The Industrial Relations (Amendment) Act, 2012 sets stricter conditions for the establishment and variation of Employment Regulation Orders (EROs) and Registered Employment Agreements (REAs).
Both EROs and REAs set out legally binding minimum pay and conditions for workers in different sectors of the economy and encompass all workers in these sectors. An ERO is set by a Joint Labour Council (JLC) made up of representatives of workers and employers, while an REA is an agreement by workers and employers which is registered at the Labour Court. Both ERO’s and REA’s are vetted by the Labour Court and ultimately the Minister, before being legally enforceable.
REA’s and ERO’s have been around for some time so why has new legislation been enacted?
The Government Programme for National Recovery, 2011-2016 signalled a wish to reform the Joint Labour Committees (JLC) system. Matters came to a head in July 2011 in the High Court case of John Grace Fried Chicken Limited V The Catering JLC where the Judge struck down the Catering ERO as contrary to the Constitution. By natural legal extension the judgement affected all EROs, on the basis that the legislation giving power to the JLC to enact a legally binding order did not give detailed “principles and policies” which the JLC should be mindful of before making such orders. At this point in time no EROs, in essence, exist until properly established under this new Act. Furthermore, the Government asserts that the new legislation also builds on the recommendations of the Independent Review of the EROs and REA Wage Setting Mechanisms (Duffy/Walsh Review).
What are the main changes in the new legislation on EROs?
Basically, it sets out the principles and policies to be set by the JLC when constructing an ERO; it gives guidance as to what can be laid down with regard to pay and other conditions in the ERO and sets out a mechanism for the Labour Court to sort out disagreements at the JLC. It also sets out a mechanism whereby an employer may seek a temporary derogation or exemption from the obligation to abide by the terms of an ERO. The Labour Court will be allowed conduct a five year review of all ERO’s/JLCs and may amend, merge or abolish them according to criteria laid down. Employees or trade unions can now go to a Rights Commissioner with a complaint within six months with an appeal to the Labour Court within six weeks. Previous contraventions were processed by Labour Inspectors. Any compensation awarded will be given priority in the distribution of assets in the case of insolvent companies.
What does a JLC have to take into account now before proposing an ERO?
The JLC for a sector must now take cognisance of the following;
• Legitimate financial and commercial interests of the employers
• Efficient, economical and sustainable work practices
• Agreeing and maintaining fair and sustainable minimum rates of remuneration
• Maintaining harmonious industrial relations
• The levels of employment and unemployment in the sector
• The general level of wages in comparable sectors
• The current National Minimum Wage
• Any National Wage Agreement in force
Where enterprises in the sector in question are in competition with enterprises in another member state of the EU the JLC can look at the general level of wages in that sector in the State in question but must take into account the cost of living in that state.
What powers does the JLC have now for setting rates and conditions?
The JLC can:
• Fix minimum hourly rates of remuneration but not more than 2 hourly rates based on length of service in the sector or enterprise concerned
• Set statutory minimum conditions of employment
• Provide regulations for under 18’s but the National Minimum Wage must apply
The JLC cannot address:
• Time off in lieu of public holidays
• Compensation under the Organisation of Working Act for working on a Sunday
• Payments in lieu of notice
• Payments referable to redundancy
The issue of the Sunday premium will be addressed at a forum between employers and the Irish Congress of Trade Unions which is being facilitated by the Minister to agree a statutory code of practice on the Sunday premium. If no agreement is reached between the parties, the Labour Relations Commission will set the rate.
Can an employer seek an exemption from an ERO?
Yes, but on a temporary basis only and only after stringent requirements are adhered to. The Labour Court must be satisfied that an agreement has been reached with the trade union or other representatives of the employees and that the business is experiencing “severe economic difficulties”. Such an exemption must be for at least three months and not more than 24 months. The employer can only get such an exemption once every 5 years though he can apply for an extension if the original was for a period less than 24 months.
Even if the majority of the employees or the trade union support an employer’s application for exemption the Labour Court may not grant it unless the employer can show it is “experiencing severe financial difficulties.”
Yes, but the employer must show:
• Provable severe economic difficulties, including tax clearance certificates and further information, particulars and documentation to the Labour Court to show that a significant risk exists that a number of employees will be made redundant if an exemption is not given or that the sustainability of the employer’s business would be significantly adversely affected.
• The employer has informed the workers concerned and attempted to come to an agreement with the Union on the statutory minimum remuneration.
Furthermore, in considering whether to grant an exemption the Court must conside whether it will have an adverse effect on employment levels or distort competition within the sector. An exemption to pay below the minimum wage or to reduce employer pension contributions is not allowed.
What are the changes to the Registered Employments Agreements (REAs)?
The fundamental changes are new measures to ensure that the parties to an agreement are substantially representative of the workers and employers in the sector in question. There are new policies and procedures to be taken into account by the Labour Court before an agreement is registered including ratification by the Oireachtas. Measures for cancellation and variation as well as the capacity to allow a party who is not party to the agreement to seek changes to that agreement are included. An employer can also seek an exemption from payment.
I’m already receiving REA rates and conditions. Will I be affected immediately?
No. The validity of existing REAs is protected and the measures apply only to new REAs agreed after the passing of the Act.
What are the factors which the Labour Court will take into account before registering and agreement in a particular sector?
• The number of workers the Trade Unions represent and whether the employer’s group in turn is substantially representative of the employers in the sector
• Ensure that registration of the agreement encourages industrial harmony
• Maintenance of established procedures for collective bargaining
• The past experience of REAs in the sector
• The potential impact on employment levels and assessment of employment and unemployment levels
• The desirability of agreeing and maintaining fair and sustainable rates of remuneration.
• The desirability of maintaining competitiveness
• The terms of relevant National Wage Agreements
• The general level of wages in comparable sectors
• Where enterprises in the sector in question are competing with enterprises in another EU state then the general level of wages in those enterprises is taken into account but the cost of living in the member state concerned must be taken into account
Can the parties to the agreement vary the terms?
They must apply to the Labour Court. The Court will make the final decision after hearing all interested parties and it can refuse the application or make an order of variation, whichever it sees fit.
Can the Labour Court vary the Agreement without the consent of all the parties?
Yes but only after a strict procedure is adhered to. Where one party applies and the other disputes the proposed variation, a procedure is laid down. This entails local talks, referral to the LRC and ultimate recommendation by the Labour Court. If, in the six weeks after the Court recommendation the dispute remains unresolved a party to the REA can apply to the Court for a variation order. The Court will arrange a further hearing and decide whether to vary or refuse.
Can an employer covered by an REA but who is not a party to the agreement seek a variation?
Only the Labour Court can vary the agreement but an employer who is not party to the agreement may seek a variation. This is a safeguard which was proposed by the Attorney General so that the REAs can maintain their universal applicability. There are strict conditions imposed before the employer concerned is given leave to apply:
• The employer must show there has been “a substantial adverse change in the economic circumstances of the sector”
• The employer concerned cannot apply for a variation order within the first 12 months of the currency of the REA or within 12 months of any previous application
• If the employer fulfils the initial requirements, the Court notifies the parties to the agreement and after six weeks of notification arranges a hearing for all interested parties to make submissions
Can an REA be cancelled?
Only the Labour Court can cancel an REA on its own initiative. It may commission a report and consider any submissions by an interested party. If the Court finds there has been substantial change in the trade or business, it may cancel the REA. It can also cancel if it finds that the employers or trade unions are no longer substantially representative of the employers or workers concerned.
Can there be exemptions for employers on the basis of inability to pay?
Yes, on similar grounds whereby temporary exemptions are granted from EROs, as outlined above. Finally, this is not intended to be a legal guide to the Act but instead gives a broad outline of the fundamental changes. Any issues with regard to EROs and REAs should firstly be addressed through your SIPTU representative.