In October 2002, legislation was introduced giving specific protection to fixed term workers. As a result, employers were no longer allowed to treat them less favourably than comparable, permanent employees unless they could justify the difference.

In Coutts & Co plc and Royal Bank of Scotland v Mr Paul Cure and Mr Peter Fraser, the employment appeal tribunal (EAT) decided that employers are still bound by the regulations, even if they announced their intention to discriminate before they came into force. It also said that it was irrelevant if the difference in treatment applied to other categories of staff, as well as those on fixed term contracts.

What were the basic facts?

Following the acquisition of NatWest by the Royal Bank of Scotland, the bank announced in April 2001 that all permanent staff would be given a 5% bonus once integration had been completed.

The chief executive then confirmed on 13 November 2002 that integration had been achieved, and that the bonus would therefore be paid to all permanent staff who were employed on both 13 November 2002 and the December payment date.

Fixed terms workers were specifically excluded, however, with the result that although both Mr Cure and Mr Fraser were employed on the relevant dates, neither of them received the bonus.

They claimed that they had been treated less favourably than permanent staff under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, which came into effect at the beginning of October 2002.

The tribunal decided that the regulations applied. The bank appealed on two grounds - first of all, that the applicants were out of time to make a claim; and secondly, that they were not treated less favourably than permanent employees.

What did the two sides argue on appeal?

The bank argued that the only issue to be decided was whether the regulations were in force 'when the act complained of took place.' It said that the decision to make a one-off payment to permanent staff was taken in March or April 2001. This was long before the regulations came into effect.

According to the bank, no importance should be attached to 13 November 2002, as this was simply the date for a meeting to discuss the mechanics of making the payment. 
It went on to argue that even if the date of 'less favourable treatment' was moved forward to when each of the applicants was engaged as a fixed term employee (29 October 2001 and 14 February 2002 respectively), those dates also preceded the introduction of the regulations.

It also argued that Mr Cure and Mr Fraser were not treated less favourably because they were fixed term employees, but simply because they were not permanent employees.

The bank pointed out that of its 100,000 employees, 6000 were not permanent staff, of whom 3000 were fixed term employees. The status of the applicants may have been a contributory cause to their exclusion from the bonus, it said, but it was not the only one. 
The applicants, on the other hand, argued that irrespective of what happened in 2001, it did not affect their right to complain when the intended act took place in November 2002.

What did the EAT decide?

The EAT decided in favour of the applicants. It said that the tribunal was right to take 13 November as the date when the bank provided much greater detail about the scale and application of the bonus, compared to the conditional announcement in 2001 (when the applicants were not employed).

It also rejected the bank's argument that the less favourable treatment was not because the applicants were on fixed term contracts. The fact that the bank also excluded other non-permanent groups of workers was irrelevant.