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Fixed Term Workers and DiscriminationFixed Term Workers and Discrimination

» Posted on: 30 September 2014

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Employers who offer their employees benefits will be comforted to learn that they are not necessarily responsible for potentially discriminatory terms in the underlying insurance policies following the recent case of Hall v Xerox UK Ltd.

In this case the insurance provided income protection for employees who were off work for 26 weeks but those on fixed-term contracts ceased to be members of the scheme at the end of their fixed term. Mr Hall was injured on 12th April 2012; his contract ended on 20th July. Although his contract was extended, the insurer, Unum, concluded that he had exited the scheme on the 20th July. He was therefore worse off than a permanent employee. He brought a claim under the Fixed-Term Regulations.

The Employment Judge, with whom the EAT agreed, concluded that the act that disadvantaged Mr Hall was that of the insurer, not Xerox. For there to be less favourable treatment under the act, there must be an act or omission by the employer. In the alternative, Mr Hall argued that the insurer was acting as Xerox's agent. But the EAT concluded that the insurer was unable to affect Xerox's relations with others. Nor did it fulfil any of Xerox's obligations to its employees. The contract between Xerox and the insurer affected the employees. But this fell well short of creating an agency relationship.

This case reiterates the importance of looking at the cause of the act or omission in detriment cases. The decision also suggests that an employer may be able to rely on a justification defence where it is shown to have caused less favourable treatment by offering less favourable benefits to fixed-term employees. In these circumstances, an employer would need to prove that there are no more suitable alternatives. The summary of the EAT judgment suggests that the legitimate aim Xerox were pursuing was “to provide employees with PHI at no greater expense than the costs of an annual premium”. However, the EAT decision itself does not deal with this legitimate aim, focusing instead on the tribunal's conclusion that a universal approach had been taken by insurers and makes no mention of the legitimate aim advanced by Xerox.

Mr Hall had tried to argue that Xerox relied on a contract term with the insurer that had the effect of excluding his rights as a fixed-term employee and, as such, was unenforceable under regulation 10 of the Fixed-term Employees Regulations. However, the fact that it did not contractually preclude him from making a claim meant the contract did not exclude the rights of a fixed-term employee.

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