Acting Up & Employee Status: The Supreme Court judgment in Power v HSE

Abstract

On 30 March 2022 the Supreme Court, in a judgment of Mr. Justice Woulfe, rejected the HSE’s appeal of a July 2021 decision of Simons J. in the High Court.

The High Court had determined that the Labour Court had incorrectly decided that because Mr. Power was a permanent employee of the HSE, he could not also have been a fixed term employee within the meaning of the Protection of Employees (Fixed Term Work) Act, 2003 (“the 2003 Act”) in the context of acting-up arrangements.

The Supreme Court agreed with the High Court and the case will be remitted to the Labour Court.

Background

Mr. Power was a permanent pensionable employee of the HSE holding the role of Chief Financial Officer of the Saolta Hospital Group. With effect from 2014, on the invitation of his employer, he took on the role of interim Chief Executive Officer on an acting up basis. It was a term of this arrangement that he would return to his previous role either on the expiry of the specified time period or on the appointment of a permanent CEO. This arrangement was renewed on 4 occasions up to 2018 at which point he had more than 4 years’ service in the interim CEO role.

A competition was held for the permanent CEO position and Mr. Power was not successful. He claimed however that he had acquired a contract of indefinite duration in October 2018 when the period in which he held the acting CEO position exceeded 4 years, pursuant to 5 separate contracts. His employer responded by saying that as he was a permanent employee he could not be a fixed term employee. The Labour Court agreed with the employer’s position that because Mr. Power was a permanent employee he could not also be a fixed term employee. This was considered in the context of a challenge by the employer as to Mr. Power’s locus standi to bring a complaint under the 2003 Act.

The Labour Court’s Determination was appealed to the High Court where the position adopted by the Labour Court and the employer was emphatically rejected and the matter remitted to the Labour Court. No appeal lay to the Court of Appeal under Section 46 of the Workplace Relations Act, 2015 which provides that the decision of the High Court in an appeal on a point of law from the Labour Court is final and conclusive. However the Supreme Court agreed to admit the employer’s appeal on the basis that it involved issues of general public importance. Leave to appeal to the Supreme Court was granted on 24 September 2021 and the judgment was delivered only 6 months later.

The Labour Court Determination

The Labour Court gave priority to the fact that Mr. Power had a permanent position in the HSE. Commencing with this fact, the Labour Court considered the definition of a permanent employee within section 2 of the 2003 Act which provides that a permanent employee is a person who is not a fixed term employee. That was effectively the end of the matter from Mr. Power’s perspective as the Labour Court determined that because he was a permanent employee he could not be a fixed term employee. Accordingly, the Labour Court found that he did not have locus standi to bring a complaint under the 2003 Act.

The High Court

Section 2 of the 2003 Act, in defining a permanent employee, does so from the perspective of a fixed term employee. The High Court found that the Labour Court had therefore approached the issue in the incorrect interpretative sequence. They ought first to have considered the nature of the 5 separate contracts pursuant to which Mr. Power was appointed as interim CEO to ascertain whether these constituted fixed term contracts, being contracts where the end of each contract is determined by an objective condition such as arriving at a specific date or the occurrence of a specific event. This is the contract that was at issue in Mr. Power’s claim under Section 9 of the 2003 Act that he had acquired a contract of indefinite duration.

The High Court found that the definition of “permanent employee” in s.2 is a term of art and it was not appropriate to apply to that definition the everyday meaning of “permanent employee”. The High Court noted that the dual purpose of the 2003 Act and the Directive it transposes, is to improve the quality of fixed term work and to eliminate the abuse of successive fixed term contracts. In circumstances where persons in acting up arrangements are not expressly excluded from the Act, it was incorrect of the Labour Court to interpret the nature of the employment relationship and the acting up contracts in a manner which effectively deprived such persons from the benefit of the Act.

The Supreme Court

The HSE presented a new argument in the Supreme Court which had not featured in the High Court or the Labour Court. The Appellant claimed that there was only ever one contract, which by variation, provided for the appointment of Mr. Power to the acting up CEO role. It was further argued that in circumstances where there was no agreement between the parties to terminate the original permanent contract of employment, accordingly when the objectively ascertained intention of the parties was considered, the correct interpretation is that there was a variation of the original contract.

The Supreme Court rejected this submission. The novelty of the argument at the late stage of the proceedings was noted. The argument was rejected because it did not accord with the legal or factual reality of the situation which arose in the case. The Supreme Court found that the variation now contended for by the HSE, was not supported by the contractual documentation. An example of note was correspondence from the National Director of HR to Mr. Power entitled “Renewal of Fixed Term Contract”. Further the original contract provided for variation only in very limited terms relating to terms and conditions negotiated between the HSE and any union representing Mr. Power. The Supreme Court also noted that a variation of a contract of employment might involve the assignment of different duties but this would not extend to an entirely different role than that which a person is employed to perform and on a higher salary.

Mr. Justice Woulfe agreed that the contractual documents suggested that Mr. Power was appointed as interim CEO pursuant to 5 successive contracts of employment. On the face of it he was a fixed term worker, as the end of each contract was determined by an objective condition such as arriving at a specific date or the occurrence of a specific event.

Accordingly the Supreme Court disagreed on a factual basis with the Labour Court’s determination that Mr. Power was engaged in the acting up position, as a permanent employee. Further the reasoning in the High Court judgment was approved wherein it was held that the Labour Court had approached the interpretation task in an incorrect sequence, focusing firstly on the definition of a permanent employee, and laterally looking at the question of whether Mr. Power was a fixed term worker.

Interestingly the Supreme Court did not consider it necessary to determine precisely the status of Mr. Power’s original contract. The Supreme Court refers in its judgment to the permanent contract having been either terminated or suspended. It was not necessary to determine this issue. Mr. Power retained a right within his acting up/fixed term contract to revert to his permanent contract on the expiry of the fixed term contract. The status of the original permanent contract was not in itself a factor that influenced the court’s finding that the acting up arrangements were fixed term contracts. This supports the interpretative sequence wherein it is the asserted fixed term contract which requires primary consideration for the purposes of a complaint under the 2003 Act. The relevance of the definition of a permanent employee in s.2 is limited, as noted by Simons J. to the identification of a comparator where a complaint of less favourable treatment is claimed. For the purposes of the 2003 Act it is merely a “term of art”.

Concluding comment

Acting up arrangements may well constitute fixed term contracts. The fact that a person might have a permanent role prior to being appointed to an acting up position, is not a relevant factor in considering whether the acting up position is one pursuant to a fixed term contract. The decision does not however mean that acting up arrangements are contrary to the 2003 Act.

However, where the acting up arrangement is in place pursuant to 2 or more consecutive contracts for a combined period in excess of four years, the employee will have a contract of indefinite duration, unless the employer can provide objective grounds justifying the renewals.

In Mr. Power’s case the question of objective grounds remains to be determined by the Labour Court. In other situations, the real question will be why would it be necessary for an acting up position to exceed four years before taking steps to fill the post on a permanent basis? This is precisely the type of abuse of successive fixed term contracts which it is intended by the Directive to eliminate.

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The views expressed above are the author’s own and do not reflect the views of The Bar of Ireland.