As the Act is relatively new, case law concerning the 2012 Act is only now starting to filter through.
Qualification allowance is basic pay
One of the first cases, Nurse on Call v Geraldine Mahon (AWD131
), concerned the interpretation of basic pay
. The complaint was made on behalf of a midwife who claimed she was entitled to have a specialist qualification allowance treated as part of her basic pay. Her claim was upheld by the Labour Court. The case is interesting in its analysis of what constitutes pay
under the Act.
The Labour Court had to decide if a midwifery allowance, which Ms Mahon says she was entitled to, comes within the definition of pay under the Act.
The agency argued that the definition of pay
as set out in the Act is exhaustive. Pay
under the Act means basic pay
and any pay in excess of basic pay
in respect of:
- Shift Work
- Piece Work
- Unsocial hours worked
- Hours worked on a Sunday
The payment of the allowance did not fall within the definition of any pay in excess of basic pay.
The question then was whether the allowance forms part of basic pay
The Labour Court noted that basic pay is not defined under the Act. The Court went on to state that in determining whether a payment forms part of basic pay it would normally have regard to the manner in which the parties themselves regarded it. In this regard, evidence was furnished as to how the payment was treated/viewed, with the Court noting that an allowance in the nature of pay is normally understood to be one on which pension contributions are payable. The Court also noted that the specialist allowance is paid in respect of a qualification without which she cannot practice as a midwife.
On foot of this, the Court upheld the worker's claim and found that the allowance was 'an integral part of basic pay to which the claimant had an entitlement under the Act'.
The case is interesting as it is one of the first determinations under the Act, particularly as it applies to the interpretation of basic pay
. As this phrase is not defined in the legislation, it undoubtedly may cause difficulty in interpretation in years to come and this decision represents some guidance on what may be deemed to be a constituent part of basic pay.
Arrangements that apply generally
In a subsequent case, O'Reilly Recruitment Limited v Nine Agency Workers (AWD 141)
, the issue of how basic pay and conditions
is to be interpreted by the courts in the absence of a direct comparator test came up for consideration.
In the case, nine agency workers won their appeal at the Labour Court in relation to their claim that they were paid less than directly hired workers. The decision represents the fifth determination made under the Act. The Act requires that workers employed as agency workers receive the same terms and conditions of employment as they would expect to receive had they been employed directly by the end users.
15% pay gap
The workers stated that their hourly rate of pay represented a difference of 15% from the rate that directly employed workers of the end user company received. The workers said that they perform the same work as the end user employees. They did acknowledge that they are afforded the same terms and conditions of employment that the direct employees enjoy such as working time and rest periods.
The agency claimed that the rate of pay given to the direct employees was a legacy rate of pay, that those directly employed workers had long service and trading conditions as a result of the recession meant that the end user company would not employ people on those historical rates either currently or as of 5 December 2011 (the date to which pay is to be backdated to under the legislation).
The Court looked at the relevant section of the legislation which requires that 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 which applies generally in respect of employees, or any class of employees of a hirer' which includes pay.
The Court said that the test that it must apply in determining this section is an objective one. It said it must determine 'if there is a legislative provision, collective agreement or general arrangement in place that sets the general working and employment conditions, including the basic rate of pay of directly employed workers'. The Court said that in order for it to meet its obligations under the Act and the fundamental principle of equal treatment, it must apply the 'arrangement that applies generally' to directly employed workers.
It said it could not accept the recruitment agency's argument and substitute a hypothetical rate posited by the hirer for the actual rate of pay that in fact generally applies to the directly employed workers who are doing the same work as assigned agency workers. To do so it said would defeat the purposes of the Directive and the Act.
On foot of this, the workers' complaint succeeded and in doing so it overturned an earlier Rights Commissioner decision. It directed that the recruitment agency adjust the workers' rate of pay by 15% with effect from 5 December 2011.
As case law under the Act is only now starting to filter through, this case is useful in looking at the court's interpretation of 'arrangements that apply generally' to directly employed workers in order to determinate the rate of pay to be afforded to agency workers. One of the criticisms levied at the Act when it was enacted was the lack of direct reference to a comparator for determining pay and conditions. This case provides some guidance as to how the court will approach the issue.