Committee Reports > List of Committees > Joint > 1991 > Committee on the Secondary Legislation of the European Communities (6th Committee) > Report No. 08 - Non Standard Employment

A. INTRODUCTION

1In April 1990 the Sixth Joint Committee adopted a report on ‘The Social Dimension of the Internal Market’, which is the Commission’s programme to develop a social aspect to the creation of a single market between the member states of the European Community. The Joint Committee’s report endorsed the principle underlying the Commission’s programme that a simultaneous and progressive improvement in living standards throughout the Community should be an essential concomitant of the completion of a single market by 1992.

2With that principle in mind the Joint Committee decided to examine three specific proposals of the Commission which deal with “non-standard employment”, that is, part-time and temporary employment. These are:

A proposal for a Council Directive on the approximation of the laws of the Member States relating to certain employment relationships with regard to working conditions (Com(90) 228 final);

A proposal for a Council Directive on the approximation of the laws of the Member States relating to certain employment relationships with regard to distortions of competition (Com(90) 228 final - SYN 280) and amendment thereto (Com(90) 533 final);

A proposal for a Council Directive supplementing the introduction of measures to encourage improvements in the safety and health at work of temporary workers (Com(90) 228 final - SYN 281) and amendment thereto (Com(90) 533 final).

These three Directives are among the first concrete expressions of the ‘Social Dimension’ to be proposed by the Commission. The Directives potentially affect a significant part of the Irish working population and a part which, in general terms, has tended to be under-protected by social welfare and employment legislation in the past.

3The present report was prepared by Deputy Michael D. Higgins, Chairman of the Sub-Committee on Social, Environmental and Miscellaneous Matters. The Joint Committee is indebted to Deputy Higgins and his colleagues on the Sub-Committee for their dedicated work on these proposals. The Joint Committee would also like to acknowledge the assistance of James Dorgan, consultant, in preparing the report.

4 Written submissions were received from the Irish Congress of Trade Unions, the Employment Equality Agency, the Federation of Irish Employers, the Department of Labour and the Department of Social Welfare.

5The Sub-Committee also heard oral submissions from the above mentioned bodies and these consultations provided a valuable opportunity for consideration and discussion of many points raised in the written submissions. The Joint Committee gratefully acknowledges the assistance and co-operation of the bodies.

B. BACKGROUND

Community Proposals

6The Commission’s White Paper “Completing the Internal Market”, which was subsequently incorporated in the Single European Act, has led to a great acceleration in the work of the European Community in creating a single market. Though the bulk of this White Paper dwelt on the measures necessary to implement the economic aspects of the single market, the White Paper also emphasised the social aspects. Specifically, the White Paper observed that:

“the Commission will pursue the dialogue with Governments and social partners to ensure that opportunities offered by completion of the Internal Market will be accompanied by appropriate measures aimed at fulfilling the Community’s employment and social security objectives.”

7The “Social Dimension of the Internal Market” which was circulated in 1988, represents the Commission’s view of why and how the completion of the Internal Market should have a social dimension. This document emphasises that completion of the Internal Market should be accompanied by measures resulting in the establishment of a European ‘social foundation’ by 1992.

8Subsequent to the circulation of the Commission’s document, the European Council, meeting in Strasbourg in 1989, adopted the ‘Community Charter of Basic Social Rights for Workers’. This Charter endorsed the principles ennunciated in ‘Social Dimensions of the Internal Market’ including, inter alia, the proposition that “the same importance must be attached to the social aspects as to the economic aspects of the completion of the single market.”

9The Social Charter Action Programme contains the Commission’s specific legislative proposals for the implementation of the Charter. The Commission’s proposals are grouped under 13 headings including, inter alia,proposals to improve living and working conditions; social protection; information for workers; consultation and participation in the work place; health protection and safety at work. In all the Commission proposed 43 new initiatives.

10Title 1, point 7 of the Community Social Charter states that

“the completion of the internal market must lead to an improvement in the living and working conditions of workers in the European Community. This process must result from an approximation of these conditions, as regards in particular forms of employment other than open-ended contracts, such as fixed term contracts, part-time working, temporary work and seasonal work”.

11The Commission’s three proposals for Council Directives on “non-standard” or “atypical” work, are amongst the first of the Social Charter Action Programme proposals to be published by the Commission.

12In identifying non-standard employment as an area for attention, the Commission is responding to two salient features of the Community’s labour market:

1The fact that part-time and temporary work is a large and rapidly growing element in the total;

2That social welfare and labour legislation in member. states has tended to overlook the requirements of this segment of the labour force.

The Importance of Non-Standard Employment

13Analyses’ by the Commission show that part-time employment accounts for about 13.5% of the total labour force in the Community (See Table 1, page 7). Its relative importance amongst member states ranges from about 5% in the Mediterranean countries to 30% in the Netherlands. Temporary employment is less significant amounting to 9.5% of the total. Again, there is considerable variance in its relative importance amongst the member states though temporary employment appears to be inversely related to economic development. Thus over one fifth of the Spanish workforce is engaged in temporary work as compared with 5% in Belgium. Allowing for the fact that 15% of part-time workers are temporary, it would seem that about one-fifth of the Community work force, or 20 million workers, are engaged in some form of non-standard employment.

14Statistics on the historical trend in non-standard employment are deficient, but from the partial data available it is clear that the incidence of part-time employment has increased very much faster than the growth in full time employment almost everywhere (See Table 2, page 8). Thus temporary and part-time work are neither themselves temporary phenomena, nor insignificant parts of the total. In fact there are very cogent reasons why non-standard employment should

TABLE 1: RELATIVE IMPORTANCE OF PART-TIME AND TEMPORARY EMPLOYEES

(As % of Total Employees)

Source: EC Labour Force Surveys

be a large and growing element in the labour market including:

1the need on the part of employers for flexibility;

2the growing importance of service industries, particularly consumer and personal services, where non-standard hours of operation are demanded by the market;

3the need on the part of certain groups for non-standard employment to complement other activities such as household duties or study.

TABLE 2: CHANGE IN FULL-TIME AND PART-TIME EMPLOYMENT 1983-88

Source: EC Labour Force Surveys

15This last factor (paragraph 14.3) draws attention to one of the most outstanding features of non-standard employment: that it is dominated by women workers. This means that evaluation of legislation in this area from the social viewpoint has to take account, not only of its impact on equity as between standard and non-standard employees but also of its contribution to equality of employment as between men and women.

16 As a country with a level of economic development well below that of the larger and northern European member states, it is not surprising that non-standard employment in Ireland is also somewhat below the Community average. As Table 1 shows, in 1988 8% of the Irish workforce was part-time and 9% was temporary. Allowing for overlap, the total is probably around 15% of the workforce or about 150,000 workers. Unlike elsewhere, the trend in the numbers of this type of employee has been erratic. However, as Figure 1 shows, there has been a sharp increase in the last two years. As elsewhere, women are strongly represented accounting for 70% of regular part-time workers (See Figure 2). (It is worth noting that while a large number of male part-time workers work part-time because of the absence of full-time jobs, a high proportion of women work part-time because of family responsibilities (See Figure 3)).

Fig 1: Trend in Part Time Work Ireland and EC 1975-87

Fig 2: Part Time Workers in Ireland 1975-88

Fig 3: Reasons for Working Part Time in Ireland 1988

The Need for Legislation

17The growth in the size of the non-standard employment workforce has outpaced the extension of social welfare and labour legislation for such workers in most member states. This has also led to the situation where the scope and content of legislation varies greatly from one country to another. The rationale for the Commission’s proposals in this area is therefore based on three main requirements:

1Improved operations of the internal market and greater transparency of the labour market;

2Improved living and working conditions of workers;

3Protection of the health and safety of workers at the workplace.

18The Commission considers that cost differences between member states, which are the result of statute-based discrimination as between standard and non-standard employees, constitute a distortion of the labour market and should be abolished. The Commission notes major labour cost differences resulting from different national regulations with respect to social insurance contributions, redundancy entitlements, holiday pay and promotion.

19With regard to the improvement in living and working conditions of workers, the Commission notes a number of areas in which the disparity of member states’ legislation calls for harmonisation including access to training, rights to information, and entitlements to social assistance.

20The Commission has already proposed legislation in the area of health and safety at work (framework Directive 89/3912/EEC). However, this is for all employees and does not make specific provision for the needs of non-standard employees. That this group needs special consideration is evidenced by statistics from various member states showing that non-standard employees are more prone to accidents than their full-time colleagues. This can be attributed to a variety of factors including lack of training and inexperience on the part of the employees.

21One other basic objective which the proposed legislation hopes to meet is greater equality as between men and women workers. The requirement that there should be no discrimination between men and women with regard to pay and conditions is embedded in national and Community legislation. However, the European Court of Justice has found that the requirement of equal treatment extends to indirect as well as direct discrimination. Specifically, different treatment of part-time and full-time workers can be been found to be indirectly discriminatory when part-time workers are mainly women and full-time workers are mainly men.

Present Legislation for Non-Standard Employees in Ireland.

22The legislative position in Ireland with respect to non-standard employment is approximately indicated in Column 2 of Table 3 following. This shows the main forms of employment protection legislation and indicates approximately the entitlements for part-time workers. As can be seen, under Irish legislation 18 hours is an important cut-off for part-time workers. Above that almost all are entitled to the benefits of our labour legislation. But only protection with respect to health and safety and equality are available for people who work less than 18 hours a week.

23However, the above mentioned entitlements are also conditioned by minimum service requirements which also determine the entitlements of temporary workers. These are shown in Column 3 of Table 3 which demonstrates the way the requirements vary according to the different forms of employment protection legislation. The result is a rather complicated pattern of entitlements for part-time and temporary workers. For example, equality and safety and health legislation apply to all part-time and temporary workers irrespective of the length of their working weeks or the number of weeks they have worked. But the other benefits require a minimum of 18 hours work per week and a period of employment which ranges from 13 weeks to two years.

TABLE 3 EMPLOYMENT PROTECTION ENTITLEMENTS FOR NON-STANDARD EMPLOYEES

24The position with respect to social insurance is comparatively simple. In effect, part-time workers working less than 18 hours per week benefit only from occupational injuries insurance for which the contribution is 0.5% of their pay, payable by the employer. The other benefits, including maternity pay, unemployment benefit, old age and widow’s pension, illness and disability benefit, etc, are not available to such workers.

25However, the Government has recently proposed two amendments to existing domestic legislation with regard to part-time workers. These will materially affect the protection of such workers under Irish law. The content of these proposals is discussed in paragraphs 30 and 31 following.

C.MAIN PROVISIONS OF THE DIRECTIVES ON NON-STANDARD EMPLOYMENT

Draft Directives On Certain Employment Relationships with Regard to Working Conditions

26This Directive is based on Article 100 of the Treaty and lays down a large number of conditions governing the employment of part-time and temporary workers. It applies only to those who work more than eight hours a week on average. The provisions require member states to bring in rules whereby:

1Part-time and temporary employees would have access to training, social services and social assistance schemes comparable to that enjoyed by full-time workers;

2Workers’ representatives would be informed by employers prior to the recruitment of part-time workers and a justification for the use of this form of employment would be offered;

3Part-time employees would be taken into account when calculating the employment threshold at which worker representative bodies would be set up in an undertaking;

4Employees of temporary employment agencies would not be precluded from taking employment with clients of the agencies.

Draft Directive on Certain Employment Relationships With Regard to Distortions of Competition.

27This Directive seeks to remove distortions in competition caused by different rules governing part-time and temporary employment of persons working more than 8 hours a week. It is based on Article 100A of the Treaty. The Directive provides that:

1Part-time and temporary employees are to be afforded the same social protection under statutory and occupational social security schemes as full-time employees;

2Part-time employees are given the same entitlements as full-time employees with regard to holidays, dismissal allowances and seniority allowances, account being taken of differences in the number of hours worked;

3Limits are to be imposed on temporary employment relationships of 12 months or less so that the total period of employment does not exceed 36 months.

28It is provided that implementation of this Directive can be effected by national legislation or by agreement between the social partners.

Draft Directive Supplementing Measures to Encourage Improvements in the Safety and Health at Work of Temporary Workers.

29This Directive aims to ensure that temporary workers have the same general level of health and safety protection as full time workers. It is based on Article 118A of the Treaty. It is intended to supplement an existing Directive 89/391/EEC of 12 June 1989 on the “Introduction of Measures to Encourage Improvements in the Health and Safety of Workers at Work.” The Directive provides that:

1Temporary employees should be afforded the same protection as full-time workers with respect to safety and health at work;

2Contracts between temporary employment agencies and their client undertakings should specify certain information on the features of the job and qualifications required and this should be passed on to the temporary worker;

3Temporary workers should be informed by their employers of health and safety risks and be given appropriate training;

4Temporary workers should be banned from work requiring special medical supervision over long periods.

Worker Protection (Regular Part-Time Employees) Bill, 1990

30While these Directives are wide-ranging in their impact, the Government has recently proposed two pieces of legislation which, assuming they are passed reasonably soon, will anticipate some of the provisions of these Directives but otherwise are more far reaching. The first of these is a Bill introduced by the Minister for Labour to extend the benefits of the legislation listed in Table 3 to all workers who have regularly worked for more than eight hours a week. This meets the requirement of the Directives with regard to workers’ representation, holidays, minimum notice and redundancy rights. However the rights with respect to maternity, unfair dismissal and insolvency in the Bill are entitlements not proposed in the Directives. On the other hand, proposals in the Directives which would require employers to extend benefits which companies give to full-time workers in the areas of training, social welfare and seniority pay to part-time and temporary workers, are important additional benefits in the Commission’s proposed legislation.

Social Welfare Bill, 1991

31 In addition to the foregoing, it was also proposed in the 1991 budget that social insurance will be extended to regular part-time workers working for less than 18 hours a week. In contrast to the Workers Protection (Regular Part-Time Employees) Bill, the lower cut off will be defined in monetary terms. This will meet the requirement in the Directives that part-time workers receive the same statutory benefits as full-time workers. However, the entitlement to occupational benefits (e.g. pensions) proposed in the Directive on Distortions of Competition is an important additional entitlement. The Social Welfare Bill, 1991 will require employers and employees to pay Pay Related Social Insurance contributions which is probably one of the most significant cost items in the Directives.

D. VIEWS OF INTERESTED PARTIES

The Irish Congress of Trade Unions (ICTU)

32The ICTU have been lobbying the Irish Government for some time for improvements in the protection of part-time workers. The recently published Bill is partly the result of this effort. The ICTU therefore expressed themselves as favouring the Directives which as noted above propose to extend the area of protection for part-time and temporary employees beyond that envisaged in the domestic legislation. Congress has two concerns;

1It urges that the Directive on Working Conditions should be dealt with under Article 100A rather than Article 100 because Article 100A only requires majority voting and it is possible that under Article 100 some member states might use their power of veto;

2The lower limit of eight hours would prompt some employers to cut the working week of their part-time employees in order to escape the provisions of the Directives. Congress is concerned particularly about the position of people who regularly work less than eight hours a week. Therefore Congress proposes the adoption of an International Labour Organisation formulation which defines part-time work as ‘regular work for less than normal hours’ thus eliminating any lower limit.

Employment Equality Agency

33The Employment Equality Agency emphasised that a large majority of part-time and temporary workers are in fact women and that measures which improve the position of non-standard employees effectively help to reduce inequality. In addition, the Agency argued that the Directives would help to increase the attractiveness of part-time working to women. It emphasised that the provision of child care facilities would also have a major effect on attracting women to the labour force as either part-time or full-time workers (a point implied by Figure 3 above). The Agency expressed itself as strongly in favour of the proposed Directives with the reservation that, like the ICTU, the Agency would have preferred no lower limit on the definition of part-time.

Federation of Irish Employers (FIE)

34The FIE submitted detailed commentaries on the provisions of the Directives. The FIE is opposed to the Directives partly because it feels that the areas concerned ought to be a matter for agreement between the social partners in each of the member states. However, the FIE’s basic objection is that the Directives will increase the cost to employers of employing non-standard employees leading to a decline in the number of such jobs available. The FIE also argues that there will be increased costs to employees which may deter them from entering the job market which will also have consequential losses to both sides of industry.

Department of Labour

35The Department is generally in favour of the proposed Directives. However, some aspects of the proposals give rise to concern and the Department is seeking some flexibility on these. The Department also seeks clarification about some of the details of the proposals. Specifically, the Department asserts:

1That Ireland as a small country has more safeguards where decisions are taken by unanimity. It queries whether the case for distortions of competition, and consequently a Directive based on Article 100A (which provides for a qualified voting procedure) has been well argued;

2 That the eight hours per week cut off for application of the Directives should be retained on the grounds that further extension of coverage would create severe practical problems;

3That remuneration should be a matter for the social partners and the member states and therefore the Directives should not cover matters like seniority pay, incremental scales, redundancy pay, etc;

4That the proposed restriction on the renewal of temporary employment contracts should be modified.

The Department of Social Welfare

36Few of the Articles in the Directives affect the responsibilities of the Department of Social Welfare. However, the implications of at least one of these could be important. Under Article 3 of the Directive on Working Conditions, equal treatment of part-time and full-time workers could require a change in the Family Income Supplement Scheme which is only available to people working at least 20 hours per week.

E. VIEWS AND RECOMMENDATIONS OF THE JOINT COMMITTEE

General Viewpoint of the Joint Committee

37The Joint Committee’s response to the Commission proposals is governed by the principles expressed in its report Number 1 on the ‘Social Dimension of the Internal Market’. In that Report the Joint Committee expressed its support for the fundamental objective of the Social Charter - that all citizens of the Community should benefit from the creation of the internal market. The Joint Committee further recognises that the three Directives proposed by the Commission in the area of non-standard employment are an important part of the Social Charter and could confer benefits on an important part of the working population of Ireland.

38In placing these proposed Directives in their policy context, the Joint Committee would like to draw attention to the fact that the Social Charter proposed that work on the social dimension should proceed simultaneously with the creation of the internal market. In adhering to this Charter, therefore, Ireland rejects arguments that social progress should wait until the completion of the internal market. This point is emphasised in the Joint Committee’s report on the ‘Social Dimension of the Internal Market’.

39Turning more specifically to the three Directives, there are two other points which the Joint Committee would like to make. Firstly, it appears to the Joint Committee to be a fairly straightforward case of equity that all employees - whether part-time or full-time-should be treated equally. It may, as a practical matter, be difficult to attain absolute equality between these two types of worker. For instance it may be difficult to incorporate temporary workers in pension schemes. But at least there should be no argument over the principle.

40The second specific point is also related to equity-that between male and female employees. As the Employment Equality Agency emphasised to the Sub-Committee, the extension of protection to non-standard employees automatically involves a reduction in inequalities given the high proportion of women involved in part-time and temporary employment. The Joint Committee endorses this point.

41 In the light of all of the foregoing therefore, the Joint Committee urges the adoption of the Directives in general terms.

42However, as a country with a large level of unemployment, there must be acute sensitivity to any measures which might have an impact on the availability of jobs. Measures which affect the direct or indirect costs of employing people must therefore be carefully assessed for their potential benefits as opposed to their ‘disbenefits’ in the form of lost employment opportunities. This concern is all the sharper in Ireland because a high proportion of our enterprises are small, and arguably have less ability to absorb overheads than larger enterprises. Also, as an economy highly exposed to competition from abroad, our employment level is possibly more sensitive to loss of competitiveness.

43Moreover, collaboration with 11 other countries, each with its own structures and traditions, inevitably carries risks as well as benefits. The benefits of international cooperation through the European Community are clear and have been accepted by Ireland even before entry to the Community. But there is sometimes a risk in particular areas that collaboration may involve acceptance of some measures which are not to Ireland’s advantage. This danger can be minimised by ensuring respect for the principle of subsidiarity and by flexibility in the drafting. The need for allowing flexibility to the member states is perhaps all the more important in the sensitive area of employment relations where there is significant attachment in this country to the principle of free collective bargaining between the social partners.

44The Joint Committee therefore urges that while the principle of the Directives should be accepted, in negotiations concerning the details, the relevant Departments should take account of the particular requirements and sensitivities of the Irish situation. These will become more clearly apparent when a number of uncertainties and ambiguities in the text of the Directives have been resolved through discussion at Commission level. In particular, the Joint Committee urges that the Department of Labour and the Department of Social Welfare should ensure that the implementation of these proposals results in a set of regulations which is simple to administer by both employer and employee. The Joint Committee also urges that the implementation of the Directives should be carried out in such a way that part-time and temporary workers are not encouraged by administrative obstacles to enter the black economy.

45One area in which consideration of the requirements of the Irish situation will need particular attention is with respect to the Family Income Supplement (FIS) scheme which, as noted above in paragraph 36 is available only to those working 20 hours or more. In principle, the Directives would seem to require that the FIS be available to those working less than 20 hours per week. In fact the FIS is not so much a social welfare benefit as an incentive to people to escape from the “poverty trap”. Accommodating this type of scheme in the Directives is difficult not only because of its hybrid nature, but also because, with the exception of the United Kingdom, other Community states do not have it. About 20,000 persons are entitled to receive FIS although only about 6,500 actually claim it. The Joint Committee urges that changes be made to the Directives to ensure that the objectives of the FIS can be retained.

Treaty Base

46The ability to take account of the Irish situation highlights the issue of the Treaty base for the Directives. The ICTU representatives argued in favour of basing the Directives on Distortions of Competition and Working Conditions on Article 100A which requires qualified majority voting. The Department of Labour queried whether the content of the Distortions of Competition Directive justified the use of Article 100A. The FIE favoured the use of a unanimous voting procedure. The Joint Committee’s view is that as one member state refused to sign the Community Charter on the Basic Social Rights of Workers, it is possible that this legislation could be vetoed. It therefore favours the use of Article 100A for the Directives on Working Conditions and Distortions of Competition.

The Question of Costs

47The major objection to the Directives put forward by the FIE is that they will increase the cost of employing non-standard employees. The Joint Committee is sceptical that the impact on labour costs of these Directives will be as great as is feared by the FIE. In the first place, if there is an impact, it will be felt equally amongst our competitors in the Community and should not therefore lead to a relative disadvantage. Indeed, insofar as some Irish employers observe some of the provisions of these Directives, e.g. with respect to pension entitlements by part-time workers, the effect of the legislation will be to strengthen their competitive position vis a vis employers who discriminate against part-time and temporary employees.

48 In any case, the Workers Protection (Regular Part Time Employees) Bill, 1990 and the Social Welfare Bill, 1991, will cover an important part of the Distortions of Competition Directive. Thus the impact of the Directives per se will be comparatively limited, it being assumed that the Government’s proposals will be implemented in any case.

49But the material counter argument to the point about costs is that in other countries which have adopted measures equivalent to some of those contained in the Directives, there has been no decline in the relative and absolute size of the non-standard work force. The popularity of part-time work amongst employees, the need of employers for flexibility and general social and economic developments are the driving forces behind the growth in part-time and temporary work and these appear to overcome any cost disadvantages which there may be.

50 Indeed, the above argument can be pushed further; by increasing the attractiveness of part-time and temporary work, the extension of employment protection and social welfare legislation makes this type of work more popular. The effect may therefore be to increase the supply of people willing to take up non-standard employment. This widens and deepens the size and qualifications of the pool of labour effectively available. It also helps to improve the general flexibility of the labour market.

Minimum Number of Hours

51The minimum number of hours below which the Directives should not have application was also a point of disagreement between representatives appearing before the Joint Committee, with the ICTU arguing for no formal limit and the Department of Labour and the FIE urging adherence to the proposed eight hour limit. The Joint Committee’s view is that it would be preferable if the lower limit were to be removed. This would eliminate any possibility that unscrupulous employers would seek to evade the impact of the legislation by deliberately reducing the working hours of their employees below eight hours a week. The ICTU representatives asserted that experience in the past with the introduction of the 18 hour cut-off for employment protection and social security leislation suggests that some employers would resort to such a manoeuvre

Agency Workers

52It is estimated that there are about 10,000 ‘agency’ workers in Ireland. The vast majority of these ‘agency’ workers (about 80%) are women. At the present moment there is little legislation protecting their position. This is an important gap in our employment legislation considering the number of workers involved. The fact that so many are women also means that protective legislation would be helpful in promoting the principle of sexual equality in the work place. Recognising this, the Government has given a commitment in the Programme for Economic and Social Progress to review legislation relating to agency workers and employment agencies. No information on the details of this legislation has so far emerged. However, the Joint Committee believes that the Commission’s proposals with respect to agency workers could be an important complement to domestic legislation (as is the case with the Workers Protection (Regular Part-Time Employees) Bill and the Social Welfare Bill, 1991) and therefore urges the adoption of the Commission’s proposals in this area.

53.In view of the importance of the issues raised in this Report the Joint Committee recommends that time be made available at an early date for debate of this report in the Houses of the Oireachtas.

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CHAIRMAN OF THE JOINT COMMITTEE

(20 March, 1991)