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Standing
up for your rights Part-time workers have, until recently, not enjoyed the same employment rights given to their full-time counterparts. But with an ever-evolving society and changing work patterns has come the move away from the typical model of a traditional employee and the rights of part-time workers have been recognised. Helen Symonds, consultant IFA at Punter Southall Financial Managagment says: “There has been an increase in short-term contracts, and there has been a huge rise in people going into gradual and phased retirement, part-working and part drawing benefits.” Historically, many employers have not allowed part-timers to join their pension schemes, but since the legislation in July 2000, there has been a steady rise in cases concerning part-time workers and pensions. The regulation made it unlawful for part-time workers to be treated less favourably than full-time workers, which meant that many became eligible for entitlement to the same pensions, benefits, and sick pay on a pro rata basis as full-timers. As many part-time workers are women, an employer could also face a claim for sex discrimination for discriminating against part-timers, and the legislation ruled that part-timers should have the same access to occupational pension schemes, unless exclusion could be justified on objective grounds. The best-known case to date is Preston vs Wolverhampton Healthcare NHS Trust, where 60,000 part-time employees claimed backdated membership of their employer’s pension scheme. A House of Lords ruling found that part-time employees of the NHS Trust may be able to claim retroactive membership of the occupational pension scheme if it could be proved that they had been unlawfully excluded from it through indirect sex discrimination. In November this year, regional chairman of employment tribunals in Nottingham, John Macmillan, held a directions hearing in London regarding all the part-time pension claims currently outstanding, in order to decide how the cases were going to progress and to ascertain the issues that would need to be determined, in the lead test cases in each sector. All the other cases will be dealt with pending the outcome of the lead cases. According to Charles Pallot, partner at law firm Bevan Ashford, the tribunal highlighted the fact that, as the regulations have changed over the years, some people have become entitled to join the pension scheme who previously did not meet the criteria. For example, someone who had increased their working hours might be eligible to join the scheme, or the qualification criteria might have been changed to become less rigourous due to the change in regulation, allowing more people in. Pallot explains: “A lot of employers in the case are running the argument that when the employee did become entitled to join the pension scheme but didn’t, their claim should end at the point where they had the opportunity to join, not when they actually did. It is these sorts of complex issues that will be considered by the tribunal in the test cases.” He adds that at the present stage, the tribunal is still going through the “show cause” procedure, where if an employee didn’t make a claim within six months of their employment coming to an end, that employee has to “show cause” why their case shouldn’t be struck out. Another case regarding part-timers that has the potential to have an impact on future pension cases is that of Shillcock. This case on part-timers rights, which had been brought to the pensions ombudsman, has recently been appealed, and is likely to be brought back to court in February this year. Mrs Shillcock, a part-time worker, brought the case on the grounds that her employer’s pension scheme rules included a lower earnings limit deduction from part-time employees’ pensionable salary. This meant that employees earning less than the lower earnings limit were effectively denied scheme membership. Many part-time workers earned less than the lower earnings limit and many of these were female. The ombudsman ruled that the inclusion of a deductible for pension calculation purposes was discriminatory against Mrs Shillcock. Graham Baker, assistant solicitor at Bevan Ashford says: “It looks like many schemes have heeded the pension ombudsman’s decision, as they do not want to appear to be acting in a manner that is discriminatory.” Similarly, the Employment Bill which was introduced in the House of Commons in November 2001, means that from this July, employers will no longer be able to discriminate against employees in fixed-term contracts in relation to pay and pensions. The Bill gives power to the Secretary of State to pass regulations to protect the pay and pensions of such employees, which is also in keeping with the EU directive on fixed-term work that the government must incorporate into UK law by this summer. With reference to the new bill, Andrew White, a partner at Rowe & Maw, says: “A lot of pension schemes exclude temporary or casual staff who would come within the definition of fixed-term workers. When that legislation comes in, I do not think employers will be able to exclude the temporary employees from pension schemes if they let the permanent employees into it. They will have to give them the same rights as permanent employees.” The effect on pensions in the outcome of the legislation around part-timers and those with fixed-term contracts will only start to be apparent later this year, as the results of tests cases begin to emerge. With regard to the part-timers’ case, either the decision of the tribunal is accepted, and all other cases are determined on the basis of the principles which the London case will set out or alternately another round of appeals will begin. Pallot comments: “I suspect that because of the volume of cases and amount of money they represent, it would be very surprising if there were not appeals. The unions would not be happy, and neither would employees.” According to Charles Ansdell, corporate relations manager at IFAs Inter-Alliance, the flexibility of part-time work should be reflected in the choice of pension. He says: “Stakeholder pensions are particularly useful as you do not need to make regular contributions. This gives part-time workers a wider option. However, flexibility very much depends on individual circumstances, and it’s best to start providing for your retirement as soon as possible.” Symonds
agrees, adding: “Pension products need to keep up with employment
trends, and there are products which have the flexibility and portability
to be able to do that.” Many pensions lawyers do not see an end
to the complexity around part-timers’ employment rights coming to
an end any time soon, and a way forward essentially hinges on the
results of the test cases to be heard later this year. What is clear,
however, is that future pension arrangements will also have to evolve
to keep up with changing legislation and employment choices if they
are to remain a viable retirement option for the increasing number
of people who take part-time work.
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