Training Outline

4.1 Standard Lecture: A Quota-Levy System (55 minutes)

  • Begin this lesson section by explaining to participants that quota schemes can be divided into three basic groups: a binding quota which is backed up with an enforced sanction (quota-levy system); a binding quota which is not backed up with an effective sanction and/or with an effective enforcement mechanism; or, a non-binding quota based on a recommendation, e.g. a government circular. Illustrate these three basic groups using Transparency 63.

    Explain to participants the quota schemes are not effective as stand-alone provisions but are potentially an important element of broader, more comprehensive non-discrimination legislation. Under quota schemes, employers employing a specified minimum number of persons are obliged to ensure that a certain percentage (a quota) of their workforce is made up of people with disabilities. Such schemes first emerged in Europe in the aftermath of the First World War, and initially war veterans who were disabled as a result of military action were the only beneficiaries. These schemes typically exempted small employers. In the post Second World War period, quota schemes were extended to cover disabled civilians, and were adopted in many countries throughout the world. The exemption for small employers was, however, often maintained. More recently, some quota schemes have been expanded expressly to include people with intellectual disabilities (such as the quota scheme in Japan) and people with mental health difficulties (such as in Germany).

    Quota schemes have undergone extensive evolution over time – moving from general quota systems with no sanctions to today’s more quota-levy systems that can be seen as a form of affirmative action and sometimes linked to effective non-discrimination legislation.

    NOTE: Some countries and especially some disability advocates are opposed to quota levy systems. Countries such as the USA, the UK, Canada and many of their disability communities find that quotas undermine the argument that people with disabilities can be equally as productive workers as non-disabled individuals, provided they have the proper accommodations. They believe that a quota levy system sets up an antagonistic position with employers, forcing them to hire individuals lest they be fined. These critics of quotas believe more can be gained by incentives such as paying for accommodations than by the sanctions.

  • Explain to participants that you will be exploring each of these approaches in greater detail. Begin by using Transparency 64 to explain that under a quota-levy scheme, a binding quota is set and all covered employers who do not meet their obligation are required to pay a compensatory payment. The money typically raised through such a quota scheme usually goes into a fund to support the employment of people with disabilities - typically administered by the public authorities, although exceptionally the social partners are involved as in the case of France.
  • Referencing page 36 of the Primer, highlight the examples from Germany, France and Japan that are provided.

    Germany was among the first countries to adopt a quota-levy scheme in 1974. Under the Social Code, Book 9, of 2002, public and private employers with a workforce of at least 20 employees are required to ensure that five per cent of their workforce is made up of people with disabilities. Employers who do not meet their quota obligation are obliged to pay a fixed compensatory levy for every unfilled quota place. This levy is used exclusively to promote the rehabilitation and employment of people with disabilities and can be used, for example, to provide grants to employers who exceed their quota obligations or to help employers meet any extra costs associated with the employment of a person with a disability, such as adaptations to buildings or the provision of extra training.

    A quota-levy system has also been adopted by other European countries, including France. In France, the funds arising from non-fulfillment of the quota obligation may be used to fund vocational training of individuals with disabilities. The French quota law also provides other options for employers to partially meet their obligation under the law, such as by purchasing goods or services from sheltered workshops employing disabled people, or by implementing an agreement, negotiated between employers’ and employee associations, aimed at the integration of disabled workers, though recruitment, training, job retention or adjustment to technological change.

    In Japan, the employment quota for people with disabilities varies depending on the level of full-time employment and unemployment in the general labour market.

  • Emphasize that it is not sufficient to provide merely for the payment of a levy when an employer fails to meet the set quota. Some means of collecting the levy must also be put in place. Explain that statutory bodies are generally given the task of both administering the collection and the distribution of the funds collected. Typically employers are given the task of assessing and declaring the amount due, and then paying the levies to the fund set up for that expressed purpose. The levies can be collected or paid annually, quarterly or monthly and are usually transferred directly to this fund. In some countries the employers do not self-identify, but instead are informed of their financial obligations by the oversight body. Using Transparency 65, highlight the approaches used in Austria and France explaining that in some countries, like Poland, tax collectors are given the authority to collect levy payments and then pass them on to the oversight body.

    In Austria, the national rehabilitation fund is administered by a government ministry which calculates the amount owed by an employer and informs the employer about it. The ministry has access to information about employers’ insurance obligations and uses this information to calculate the quota and levy responsibilities.

    In France, the fund is managed by an association (AGEFIPH) was established by law in 1987. The administrative council of AGEFIPH is composed of representatives of employers, worker and, persons with disabilities as representatives, qualified persons nominated by the social partners, disabled persons’ organizations and the Ministry for Employment and Solidarity.

    In Poland, levy payments are regulated under the law providing for tax liabilities. Under this law, tax offices have to control payments and to collect funds owed to the national rehabilitation fund. If an employer fails to pay the levy directly to the National Rehabilitation Fund, the Fund, without needing a court order, can ask the tax office to collect the money directly from the employer’s bank account or even take the employer’s property.

    In China, employers are obliged to pay a daily fine for each day that a payment is overdue.

  • Before moving on to binding quotas without an effective sanction, explain to participants that, in some countries, employers are fined for late payment of the levy sums owed. Summarize by stating that in some countries, quota-levy schemes are valued because of their revenue generating capacity to support the employment of people with disabilities. If employers prefer to pay the levy rather than employ workers with disabilities, however, the operation and effectiveness of the quota scheme should be reviewed. Conclude by stating that if a quota-levy scheme is being considered because it is seen as a source of funding for disability-related activities and services, other approaches should be explored, as these are likely to be more cost effective.