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Unpaid Jobseeker Schemes – Legally Flawed

Unpaid Jobseeker Schemes – Legally Flawed

In the case of R (on the application of Reilly and another) v Secretary of State for Work and Pensions [2013] EWCA Civ 66 CA, on appeal from [2012] EWHC 2292 (Admin) HC, jobseekers challenging the validity of a Government scheme requiring them to work for no pay as a condition of continuing to receive jobseeker’s allowance have been successful in their attempt to establish that the Government had exceeded their powers under the Jobseekers Act 1995, proving the unpaid schemes to be legally flawed.

The facts

Ms Reilly, a 24-year-old geology graduate looking for work and claiming jobseeker’s allowance was told that she was suitable for ‘training’ under the sector-based work academy scheme (‘SBWA scheme’), which would last for up to six weeks and be unpaid. Ms Reilly was told by her advisor that participation in the scheme was ‘mandatory’ and that Ms Reilly risked losing her jobseeker’s allowance if she did not participate. Consequently, she was placed for work at a Poundland store for five hours a day, five days a week, but was not paid. Regulation 4 of The Jobseeker’s Allowance (Employment, Skills and Enterprise) Regulations 2011 (S.I. 2011/917) (‘the ESE Regulations’) was allegedly breached on the basis that Ms Reilly should not have been told that it was mandatory for her to participate in the SBWA scheme.

Mr Wilson, a heavy goods vehicle driver looking for work, was told that in order to continue to receive jobseeker’s allowance, he would have to take part in the Community Action Programme (‘CAP’). However, he was ‘not prepared to work for free, particularly for such a long period of time.’ Mr Wilson was not told what work he would be doing. In addition, the notice given to him under Regulation 4(2) of the ESE Regulations was inadequate. He objected to doing unpaid work that was unrelated to his qualifications which would not help him re-enter the jobs market and refused to participate. He was stripped of his jobseeker’s allowance for six months.

Ms Reilly and Mr Wilson challenged the validity of the Government scheme requiring them to work for no pay as a condition of continuing to receive jobseeker’s allowance. The case proceeded to the Court of Appeal after the High Court ruled that the schemes were lawful (although it accepted that there were flaws in Ms Reilly’s and Mr Wilson’s treatment).

The judgment

The Court of Appeal allowed the appeal and quashed the ESE Regulations.

The Court highlighted four grounds:

  1. The scheme named in the ESE Regulations is beyond the powers of section 17A(1) of the Jobseekers 1995 Act. Section 17A(1) of the Act provides, that it is for the ESE Regulations to make provision for schemes of a prescribed description [paragraph 49].
  2. The ESE Regulations could not be enforced in the absence of a published policy in relation to them. Foskett J stated that, whether the individuals have a choice to participate in the scheme or not, they need to have the opportunity to make an informed choice about whether to become engaged in the programme at all [66].
  3. The notices to the appellants required by Regulation 4(2) were inadequate. The correspondence given to Mr Wilson regarding the programme did not meet the Regulation 4 obligation as the information given to him concerning the sanctions was unclear and opaque [119].
  4. It was argued that the ESE Regulations conflict with Article 4(2) of the European Convention on Human Rights which provides, subject to exceptions, that: ‘No one shall be required to perform forced or compulsory labour.’ The Court found no breach of Article 4.
The need to give appropriate information to claimants
  1. The schemes must be designed to assist claimants to obtain employment and be made with a view to improving their prospects of doing so [62].
  2. Claimants must be made aware of their obligations and of the circumstances, and the manner, in which sanctions will be applied. A notice in writing under Regulation 4 is capable of meeting this requirement [63].
  3. The notice given to Mr Wilson failed to comply with the statutory requirement. Further, no particulars were given as to what duties Mr Wilson would be expected to perform and no clear explanation, or apparently clear strategy, as to how the programme would improve Mr Wilson’s prospects of obtaining employment or assist him to do so. That being so, the requirement to participate in the scheme did not arise. The claimant selected under Regulation 3 is required to participate only where a notice in writing complying with Regulation 4(2) has been given [63-64].
The human rights argument
  1. The Court of Appeal considered the case of Van der Mussele v Belgium [1983] ECHR 13 where the European Court of Human Rights found that there had been no breach of Article 4 where pupil lawyers were required to undertake pro bono work to complete their pupillages.
  2. At paragraph 37, the Court held that there could be a breach:

    if the service imposed a burden which was so excessive or disproportionate to the advantages attached to the future exercise of that profession that the service could not be treated as having been voluntarily accepted beforehand.

Conclusion

The Court of Appeal holds that the ESE Regulations are invalid because they failed to describe the jobseekers schemes made under them in sufficient detail and that notices given under the Regulations were inadequate. Consequently, Ms Reilly and Mr Wilson had been unlawfully made to work unpaid for organisations because the Department for Work and Pensions had not given jobseekers enough legal information about why they were being made to do.

After the ruling Ms Reilly said the two weeks of unpaid work at Poundland were a ‘complete waste of my time as the experience did not help me get a job’. She added:

I don’t think I am above working in shops like Poundland. I now work part-time in a supermarket. It is just I expect to get paid for working.

Implications of the Court of Appeal decision

The Department for Work and Pensions is now implementing emergency regulations to deal with the Court of Appeal ruling. The Secretary of State for Work and Pensions, Iain Duncan Smith, is attempting to reverse the impact of the recent Court of Appeal decision in order to avoid an estimated liability of up to £130m. The Court of Appeal ruling means that thousands of jobseekers who had been previously financially penalised for failing to participate in back to work schemes could be entitled to a full rebate. However, Smith has immediately issued new Regulations (the Jobseeker’s Allowance (Schemes for Assisting Persons to Obtain Employment) Regulations 2013) which correct the technical errors in the original ESE Regulations and mean that the back-to-work schemes can continue.

The Government has made it clear that it has no intention of making retrospective benefit payments. The Jobseekers (Back to Work Schemes) Bill is being rushed through Parliament and will have both its second and third readings on 19 March. The retroactive legislation aims to invalidate the Court of Appeal’s decision and intends to validate with retrospective effect the ESE Regulations in order to ensure that claimants have no right to claim a refund on the basis that the ESE Regulations are ultra vires and/or that their notices were non-compliant.

The ruling has prompted much discussion of the importance of paying workers fairly.

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