This Act was passed in July, 2003 and applies to temporary workers (but excludes trainees). Henceforth temporary workers may not be treated less favourably, as regards their remuneration, than a comparable permanent employee.

Certain exceptions are permitted. Parity of benefits must be provided by the employer by reference to the proportion of hours worked as between the permanent comparator and the temporary employee. So, if they both work a 40 hour week the temporary employee must, in principle, receive the same remuneration (including pension benefits) unless permitted exceptions apply.

Key points to watch for are that you need to consider the terms of the temporary employees employment contract as a whole when looking at whether or not legislation has been breached in respect of any particular term. If the terms are regarded as at least as favourable as the terms of the comparator's employment contract, the treatment is regarded at justified on objective grounds.

This sounds easier in principle rather than in practice: one contract may offer better pay (including pension rights) whereas another may offer better conditions of employment such as holidays and other non-monetary benefits including prospects of promotion. However, the focus of the legislation suggests that in making this comparison one should only look to financial terms.

Difference in treatment is permitted where it can be justified on objective grounds. The legislation offers little guidance as to what objective justification constitutes. It must be based on considerations other than the status of the employee concerned as a fixed-term employee. The less favourable treatment must be for the purpose of achieving a legitimate objective of the employer which must be appropriate and necessary. It is unclear if previous EU decisions on the scope of an employer's objective justification, in the context of gender equal pay laws, will be taken in to account under this legislation. That case law suggests that economic considerations of an employer are not objectively justifiable, per se.

The Minister for Enterprise, Trade and Employment is permitted to introduce regulations to enable any provision of the Act to have full effect. Possibly regulations will be issued which will expand on these areas of doubt.

Where a temporary worker works less than 20% of the normal hours of their comparator there is no entitlement to comparable pension benefits.

If some conditions of employment carry with them a period of service qualification this must be the same for fixed-term employees and their comparators unless a different length of service qualification can be justified on objective grounds.

This may be relevant as regards the entitlement to join an employer's pension scheme. Henceforth, it is appropriate for employers to offer the same service qualification for entry to the scheme as between temporary and permanent employees.

The legislation is not gender specific and thus comparisons lie as between a fixed-term employee and his/her permanent comparator. In big picture terms, the comparator is required to be engaged under the same or similar conditions or carry out work of a similar nature. However, the permanent comparator can, but does not have to, be located within the same workforce as the temporary employee's employer (or its associated employer). The permanent comparator can be located within another employer entirely provided it is within the same industry or sector of employment. Additionally, for employments regulated by collective agreements the legislation enables those type of agreements to specify the type of employee who could be a comparator in relation to the relevant fixed term employee.

The foregoing concepts of using a collective agreement to identify a comparator or locating one within the same industry or other sector are not to be found within familiar gender equality laws. They are to be found within equality laws applicable to part-time workers which were introduced in 2001.

The fact that the temporary worker can cast his net widely to find an appropriate comparator could present many employers with difficulties.

Enforcement of the Act's provisions arise by the issue of a complaint to a Rights Commissioner within six months of a breach of the Act or the termination of the employment contract, whichever is the earlier. This period may be extended by the Rights Commissioner to twelve months in certain circumstances. The remedy is a decision of the Rights Commissioner which can incorporate various matters including requiring the employer to pay the employee compensation of up to two years remuneration, or comply with the relevant provision of the Act.

As far as pension benefits are concerned, where an employer is providing pension benefits it should first establish if the pension scheme has any discriminatory conditions in relation to, for example, the exclusion of temporary employees as members either directly or indirectly. If a scheme rule is discriminatory it must be changed. The entry rule may only admit the inclusion of permanent employees or may admit employees at the discretion of the employer. In that event the employer needs to satisfy itself that its practice to date has not been to exclude fixed-term employees and that this will not happen in the future.

If the employer's industry is one which could admit of a permanent employee being specified in an applicable collective agreement as being an appropriate comparator for the purpose of the legislation, the employer needs to check if this has happened. If the employer's industry is likely to be one which will enable an employee of another organisation to be regarded as a comparable person in respect of whom the employer would be required to grant to its temporary workers pro-rated comparable pension benefits, it needs to check this out. In the majority of cases it may be difficult to ascertain this situation because it will not be possible to know the remuneration terms of one's competitors' employees. This feature of the legislation appears to be anti-employer and is something which was introduced on top of the requirements of the applicable directive.

Even if the pay practice looks, at first sight, as if it is discriminatory as regards the provision or absence of pension benefits the employer then needs to assess if any of the permitted exceptions apply. It needs to look at the terms of each fixed-term worker's contract as a whole and ascertain if this is likely to be least as favourable as those of any possible comparator. Since the whereabouts of a comparator may be widely located this may be a difficult task.

Judicious use of PRSAs when employing fixed-term workers is likely to enable employers provide comparable pension benefits, at least as regards defined contribution schemes, enjoyed by permanent employees without falling foul of this legislation.

The conclusion has to be that employers need to be vigilant of the employment terms and conditions applicable to temporary workers or else claims may arise.

August 2003

For further information please contact Fiona Thornton.