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News & Events

Government agrees major reforming industrial relations legislation

Legislation will provide significant strengthening of laws to protect and promote workers’ rights and the low paid, and certainty for businesses and employers – Minister Bruton, Minister Nash

The Government has agreed the publication of legislation which provides for significant reforms to Ireland’s industrial relations laws.

The new laws will balance the interests of workers and employers by providing certainty and clarity for businesses while enhancing collective bargaining in workplaces, providing for registered employment agreements to be re-established and sectoral wage rates and conditions to be re-introduced and placing the Low Pay Commission on a statutory basis.

The Minister for Jobs, Enterprise and Innovation Richard Bruton TD and the Minister for Business and Employment Ged Nash TD secured Cabinet agreement for the publication of the new legislation. It will provide an improved framework for workers who seek to better their terms and conditions where collective bargaining is not recognised by their employer as well as to provide a replacement for Registered Employment Agreements, and separately another Bill to establish the Low Pay Commission on a statutory basis.

The Collective Bargaining element of the legislation will provide a mechanism for workers who seek to improve their terms and conditions in companies where collective bargaining is not recognised by their employer. When enacted it will ensure that such workers, aided by a trade union, can advance claims about remuneration, terms and conditions and have these determined by the Labour Court based on comparisons with similar companies.
The proposed laws have strong anti-victimisation protections.

In addition, any determination by the Labour Court may also be enforced by the Circuit Court, should any employer refuse to engage.

Ministers Bruton and Nash said that they are confident that the legislation, when enacted, will fit Ireland’s constitutional, social and economic traditions and its international obligations, and will ensure continued success in creating jobs and attracting investment into the economy.

Minister Bruton said: “Our basic objective as a Government is to achieve sustainable full employment and to raise people’s living standards. All of our laws and public services must be addressed towards these goals. The legislation we are publishing today is an important part of that”.

“Publication of this legislation marks the culmination of processes which have been going on within my Department for several years, involving stakeholders from all sides of industry, and I wish to pay tribute to all involved in reaching this point.

“These two pieces of legislation provide new, clear, balanced and evidence-based mechanisms to deal with specific industrial relations issues. They will address particular gaps that exist in protections for workers and the low paid, while also providing stability and certainty for employers and businesses, both Irish and multinationals, which we rely on to create the jobs we need”.

Minister Nash said, “A lacuna has existed for several years now in relation to the framework for workers who seek to better their terms and conditions either through collective bargaining or registered employment agreements (REAs). This arose after the Supreme Court struck down the old REA framework on grounds of constitutionality while the Supreme Court had also found fault with the application of the legislation that existed in terms of collective bargaining. These two pieces of legislation are a direct response to these rulings”.

“This is a key commitment of the Labour Party in Government and one I am very proud to have progressed. I entered public life 16 years ago in order to improve people’s living and working conditions. I believe the new collective bargaining legislation will do exactly that and is part of a package of measures we are introducing in order to promote the dignity at work agenda.”

The Programme for Government contained a commitment to address the legislative gaps and the Statement of Priorities agreed by the Taoiseach and Tanaiste in July also committed to prioritise the enactment of Collective Bargaining legislation.

The Ministers are also publishing legislation to provide for a system of Registered Employment Agreements (REAs) and Sectoral Employment Orders. 
This follows a judgement by the Supreme Court (McGowan and others v the Labour Court, Ireland and the Attorney General, May 2013) which effectively made the registration of employment agreements invalid.

As well as allowing trade unions and employers register agreements again, the new legislation will allow trade unions and employers to apply to the Labour Court to undertake a review of pay/pensions/sick pay in terms of workers in a particular sector and make recommendations to the Minister for the making of an order in these areas. These Orders will have legal effect.

Minister Nash said, “I believe the re-introduction of REAs and sectoral agreements in a constitutionally robust manner will be of benefit to both workers and their employers. Such agreements may be used in resolving industrial disputes or potential disputes and certainly we have seen a number of such disputes arise following the Supreme Court ruling.

“The new legislation will bring a sense of certainty to both sides of industry who engage in such agreements around terms and conditions – particularly when the employer is tendering for contracts. Ultimately, I believe the legislation will improve industrial relations after a period of uncertainty. It will also help to prevent a race to the bottom in terms of skills, training and terms and conditions of employment.”

Legislation which will establish the new Low Pay Commission on a statutory basis is also being published. The Commission will recommend to Government on an annual basis the appropriate rate of the National Minimum Wage. In addition, the Commission can examine related matters affecting the NMW subject to agreement at Cabinet in the first quarter of each year.

The Commission is being chaired by Dr Donal de Buitléir and is made up of nine members.

It has already begun its work on an interim basis, examining data sets and taking submissions on the minimum wage and is due to deliver its first report to Government by mid-July.

ENDS

For further information please contact:

Press Office, Department of Jobs, Enterprise and Innovation: press.office@djei.ie  or Ph: 01-6312200
Deirdre Grant, Press Advisor to Minister Nash – M: 086-048 4279

Note for Editors

Below is an explanatory note and overview of each of the three main legislative provisions agreed by the Cabinet.

1. Industrial Relations (Amendment Bill 2015)

A. Collective Bargaining

Programme for Government, Ryanair and ILO

The proposals for legislation are in fulfilment of the Programme for Government Commitment to “reform the current law on employees' right to engage in collective bargaining (the Industrial Relations (Amendment) Act 2001), so as to ensure compliance by the State with recent judgments of the European Court of Human Rights". In addition, the ILO, in 2012 issued its report in response to a complaint referred to it by ICTU and IMPACT arising from the 2007 Ryanair Supreme Court judgment. As part of the Government’s response to the ILO Report, it indicated that these matters would be addressed in the context of the Programme for Government commitment.

Overview

The proposals respect Ireland’s voluntary IR system but ensure that where an employer chooses not to engage in collective bargaining either with a trade union or an internal ‘excepted body’ the 2001 Act will be remediated to ensure there is an effective means for a union, on behalf of members in that employment, to have disputed remuneration, terms and conditions assessed against relevant comparators and determined by the Labour Court if necessary. 
It will also ensure that if an employer chooses to collectively bargain with an internal ‘excepted body’, as opposed to a union, that body must pass tests as regards its independence.

Provisions are included to ensure the Act is used appropriately and not abused in any way. There are provisions to ensure cases dealt with are ones where the numbers of workers are not insignificant; provisions to ensure elements of remuneration and conditions of employment are not challenged without regard for the totality of remuneration and conditions of employment; provisions to manage the frequency of reassessment of the same issues. 
Additional protection by way of interim relief is proposed where a union member, identified in the course of use of the process under the Act, is to be dismissed.

Specific Provisions

Definition of Collective Bargaining

In the Ryanair case, the Supreme Court found that the Labour Court cannot conclude that a trade dispute is in existence without first establishing that collective bargaining is in place and that internal machinery (if any) for resolving the perceived problem has been exhausted. In looking at how the case had been progressed, the Supreme Court found that the Labour Court had erred in law in its construction of the relevant provisions of the 2001 Act and the hearing of the case had been procedurally flawed.

As there was no definition of collective bargaining in the Act, as part of the decision, the Supreme Court found that the Labour Court was in error in utilising the “industrial relations” concept of collective bargaining and that instead, an ordinary, dictionary definition should apply. To address this lacuna the following definition will apply for the purposes of the Industrial Relations Act 2001 (as amended).

For the purposes of this Act, ‘collective bargaining’ comprises voluntary engagements or negotiations between any employer or employers' organisation on the one hand and a trade union of workers or excepted body to which this Act applies on the other, with the object of reaching agreement regarding working conditions or terms of employment, or non-employment, of workers.

Excepted Body

Under industrial relations legislation it is not lawful for a body to bargain collectively unless it has a negotiation licence (e.g. a trade union of employers or employees). The Trade Union Act 1941, in introducing “excepted bodies”, provided for a situation where both employer and employees in an individual firm wanted to negotiate terms and conditions in a situation where the employer or employees would not be acting illegally for not having a negotiation licence under that Act.

It is not proposed to amend the definition of excepted body other than, for the purposes of the 2001 Act (as amended) to reflect the concept of voluntary negotiations or engagements as contained in the collective bargaining definition above.

However, the legislation will address the status of the “excepted body” insofar as ensuring that it is genuinely free of employer influence in terms of negotiating and agreeing on wages or other conditions of employment. The following legislative provision will address this:
In determining if the body is an excepted body within the meaning of the 2001/2004 Acts the (Labour) Court shall have regard to the extent to which the body is independent and not under the domination and control of the employer or trade union of employers with which it engages or negotiates, in terms of its establishment, functioning and administration.

Remove Right of Access for Excepted Bodies

Given that excepted bodies, by their nature, are involved in collective bargaining as defined above, they will no longer have a right of access under the Act. This in effect means that it will be a matter for a trade union alone to initiate the processes under the legislation.

Establishing Trade Dispute and Access to Labour Court

While restoring and improving the operation of the Acts, it is recognised that the processes under this legislation are not appropriate to disputes involving very small numbers of workers. For this reason the legislation will ensure that the Court shall decline to conduct an investigation of a trade dispute under the Act where it is satisfied that, in the context of the dispute, the number of workers party to the trade dispute is insignificant.

To avoid a situation arising where, in the context of the totality of terms and conditions having been recently assessed by the Labour Court it is proposed that, other than in exceptional circumstances, the Labour Court shall not admit an application by a, grade, group or category of worker to which the trade disputes applies where the Court has made a recommendation or determination in relation to the same group, grade or category of worker in respect of the same employer in the previous 18 months.

Initiating Process

For the purpose of initiating a process of establishing the position when referring the matter to the Labour Court the following process will apply:
A statement made under the Statutory Declarations Act 1938 by the General Secretary or equivalent of the trade(s) unions concerned, setting out the number of its members and period of membership in the group, grade or category to which the trade dispute refers and who are party to the trade dispute, shall be admissible in evidence without further proof.

The employer may request the Labour Court to satisfy itself that the contents of the declaration are correct. In carrying out an examination, the Labour Court will ensure that the identities of trade union members are protected.

This brings clarity to the process and obviates the need for protracted procedures early in the process and removes the need for workers to be identified at an early stage.

Proof that Collective Bargaining with an Excepted Body is Taking Place

In the course of the consultations there was all party agreement that bringing further clarity to the above process could help avoid lengthy and potentially acrimonious hearings at the Labour Court. The following provision will assist in this regard:

Where an employer asserts to the Labour Court that it is the practice of the employer to engage in collective bargaining with an excepted body in respect of the grade, group or category of workers concerned, it is a matter for the employer to satisfy the Labour Court that this is the case.

Labour Court: Policies and Principles in Context of Establishing Remuneration and Conditions

Related decisions of the High and Supreme Courts indicated that further guidance to the Court was needed by way of primary legislation in terms of what the Court should take into account when looking at terms and conditions of the workers party to the trade dispute. Accordingly, the legislation will specify that:
When examining the terms and conditions of any employer the Labour Court will take into account the totality of remuneration and conditions of employment, and in doing so, look at comparators, where available, which can comprise both unionised and non-unionised employers.

In addition, in making any recommendation or determination under this Act, the Labour Court shall have regard to the sustainability of the employer’s business in the long-term.

Victimisation of Workers

The legislation will enhance protection for victimisation of individuals who are victimised as a result of invoking through the trade union, or acting as witness, comparator for the provisions of the 2001/2004 Acts are incorporated in the Bill.

Protection will be provided by way of allowing interim relief to be applied for in the Circuit Court in circumstances where a dismissal is being challenged on the grounds of unfairness arising from an individual believing that he/she is being victimised as a result of invoking through the trade union, or acting as witness, comparator for the provisions of the 2001/2004 Acts.

Where such relief is granted the case itself will be dealt with by the Adjudicator arm of the Workplace Relations Commission that is to be established in the near future.

B. Registered Employment Agreements/Sectoral Employment Orders

In the judgement delivered on 9 May 2013 in McGowan and others v The Labour Court, Ireland and the Attorney General, the Supreme Court held that Part III of the Industrial Relations Act 1946 was invalid having regard to Article 15.2.1 of the Constitution. That Article provides, in effect, that the exclusive power to make laws is vested in the Oireachtas. The Supreme Court took the view that Registered Employment Agreements are instruments having the status of laws made by private individuals, subject only to a limited power of veto by a subordinate body. While the Constitution allows for the limited delegation of law making functions, the provisions of the 1946 Act went beyond what is permissible under the Constitution.

The effect of this decision was to invalidate the registration of employment agreements previously registered under Part III of the 1946 Act. In consequence the Labour Court no longer has jurisdiction to enforce, interpret or otherwise apply these agreements. As a result, all such agreements no longer have any application beyond the subscribing parties and are not enforceable in law.

However, existing contractual rights of workers in sectors covered by Registered Employment Agreements were unaffected by the ruling. Contractual rights can be altered only by agreement between the parties involved.

Prior to the 2013 Supreme Court ruling there were six sectoral REAs extant which had been registered or varied by the Labour Court in recent years: two in the Construction Sector and one each covering Electrical Contracting, Printing, Overhead Powerline Contractors and Dublin Drapery, Footwear and Allied Trades. It is estimated that between 70,000 and 80,000 workers were covered by these sectoral agreements.

The striking down of the REAs means that, since May 2013, new employees in those sectors can be hired at a rate of remuneration agreeable between workers and their employers. This is subject only to the provisions of the National Minimum Wage Act, 2000.

While the Supreme Court ruling arose from a legal challenge by a group of electrical contractors to Part III of the 1946 Industrial Relations Act, the striking down of the totality of Part III also had the effect of rendering invalid all enterprise-level REAs that had been registered by the Court even though these were not the subject matter of the appeal to the Court. (There were over 50 such employment agreements registered by the Court under the 1946 Act).

The main purpose of the Part 3 of the Industrial Relations (Amendment) Bill 2015 is twofold. Firstly, it will provide for the reintroduction of a mechanism for the registration of employment agreements between an employer or employers and trade unions governing terms and conditions in individual enterprises. Such agreements will not be legally binding beyond the subscribing parties.

The Bill provides for the reintroduction of a mechanism for the registration of employment agreements between an employer or employers and trade unions governing terms and conditions in individual enterprises. Such agreements will not be legally binding beyond the subscribing parties.

The Bill also provide for a new statutory framework for establishing minimum rates of remuneration and other terms and conditions of employment for a specified type, class or group of – in effect a framework to replace the former sectoral REA system. In this context, the new framework proposes a mechanism whereby, in future, at the request, separately or jointly from organisations substantially representative of employers and/or of workers, the Labour Court can initiate a review of the pay and pension and sick pay entitlements of workers in a particular sector and, if it deems it appropriate, make a recommendation to the Minister on the matter. If the Minister is satisfied that the process provided for in the new legislation has been complied with by the Labour Court, he shall make the Order. Where such an order is made it will be binding across the sector to which it relates, and will be enforceable by the National Employment Rights Authority.

2. National Minimum Wage (Low Pay Commission) Bill

Making work pay continues to be a cornerstone of this Government’s agenda and the setting up of a Low Pay Commission is one of the key commitments in the Statement of Government Priorities agreed in July last.

The Commission was officially launched on 26th February to operate on an interim administrative basis, and the Commission held its first meeting the same day.

The principal function of the Low Pay Commission will be, on an annual basis, to examine and make recommendations to the Minister of the day on the national minimum wage, with a view to securing that the national minimum wage, where adjusted, is adjusted incrementally over time having had regard to changes in earnings, productivity, overall competitiveness and the likely impact any adjustment will have on employment and unemployment levels.

Alongside examining the National Minimum Wage, the Low Pay Commission will also be tasked with examining matters related generally to the functions of the Commission under the Act. This work programme will be agreed by Government and presented to the Commission in February of each year.

In addition, in the discharging of its function, the Commission will be required to make recommendations that are evidence-based using a suite of agreed data sets or, where required, based on bespoke research undertaken at the behest of the Commission.

The approach draws on that adopted in the UK where, since 1997, the recommendations of the UK Low Pay Commission have brought about a progressive increase of the minimum wage that has little detrimental effect on the functioning of the economy or labour market.

The Minister retains the power to accept, reject or vary the recommendations of the Commission, for stated reasons. The Minister will be required to make a statement in the Oireachtas setting out the basis for any rejection or variation of a recommendation or recommendations.

The Commission will be statutorily independent in the performance of its functions. While not provided for statutorily, it is intended that the LPC will adopt a consensus-based approach to its reports and recommendations.

A particular function of the Commission will be to ensure that any advice or recommendations it makes to Government is evidence-based; utilising agreed data, carrying out research and consultations with employers, workers and their representatives and taking written and oral evidence from a wide range of organisations. This is to ensure that any suggested changes to the National Minimum Wage have minimum adverse impact on employment and competitiveness.

Alongside this ‘hard data’, the Commission will consult with employers and worker who are directly affected by the National Minimum Wage. This real-lived experience will be vital for the Commissioners when deciding on what the minimum wage rate should be.

From an employer and worker perspective, a significant benefit of the LPC concept is the National Minimum Wage rates will be assessed annually and, therefore, where they occur, any adjustments into the future will be incremental and less disruptive for business rather than the step changes witnessed in the past.

The Commission has already commenced its work: submissions have been sought and the Commission is expected to submit its first report by the middle of July.