enforcement Act, 2001 aims to impose much stricter compliance requirements on the filing obligations of companies and has given the Director of Corporate Enforcement considerable powers to ensure that company law compliance is strictly adhered to. Companies and their officers will therefore need to be far more vigilant about Companies Registration Office filings if they are not to incur penalties and prosecution.

For further information please contact Alan Browning.

Occupational pension schemes in this country are set to undergo a radical overhaul if the Pensions (Amendment) Bill, 2001, as published, becomes law. The headline news items in the Bill relates to setting up a framework for personal retirement savings accounts and the creation of a Pensions Ombudsman, but the draft legislation envisages that pension scheme members will be given extra protections - and some of these will inevitably have a cost implication for employers.

Remittance of contributions

The Bill proposes new rules dealing with the time by which pension contributions must be remitted to a scheme. These will now have to be paid within 21 days of the end of the month in which the deductions from employees' pay were made. The obligations cover employee and employer contributions for defined contribution schemes. Employers must give staff and scheme trustees monthly statements of the amount deducted and the amount of the employer contributions paid to the scheme in the previous month. Some employers that pay over contributions less frequently will now need to make monthly remittances, and some may need to reorganise their existing arrangements to comply with the new rules.

Minimum benefit level

Defined benefit plans will need to provide minimum benefit levels for those who retire. The value of a pensioner's entitlement must at least equal 120% of his personal contributions with interest. This guarantee will apply to contributory pension schemes only and its purpose is to mitigate the effect of the integration of occupational and social welfare pensions on low-income earners at retirement. Whether it will cause funding implications for an employer is dependent upon the profile of the scheme.

Greater pension portability

At present on leaving service, employees with five years' membership of a pension scheme can transfer benefits to the new employer's pension plan. The Bill proposes that the five-year period shall be reduced to two years. Since younger employees are unlikely to stay in service for five years, they have, in the past, not been fully able to access the benefits of their pension plan when they left service. The new two-year vesting rule will benefit them. It is clear that there is less likelihood in the future of windfalls accruing to a pension scheme due to early leavers. Also, depending upon the financial health of a scheme, the increased preservation and revaluation rights may give rise to extra financial costs.

At present, transfers are authorised between funded schemes and from funded schemes into personal retirement bonds. In the future, transfers will be permitted from funded schemes into State pay-as-you-go schemes and PRSAs, and it is proposed that transfers into overseas schemes will also be permitted.

This is all good news for members, as it will enable increased flexibility and portability of pension benefits.

Wind-ups and reorganisations

Once the operative provisions are in force, if an employer is intending to wind up a scheme or reorganise one or more pension schemes within a group, extra regulation will apply to them. Consequently, employers may consider expediting such events prior to that date. In relation to wind-ups, there will be additional requirements for disclosure and consultation. Where a surplus arises, it must first be used to revalue the pre-1991 benefits for members with deferred entitlements. Also, members must be consulted and given an opportunity to make 'observations' which must be considered. Similar obligations arise in an insolvent wind-up, where benefits are being abated. It is likely that the consultation process will add to the cost and duration of the winding-up.

Often, a company with an acquisition trail profile rationalises the pension plans of companies acquired to bring them within one large group scheme. This is usually done to streamline administration procedures and expenses. Various legal considerations arise when this type of transaction occurs. Actuarial certification of funding levels as between the transferring and receiving schemes will soon be required, as well as disclosure to members prior to the transfer. The trustees of both schemes will have to comply with conditions to be set out in regulations. They will need to give prescribed information to members and, if member consent to the transaction is not required (under the rules), members must be given an opportunity to make 'observations' which must be duly considered.

PRSAs

A lot has been written about the proposed new regime for personal retirement savings accounts. Where an employer does not provide a pension arrangement for employees after six months of joining service, the Bill proposes that it must offer participation in a PRSA. The practical effect of this is that employers may need to either amend the terms on which employees are admitted to an existing plan to enable members to join after six months of joining service, or run a PRSA along with an existing plan or on a stand-alone basis, if no pension plan is currently in place. All of this will greatly add to members' protection, but at a cost. The new regime will add an extra layer of duties to trustees of pension plans and to employers. It remains to be seen in what form the Bill is enacted.

For further information please contact Fiona Thornton.

Profit warnings, job losses and cutbacks as technology stocks plummet have domin-ated media headlines here and around the world. Companies at the lower end of the market have been hit particularly hard and now find themselves caught in the downward spiral currently engulfing the sector.

Among the issues facing such cash-strapped or insolvent IT companies are insolvency, data protection and copyright infringement.

Insolvency

There are number of routes available to a company being wound up:

• It may be wound up voluntarily because it cannot pay its debts
• Creditors can petition the High Court to appoint an official liquidator
• An alternative route, dubbed the 'work out', is where a business attempts to 'trade' paying of its creditors and winding down the business with the intention of walking away with no liabilities owing to its creditors.

A company may go into examinership or receivership. The examiner, who is appointed by the court, aims to examine the affairs of the company with a view to ensuring its survival. The receiver, on the other hand, manages the affairs of the company in the hope that the outstanding debts can be met.

A liquidator will take control of the assets of the company with a view to realising those assets in accordance with the Companies Acts. This may well involve auctions of computer-hardware, given the nature of e-business. But this hardware may contain databases protected by the Copyright and Related Rights Act, 2000, and this could give rise to copyright and data protection issues.

Data Protection Act 1988

Some organisations, public or private, that possess personal data, public or private, are required to register under the Data Protection Act, 1988. In the world of e-business, databases of personal data are valuable assets and may be a useful form of income once the consent of the data subject has been validly obtained for the uses to which it will be put. Amongst other things under the 1988 Act, a company is obliged to keep data safe and secure and not to retain the data longer than is necessary for the relevant purpose. Personal data must be protected by technical and other means against destruction and disclosure.

Copyright issues

But what if the IT company's hardware, having been wiped clean, is then bought by individuals who intend to extract any remaining 'irretrievable' or 'forgotten' software with the intention of using this software or perhaps improving it? This raises questions about copyright infringement and who owns the copyright to any new improved software.

On 1 January 2001, the Copyright and Related Rights Act, 2000 became law. The scope of this Act includes all aspects of copyright to include, inter alia, original databases and computer programs among other works. Certain offences attract fines of up to £100,000 and prison sentences up to five years. Under the 2000 Act, copyright in software will vest in the author who obtains exclusive rights to exploit it. This right lasts for 70 years after the death of the author, in the case of literary works.

Ensuring that you get the best advice

Factors outlined in studies show that while under-capitalisation usually derives from a variety of factors, it is not the root of business failure itself. Businesses should invest in high-calibre management with the capacity to manage the financial aspects of e-commerce. Given that directors may face penalties under legislation for failing to keep records and appropriate books, it is not only prudent practice to do so but is also required under legislation.

For further information please contact Eoin Cunneen.