Hello everyone, Collette here and welcome back to our case of the week. This week, we are examining a case concerning part-time workers and their experience of less favourable treatment. Last week, we had the case of Gallagher v McKinnon’s Auto and Tyres Ltd on fairness, pressure tactics, and the use of “without prejudice” in negotiations. For those that missed it you can find it here.

Part-Time, Full Fee: A Pro-Rata Problem Drives This Tribunal Case

The claimant was employed by the respondent as a part-time private hire driver, working an average of 34.8 hours per week. He was required to pay the respondent a weekly “circuit fee” of £148 to access the respondent’s booking system. This fee was a fixed sum applied equally to all drivers, regardless of whether they worked full or part-time. The claimant brought a claim before the Employment Tribunal (ET) arguing that the fee breached Regulation 5 of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (PTWR).

Under Regulation 5(2), less favourable treatment of a part-time worker compared to a comparable full-time worker is unlawful if:

  1. The treatment is on the ground of the worker’s part-time status, and
  2. The treatment is not objectively justified.

The claimant stated that the fixed fee was disproportionate for part-time drivers when compared with the hours worked or earnings and went against the principle of pro-rata pay.

The ET dismissed the claim, concluding that:

  1. The claimant was not treated less favourably than a comparable full-time worker, as both full-time and part-time drivers were charged the same fixed fee.
  2. Alternatively, the circuit fee was not applied solely because the claimant was a part-time worker.

The claimant appealed, arguing that the ET made two legal errors in its judgment:

  1. The ET failed to consider the pro-rata principle, as the fixed circuit fee represented a greater proportion of his hours worked or pay when compared to full-time drivers, amounting to less favourable treatment.

2. The ET misapplied the test in McMenemy v Capita Business Services Ltd [2007]. In that case, the Inner House of the Court of Session held that for less favourable treatment to be unlawful under the PTWR, part-time status must be the sole cause of the treatment, and the employer’s intention must be considered. The claimant argued that the ET should have focused on the effective cause of the treatment, not the employer’s intent.

The Employment Appeal Tribunal (EAT) held:  

  1. Ground 1 – Less Favourable Treatment:

The claimant’s first ground of appeal was upheld. The EAT found that the ET erred in its assessment of whether the flat-rate £148 circuit fee constituted less favourable treatment. The claimant’s argument was not about the mere imposition of the fee on all drivers, but rather the fact that the flat fee disproportionately impacted part-time workers. Specifically, as a part-time driver working 34.8 hours per week, the claimant paid a higher proportion of his earnings toward the circuit fee compared to his full-time comparator, who worked over 90 hours per week. This resulted in a lower hourly take-home rate for the claimant. Applying the pro-rata principle, the EAT agreed that the circuit fee amounted to less favourable treatment when analysed as a proportion of pay. Additionally, any comparative assessment of pay needed to account for other factors affecting the hourly rates of the claimant and his comparator.

  1. Ground 2 – Causation and the Employer’s Intention:

The claimant’s second ground of appeal was partially upheld. The EAT clarified that the ET erred in considering the respondent’s intention when determining causation. The relevant question is the reason for the treatment, not the employer’s motive or intention. The EAT noted that causation under Regulation 5(2)(a) of the PTWR requires determining whether part-time status was the effective and predominant cause of the less favourable treatment, but it need not be the sole cause.

Although the EAT was not strictly bound by the decision in McMenemy v Capita Business Services Ltd, it followed it as good practice to ensure consistency. The EAT confirmed that McMenemy established a binding principle that less favourable treatment under Regulation 5(2)(a) must occur “on the sole ground that the worker was a part-time worker.” As a result, the EAT approached the appeal on the basis that McMenemy correctly interpreted the regulation.

Takeaway Points

Employers should carefully review their policies to ensure compliance with the pro-rata principle. Uniform fees or charges, while appearing neutral, must not disproportionately impact part-time workers’ pay or working hours. When comparing treatment, it’s crucial to assess the overall financial effects rather than relying on surface equality.

Additionally, any policies that could disadvantage part-time employees should be objectively justified, demonstrating they are necessary and proportionate. Employers must focus on the actual impact of their practices, as motives or intentions are irrelevant in determining whether less favourable treatment has occurred.

If you or someone you know are dealing with a similar issue, please contact us for further assistance.