AWD144

• “...unlike other similar employment right statutes the Act does not require a claim for equal pay by reference to an actual comparator, nevertheless the rate that is to be paid to employees of the hirer who are engaged in the same type of work is an important evidential tool. Where a rate of pay is generally applicable to all workers performing the same work as that performed by the agency it may be readily inferred that if the agency worker was employed by the hirer heor she would be similarly paid”.

• •significant savings in cleaning, security and energy costs;
  •significant savings in audit fees and tax fees;
  •voluntary redundancy option;
  •reducing terms and conditions of existing employees;
  •applying different terms and conditions for new employees.

The Act was signed into law on 16^thMay 2012. Its purpose is to transpose into Irish law Directive 2008/104/EC of the European Union on Temporary Agency Work. Consequently, the Court is obliged to interpret and apply the Act, as far as possible, in the light of the wording and purpose of the Directive so as to achieve the result envisaged by the Directive. The Act commenced on 16^thMay 2012, although sections 2, 3, 4, 5, and 6 are deemed to have commenced on 5^thDecember 2011, the date on which Members States were obliged to implement the Directive.

The purpose of the Directive is set out at Article 2 thereof as follows: -

• The purpose of this Directive is to ensure the protection of temporary agency workers and to improve the quality of temporary agency work by ensuring that the principle of equal treatment, as set out in Article 5, is applied to temporary agency workers, and by recognising temporary work agencies as employers, while taking into account the need to establish a suitable framework for the use of temporary agency work with a view to contributing effectively to the creation of jobs and to the development of flexible forms of working.

• The principle of equal treatment

  1.The basic working and employment conditions of temporary agency workers shall be, for the duration of their assignment at a user undertaking, at least those that would apply if they had been recruited directly by that undertaking to occupy the same job.

• 6.— (1) Subject to any collective agreement for the time being standing approved undersection 8, an agency worker shall, for the duration of his or her assignment with a hirer, be entitled to the same basic working and employment conditions as the basic working and employment conditions to which he or she would be entitled if he or she were employed by the hirer under a contract of employment to do work that is the same as, or similar to, the work that he or she is required to do during that assignment.

The meaning to be ascribed to the term “basic working and employment conditions” is set out at Section 2 of the Act as follows: -

• “basic working and employment conditions” means terms and conditions of employment required to be included in a contract of employment by virtue of any enactment or collective agreement, or any arrangement that applies generally in respect of employees, or any class of employees, of a hire, and that relate to—
  • (a) pay,

    (b) working time,

    (c) rest periods,

    (d) rest breaks during the working day,

    (e) night work,

    (f) overtime,

    (g) annual leave, or

    (h) public holidays;

• (a) basic pay, and

  (b) any pay in excess of basic pay in respect of—

  (i) shift work,

  (ii) piece work,

  (iii) overtime,

  (iv) unsocial hours worked, or

  (v) hours worked on a Sunday,

As the Court held inTeam Obair Limited v Mr Robert Costello AWD 134

• “it is clear from the opening words of this provision that in order to constitute ‘basic working conditions’ for the purpose of the Act the conditions in issue must be provided by virtue of “any enactment or collective agreement, or any arrangement that applies generally in respect of employees or any class of employees, of a hirer”.It seems clear from a reading of this provision as a whole that it is the enactment, collective agreement or arrangement that must be of general application rather than the rate of pay or conditions of employment that results from the utilisation thereof.
  

  There will be little difficulty in practice in identifying conditions of employment derived from an enactment or a collective agreement. But the term “any arrangement”is less certain. It seems that the use of this term was intended to give s.6 of the Act a wide ambit so as to encompass conditions of employment established within a hirer by systems used for that purpose in employments where collective bargaining does not take place. It can also include less formal arrangements established by custom and practice. However the term connotes an objectivemodus operandifor determining conditions of employment rather than a subjective assessment of individuals.”

As appears from Section 6 of the Act and Article 5 of the Directive an agency worker is entitled to the same basic working and employment conditions as those to which he or she would be entitled if employed by the Hirer. That raises a question as to what employment conditions the agency worker would have become entitled to under any enactment collective agreement, or any arrangement of general application to similar workers if he or she had been employed by the Hirer at the time his or her assignment commenced. As the Court held inTeam Obair“that question involves an element of hypothesis but it must be grounded on reliable evidence rather than by mere speculation or assertion”.

While thebasic working and employment conditionsapplied to actual direct employees of the Hirer who carry out like work to that of the Complainant is obviously an important evidential tool it is not determinative of the case under the Act. Circumstances may have changed since the employees of the Hirer who may be relied upon were first employed and pay and conditions for new entrants may have been altered. Whether that is the case is a question of fact to be established on evidence which in most cases will be within the peculiar knowledge or power of procurement of the Respondent and beyond a Complainant’s capacity of proof. Oral evidence was adduced by both parties on this point.

The Evidence

Ms. Ursula Ruane, Production Operator, Celestica Ireland Limited

Evidence was given on behalf of the Complainant by Ms. Ursula Ruane who is employed by the Hirer in the same capacity as the Complainant. Ms. Ruane told the Court in evidence that she commenced employed with the Hirer on 2^ndOctober 2000. She said that all employees were asked to take a pay cut in June 2009. However, as there had been no pay rise since 2007, there was no agreement on a pay cut. She said that Management explained to the workforce that if there was no agreement on pay reductions the Company would have to close down due to loss of contracts. Therefore a proposal to cut the shift premium by 10% was proposed, balloted upon and accepted. Ms Rune said that as a result the Company acquired new business. This required extra staff to be recruited. Employees who had been made redundant were brought back as agency workers. She said that this gave rise to some anxiety as employees were concerned about losing the opportunity to work overtime.

Ms Ruane said that while it was clear that the Company was facing real difficulties and employees were asked to ballot on shift premium reductions it was not made known to them that new employees would be recruited on the lower rates which apply to the agency workers.

Ms Margaret Cox,Managing Director, ICE Group

Evidence was given by Ms Margaret Cox, Managing Director, ICE Group, on behalf of the Respondent. The Respondent is involved in recruiting employees on behalf of clients. Once recruited they are employed directly by the third-party client and the Respondent has no further relationship with them or alternatively the Respondent as an employment agency places the agency workers with a hirer.

Ms. Cox told the Court that her company had been supplying services to the Hirer for many years – payroll services, temporary agency workers to cover for absences, etc. While it had not previously supplied production operators to the Hirer, the supply of such workers to other businesses is a major part of the Respondent’s business.

In 2009 the Hirer sought Production Operatives and discussions commenced with the Respondent on the appropriate rate of pay to apply. Ms Cox said that she had discussions with HR Management and informed them that at that point in time a number of companies had reduced pay rates by approximately 10% due to financial pressures at the time. Thereafter, discussion commenced between the Respondent and the Hirer on what would be acceptable rates of pay and rates for similar organisations within the region were examined. Ms Cox said that the Respondent needed clarity on the rates of pay issue before it could recruit and it was not sure at this point whether Production Operators would be supplied to the Hirer on a placement basis or an agency worker basis.

It was agreed that the rate of pay would reflect the market rates at the time and eventually it was decided that the Production Operatives would be paid €9.00 for day work and €10.35 for shift working and that it was further decided that workers would be supplied on an agency basis. Recruitment took place between July and September 2009. Ms Cox said that she was aware the direct employees were on higher rates of pay/conditions at that time.

Ms Cox said that when the Act came into force she wrote to the Hirer seeking information on the rates of pay and basic working conditions which would apply to direct employees if the Hirer was hiring. She received a detailed response, confirming that the arrangements in place for the agency workers were in compliance with what would be paid if hired directly by the Hirer at the time.

Ms. Cox told the Court that around July 2012 the Hirer directly hired from the agency workers on its site and continued to pay them the rates and conditions they were already on.

Mr. Kevin Walsh Managing Director, Celestica Ireland Limited

Mr. Kevin Walsh, Managing Director, Celestica Ireland Limited, on behalf of the Hirer, told the Court that in early 2009 the Company lost a major part of its business from its main customer, which led to 169 redundancies around March 2009 and the Company was in danger of being closed down. He told the Court that in an effort to keep the Company open he initiated a survival plan, which incorporated cost reductions across the board, including reductions in labour costs. Production Operators were required to take a reduction in their shift premium from 11% to 6%, Administration and Professional Grades were required to take an 8.3% cut in pay and the replacement of redundant employees with new staff on lower rates of pay based on the national minimum wage with appropriate shift premia were necessary parts of the plan. Mr. Walsh said that the use of agency workers instead of directly-recruited employees was necessary as the Company’s Headquarters (HQ) was most unlikely to allow new staff to be directly recruited after it has just paid out expensive redundancy payments. He also said that a necessary aspect of the new contract was the need for the flexibility required by the new unit cost model which was agreed with the customer.

Mr. Walsh said that he had a staff communication meeting in February 2009 with all employees where he announced redundancies on a voluntary basis paying four weeks’ pay per year of service in addition to the statutory redundancy payment. He explained to employees that in order to secure the future of the company it was necessary to be far more competitive and therefore he envisaged a cut in wages. He told them that the manufacturing lines would need to be manned in a leaner fashion and that if new business was secured it would entail hiring back some of the redundant employees on lower rates of pay. Mr Walsh said that he did not specify how mush those lower rates of pay would be as it had not been decided at that point in time. He said that he told employees that this was the plan, however, he told them that he would not proceed without the support of the majority of the staff as at that time he had approval from HQ to close the Company.

Mr. Walsh told the Court that there was an expectation that the Company was about to close and “RTE were outside the door”. He told the staff that if they won back business then he would endeavour to eventually to reverse the reduction in wages (this occurred in two tranches – May 2012 and April 2013).

Mr. Walsh told the Court that he then announced immediate redundancies and began working with a company in Singapore to attract the new business for a new product called “Tiger”. He said that Singapore came back and said “you have my interest”.

The new survival plan proposal (“the Tiger proposal”) was explained to staff at a meeting on 30^thJune 2009, it was put to a ballot of staff and was accepted by the vast majority. He said that this result saved the Company.

Mr. Walsh said that the pricing model for the new business was based on the need to be completely flexible and therefore it decided to recruit staff on an agency worker basis rather than on a direct basis.

Mr Walsh told the Court that when this plan was in place and after the ballot was held, the Company began to hire the agency workers between July and September 2009, however, even after the agency workers were employed, the Company struggled to survive.

Mr Walsh said that when further new business was secured from summer 2012, 29 of the agency workers were taken on as direct employees of the Hirer retaining their rate of pay and conditions of employment, 28 were taken on in December 2012 and 2 more in 2013. The Company secured a 36-month contract commencing from 15^thJune 2011, therefore, as he was concerned about the ratio of permanent employees to temporary employees he decided to seek permission from HQ to hire the temporary employees on permanent contracts commencing from July 2012.

The Complainant

Mr Joyce stated that the Complainant would not be rebutting any of Mr. Walsh’s evidence and therefore would not be giving evidence himself.

Conclusions of the Court

There is no doubt that from the evidence given and information tendered to the Court the Hirer implemented a survival plan in 2009 to safeguard its business by attracting a new client as a result of which lower rates of pay/conditions were introduced for existing employees. Equally, there is no doubt that had the Hirer directly recruited employees in 2009 as part of its revival, it fully intended to pay the lowerbasic working and employment conditionsthat were paid to agency workers recruited at that time. However, no new employees were recruited directly and instead the Respondent supplied the Hirer with agency staff.

Having considered the information supplied and examined the ballot papers it is clear that employees were balloting on two items. Depending on whether they were Production Operatives or Professional/Administrative Staff, the ballot paper required them to vote on (i) the Tiger proposal and (ii) the change in their shift premium (Production Operators) or changes in terms and conditions (Professional/Administrative Grades).

The ballot paper for Production Operatorsstated as follows:-

• Thank you for attending the Company meeting on Tuesday night where Kevin gave a business update. As agreed, employees are given the opportunity to convey their support, or not, for the business proposal going forward.

  Do you support the Tiger proposal and the change in shift premium?

• Thank you for attending the Company meeting on Tuesday night where Kevin gave a business update. As agreed, employees are given the opportunity to convey their support, or not, for the business proposal going forward.

  Do you support the Tiger proposal and the changes in Terms and Conditions.

In this case the only evidence relied upon by the Respondent is apro formadocument used by the Hirer for the purpose of providing information to the Respondent pursuant to Section 15 of the Act. This Section provides: -

• (1)It shall be the duty of the hirer of an agency worker to provide the employment agency that employs that agency worker with all such information in the possession of the hirer as the employment agency reasonably requires to enable the employment agency to comply with its obligations under this Act in relation to the agency worker.

In relation to overtime the Hirer responded that overtime is paid at the relevant rate after completion of 84 hours’ work per fortnight. Day shift overtime €11.25 per hour, night shift €13.94 per hour.

It is, however, undisputed that the Hirer did not directly-employ any workers on the abovebasic working and employment conditionsat 5^thDecember 2011. It was suggested by the Respondent that the rates specified are those that the Hirer would pay to directly-employed workers who perform the same work as that undertaken by the Complainant, following the Hirer’ survival plan of 2009 and as paid to direct employees since 2012. Mr. Joyce, on behalf of the Complainant, pointed out that the rates upon which he relies are established within the Hirer and no lower rates/conditions were agreed or put in place for new entrants.

InTeam Obairthis Court held that there were rates of pay for forklift drivers within the hirer which had been established by an arrangement of long standing. It held that:-

• “While this is acknowledged by the Respondent it contended that those rates are historical. It submitted that if the hirer took on new employees at the time that the Claimant’s assignment is deemed to have commenced the rates payable would be those specified in the s.15 notification upon which it relies. That, however, is a mere assertion which cannot be elevated to an evidential basis upon which the Court could make findings of fact. In particular, the Respondent has not pointed to any pay determination arrangement operated by the hirer the application of which might result in fork lift drivers being paid €13.50 per hour.”

• “The CJEU has decided that cost alone cannot compromise a fundamental right set out in European Law.(Sch�nheit v Stadt Frankfurt am Main (Joined Cases C-4/02 and C-5/02[2003] ECR I-12575, para 85, and Zentralbetriebsrat der Landeskrankenh�user Tirols v Land Tirol (Case C-486/08) [2010] ECR I-3527, para 46.)The Directive confers on agency workers a fundamental right to equal treatment with directly employed workers occupying the same job. The benefit of the directive in an individual case cannot be compromised by the cost of so doing. The right is established in law and must be afforded to agency workers in accordance with law. Were the Court to accept the hypothetical argument put forward by the Respondent in this case it would in effect be allowing it to plead cost as a justification for not applying to agency workers the rate that “applies generally” to directly employed workers. The Court cannot adopt this approach as to do so would defeat the purpose of the Directive and of the Act. This is particularly the case where the rate claimed by the Complainants applies generally to directly employed workers occupying the same jobs whereas the rate contended for by the Respondent was in fact paid to no directly employed workers at the relevant time.”