30/10/2002

EU pension regulations open to interpretation

Nearly 1.5 million people in the UK are employed on fixed term contracts, but flexibility in interpreting regulations will result in many people suffering through reduced pensions when they retire.

Although the EU 'Fixed Term Work Directive' makes it unlawful to treat fixed-term, contract employees less favourably than normally contracted staff doing similar work, according to Richard Smith of Croner Consulting: "There are occasions where employers can justifiably treat fixed-term employees less favourably than permanent members of staff."

"The regulations require employers to offer access to occupational pension schemes to fixed-term employees on the same basis as permanent ones, unless different treatment can objectively be justified. However, they do not require employers to offer alternative benefits, such as contributions to private pension schemes, unless this is also offered to permanent employees.

"The employer and the employee may agree that lack of access to an occupational pension can be compensated for in the employment package. But it is always advisable that employers and employees take time to discuss the whole salary and benefits package applicable to the position. It must be properly detailed in letters of appointment and in the employment contract itself."

As general advice it is recommended that employees who take regular short-term contracts should plan for the future and seek advice on savings and pensions from an independent financial advisor.

(SP)

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