UK: House of Lords Rules on Part-time Workers’ Claims

In the important test case of Matthews v Kent and Medway Towns Fire Authority the House of Lords has made it considerably easier for part-time workers to claim equal treatment with their full-time colleagues. As a result, employers who exclude part-timers from pension and other benefits are likely to face growing demands for parity of terms and conditions (albeit on a pro rata basis) which could prove difficult to resist

Background

The Matthews case concerned a group of part-time firefighters. They argued that their employer had breached the Part-time Workers Regulations by treating them less favourably than their full-time counterparts, in particular by denying them access to the firefighters' occupational pension scheme. An employment tribunal initially rejected their claims. In its view the claimants could not compare themselves with the full-time firefighters because they were not employed under the same type of contract and did not carry out broadly similar work - both prerequisites to a successful claim under the Regulations.

This view was subsequently confirmed by the EAT and in part by the Court of Appeal which agreed that certain differences between the duties carried out by the two groups meant that their work was not broadly similar. However these decisions were widely criticised as driving a coach and horses through the Regulations, effectively leaving many part-time workers with no means of claiming equality.

The House of Lords has now taken a different approach. In its opinion not only did the two groups of firefighters work under the same type of contract, the similarities in their jobs meant they also did broadly similar work. This emphasis on the similarities rather than the differences in the work of the firefighters is significant and means that part-timers may be able to bring claims even if their full-time comparators carry out some additional functions.

The Matthews case clearly lowers the threshold for bringing claims under the Part-time Workers Regulations and the case will have ramifications for those sectors such as higher education and retail which employ significant numbers of part-timers. However it should not be forgotten that employers can defend such claims on the basis that any different treatment is objectively justified and advice on this issue should be taken without delay.

In the recent case of Cable and Wireless v Muscat, the Court of Appeal has confirmed that an agency worker may be an employee of the end user client (and so able to rely on a broad range of employment rights) despite there being no written contract between them.

It is notoriously difficult to determine the employment status of agency workers. The triangular relationship between the worker, the agency and the client allows the agency to argue (often successfully) that it has insufficient control to be the employer of the worker. On the other hand there is usually no contract between the worker and the client and such documentation as exists usually provides that the worker is not to be regarded as the client's employee. This can result in the agency worker being employed by neither the agency nor the end user, thereby having greatly reduced employment rights.

In response to this state of affairs, two years ago the Court of Appeal in Dacas v Brook Street Bureau indicated that in some circumstances there could be an implied contract of employment between the worker and the end user. That case was widely criticised, not least because the judges appeared to be making the law rather than Parliament. However the Muscat decision has now upheld the Dacas reasoning, stating that it was necessary to imply an employment contract with the end user in the case before it ‘to give business reality to the relationship’. Notably in both the Dacas and the Muscat cases the relationship between the worker and the client had been ongoing for a number of years.

There is now a real risk that agency workers assigned to the same client for a year or more will have unfair dismissal rights against that client. End users may want to reconsider their use of agency workers as a result. However important questions still remain, not least whether an implied contract of employment can arise in respect of a short term assignment (eg for three months). The Government has indicated recently there is unlikely to be legislation in this area and so there will almost certainly be further case law in the future.