The Labour Court recently issued an important decision in relation to equal pay under the Protection of Employees (Temporary Agency Work) Act 2012 (the "2012 Act"). Team Obair Limited v Mr. Robert Costello  was an appeal by an agency worker of a decision of a Rights Commissioner under the 2012 Act.
The decision is significant due to the size of the award made by the Labour Court in favour of the agency worker and given that there have been relatively few decisions under the 2012 Act to date. The case clearly highlights the need for enhanced communications between an employment agency and a hirer to ensure that agency workers benefit from equal treatment as prescribed by the 2012 Act.
Mr. Costello was employed by an employment agency, Team Obair Limited (the "Agency"). He was assigned by the Agency to Shannon Transport Logistics (the "Hirer") and had worked as a forklift driver on behalf of the Hirer at the Diageo Guinness Ireland Plant at St. James’ Gate since March 2007.
Agency Worker’s Right to Equal Pay
Under the 2012 Act, an agency worker is entitled to the same pay that he/she would have been paid if he/she had been employed directly by the hirer to perform the same, or similar, work. Although the 2012 Act was signed into law on 16 May 2012, an agency worker’s entitlement to equivalent pay is retrospective to 5 December 2011.
Mr. Costello claimed that under the 2012 Act, he was entitled to be paid by the Agency the same hourly rate as a forklift driver directly employed by the Hirer. He argued that fork lift drivers employed by the Hirer were paid €5.00 per hour more than the basic hourly rate of €13.50 which he was paid by the Agency.
Hirer’s Obligation to Provide Information to Agency
Under the 2012 Act, the hirer is obliged to provide the employment agency with all such information in the possession of the hirer, which the employment agency might reasonably require, to enable the employment agency to comply with its obligations under the 2012 Act.
The Hirer had completed a pro-forma document for the purposes of providing information to the Agency and had indicated that it would pay forklift drivers €13.50 per hour.
The Court noted that the 2012 Act does not require an agency worker to point to an actual comparator employed directly by the hirer on the date of commencement of his/her assignment to the hirer.
Although the agency worker need not identify an actual comparator, the Court noted that the rate of pay that the hirer paid employees engaged in the same work as the agency worker was an “important evidential tool.” The Court accepted that the rates of pay paid by a hirer may be based on factors that did not apply to an agency worker or that such rates may have changed since they were first imposed.
Such information would not be readily available to an agency worker and on that basis the Court held that the burden of proof to establish the correct rate of pay of the agency worker falls on the party asserting that an agency worker was not entitled to a particular rate of pay claimed by an agency worker.
In Mr. Costello’s case the burden of proof was on the Agency to demonstrate that Mr. Costello was not entitled to €18.50 per hour. In noting that the rate specified in the statement provided by the Hirer to the Agency reflected the rate paid by the Agency, the Court found that it was “at least probable that the information furnished by the [Hirer] is predicated on the assumption that if the [Agency] can employ labour on those rates it could do likewise.” The Court noted that if this was in fact the position, the purpose of the 2012 Act would be “seriously subverted”.
Decision of the Labour Court
The Court held that had Mr. Costello been employed directly by the Hirer, he would have been paid €18.50 per hour in line with the other forklift drivers similarly employed. The Court directed that Mr. Costello’s rate of pay be increased to €18.50 per hour retrospectively with effect from 5 December 2011, the date when the 2012 Act applied in relation to the equal pay provisions. Mr. Costello was entitled to approximately €20,000 from the Agency.
It is clear from the decision of the Labour Court that full disclosure is required by a hirer to ensure that an employment agency does not fall foul of the equal treatment provisions under the 2012 Act.
No one was present on behalf of the Hirer at the hearing of the above matter to give supporting evidence in relation to the rate of pay the Hirer had stipulated in the pro-forma document and applied by the Agency. The Labour Court was not satisfied that the information provided by the Hirer was correct and that sufficient efforts had been made by the Agency to satisfy itself that Mr. Costello was receiving the rate of pay he was entitled to in accordance with the 2012 Act.
The Department of Jobs, Enterprise and Innovation has published a Guidance document on the 2012 Act. The Guidance states that the obligation of an employment agency is to ensure that “in consultation” with the hirer, the appropriate terms and conditions are applied to agency workers. Furthermore, the hirer is obliged to provide the employment agency with “sufficient up-to- date information on basic pay and employment conditions so that the [employment agency], as employer, can satisfy itself that an [agency worker] is getting equal treatment.”
Following the decision in Team Obair Limited v Mr. Robert Costello it is advisable that an employment agency does not rely blindly on information provided by a hirer in a pro-forma document and that it engages in a level of consultation with the hirer in advance of placing an agency worker with the hirer to satisfy itself that the information provided by the hirer is accurate and up-to-date and that the agency will be in compliance with its obligations under the 2012 Act.
The 2012 Act provides that if a claim is made by an agency worker that they have not received equal treatment in relation to their basic working and employment conditions and it is found by a Rights Commissioner and/or the Labour Court that the agency worker was not paid the correct rate of pay, the employment agency must rectify this. However, it is worth noting that the 2012 Act further provides that the hirer shall indemnify the employment agency in respect of any loss incurred by the employment agency that is attributable to the hirer’s failure to comply with its obligations to provide accurate information to the employment agency.
On that basis, it is advisable from a commercial point of view that an employment agency obtains an indemnity from a hirer to cover any loss or damage suffered by an employment agency as a result of a hirer’s failure to provide sufficient up-to-date information on the relevant basic pay and employment conditions.
For further information, please see our previous article of the 2012 Act.