Alastair Purdy, Partner at Purdy FitzGerald writes:

Recent case law on Protection of Employees (Temporary Agency Work) Act 2012


The Protection of Employees (Temporary Agency Work) Act 2012 was enacted to give effect to directive 2008/104/EC. The operative Section of the Act is Section 6 which provides that an agency worker for the duration of his/her assignment with a hirer shall be entitled to the same basic working and employment conditions as the basic working and employment conditions to which he/she would be entitled if he/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/she is required to do during that assignment. This in summary means that an agency worker is entitled to same basic working conditions as if he/she was employed by the hirer.

Section 2 of the Act defines basic working in employment conditions as including pay, working time, rest periods etc. Pay then is separately defined as meaning:-

1. Basic pay and;
2. Any pay in excess of basic pay in respect of:-
   1. Shift wor
   2. Piece wor
   3. Overtime
   4. Unsocial hours of work or
   5. Hours worked on a Sunday

It is clear therefore from a simple reading of the Act that basic working conditions include basis pay. However a problem arises in that basic pay is not defined under the Act. The Labour Court had cause to conside this matter in the case of Geraldine Mahon v Nurse on Call (the ‘Mahon’ case).

The facts of this case were that Ms. Mahon was a temporary agency worker working as a midwife providing services in the Health Service Executive through Nurse on Call, an agency. Ms. Mahon brought a complaint under section 6(1) of the Act alleging that an element of her basic working employment conditions was less favourable than the basic working in employment conditions than she would have received if she was employed directly by the Health Service Executive. Her complaint related specifically to the non payment of a specialist midwifery qualification allowance, of €2,791 per annum on a pro rata temporis basis in respect of hours worked.

The Court held that the issue for determination was whether the allowance fell within the definition of “pay” in the Act and the Court noted specifically that the Act does not explicitly provide for the payment of “allowances”. Therefore the question was whether the allowance could be said to be a constituent element of basic pay which is not defined in the Act.

The Court concluded that the constituent elements of basic pay “can be ascertained from the manner in which the parties have treated the various elements contended for by either side”. The Court held that; “the parties themselves have treated the specialist qualification allowance as a constituent element of basic pay to which the claimant has an entitlement under the provisions of Section 6 of the Act”.

Thus the Court held that basic pay meant something more than basic and pay had to be considered in its totality (our emphasis).

This question however of what constitutes pay has continued to cause difficulties for employers and employees and the Labour Court again had to grapple with this issue most recently in the case of IRE Recruitment Limited v. Denis Coakley and four others. The facts of this case are as follows:-

The respondent was an employment agency and the claimants were employed by the respondent as truck drivers with a basic rate of pay of €11.50 per hour. At the time of the hearing they were assigned by the respondent to a third party namely Greenstar Limited (‘the hirer’). Greenstar Limited provides a refuse collection and removal services to both domestic and commercial clients in the State.

In 2011 the company went into receivership. In an effort to prepare the business for sale the receiver concluded a collective agreement on pay and conditions of employment for all staff with SIPTU (the Trade Union) that represents workers in this sector. Directly employed workers are paid in accordance with the terms of that agreement which provides for a basic hourly pay rate of €12.50 per hour for all drivers. The agreement further provides for a reduction in the basic hourly rate to €11.50 per hour for twelve months after it came into effect. However the reduction in the basic hourly rate was never put into effect.

The respondent was contracted to provide agency workers to the hirer. The respondent pays its drivers €11.50 per hour and SIPTU on behalf of the agency workers claimed that they were entitled to be paid the agreed basic rates of pay that were set out in the collective agreement concluded by the receiver that applies to the directly employed workers i.e. €12.50 per hour.

This involved the Court re-examining Section 6(1) of the Act (which deals with basic working and employment conditions). The Court noted that basic working conditions includes “pay” which the Act goes on to define as basic pay in excess of basic pay in respect of shift work, piece work, overtime, unsociable hours worked and hours worked on a Sunday.

The question before the Court therefore was whether the constituent parts of the term “pay” are to be considered separately or together for the purposes of comparison with pay of agency and directly employed workers. The Court noted that the pay of an agency worker is protected under the Act. Its constituent parts which are listed in Section 2(1) of the Act were not individually protected by Section (1) rather the Act protects the sum total of these constituent parts rather than each part individually. The Court therefore held that the term “pay” in the Act is a composite entity and it consists of all the elements that go to make up the overall term “pay” and that the purpose of Section 2(1) of the Act is to ensure that an agency worker’s pay is no less favourable than that of the pay of comparable directly employed workers.

The Court noted that in this case directly employed drivers are paid a basic hourly rate of €12.50 per hour while the complainants were paid €11.50 per hour. The Court noted however that directly employed drivers are paid overtime at a rate of 1.25 times the basic hourly rate for the first five hours and overtime at 1.5 times the basic hourly rate thereafter whereas the complainants are paid overtime at a rate of 1.5 times the basic hourly rate from the first hours of overtime worked.

The Court determined on the evidence put forward that the complainants who do not work overtime hours are paid less than comparably directly employed workers. The Court further determined that agency workers who work overtime hours may or may not depending on the number of overtime hours worked be paid more or less than comparable directly employed workers.

The Court held that there was a calculation to be undertaken in respect of each worker for all hours worked over the last six months and that the Court would then meet the parties again to hear submissions on the application of this point having determined the economic loss, if any, due to the workers concerned.

These cases are important in that first of all the Court has held in the ‘Mahon’ case that basic pay first of all has to be determined from the manner in which the parties have treated various elements of basic pay and in the IRE Recruitment case the Court have gone further to state that pay (which includes basic pay) is the sum total of the constituent parts and not any one of them to be taken in isolation.

Whereas the Court appears to have interpreted the Act correctly in the IRE case, the finding will nonetheless make it even more difficult for agency workers to compare themselves to those who are or who would be employed by the hirer as the determination requires both hirers and agency workers to take an overall view of pay in its totality.