Clause 45 - Fixed-term work
Employment
4:30 pm
Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West and Hessle, Labour)
Good afternoon, Mr. Conway. The amendment aims to prevent the equal treatment principle from applying to fixed-term employees in respect of occupational pensions during their first two years of fixed-term employment. The effect would be to deny many fixed-term employees access to occupational pension schemes, even where, as the hon. Member for North Norfolk mentioned, they would benefit from access. The exclusion could have an adverse effect on pension provision, encouraging employers to exclude fixed-term employees from such pension schemes even where it is in their interests to take part. Employees on long fixed-term contracts, or on a long series of such contracts, may derive benefit from exercising the right to join an occupational pension scheme even if the scheme has a vesting period.
The amendment could result in such employees being admitted to the scheme only after two years' employment, when the opportunity to accrue benefits is reduced. Not all occupational pension schemes have vesting periods; the amendment could have the effect of imposing a waiting period solely on fixed-term employees. The amendment is not necessary. The draft regulations for fixed-term employees provide considerable flexibility for employees and employers to agree employment packages that suit their circumstances. It will not always be appropriate to include all fixed-term employees in occupational pension schemes, but that should be looked at on a case-by-case basis to achieve the right balance between business requirements and employee protection.
We realise that there might be occasions when, as the directive allows, an employer can justifiably treat fixed-term employees less favourably than similar permanent employees. The employer might be able to justify excluding an employee on a very short fixed-term contract from an occupational pension scheme if including him or her has a disproportionate cost and/or is of no benefit to the individual employee. That employer will not have to provide alternative compensation, but may choose to do so.