Industrial Relations (Amendment) Bill

Peninsula Team

June 27 2012

The Industrial Relations (Amendment) Bill, which will govern sectoral minimum wages (Employment Regulation Orders (EROs) & Registered Employment Agreements (REAs)) has been debated for the last number of months in the Oireachtas. Recent amendments to the Bill have been published, the most striking of which allows employers or workers not party to the REA agreements to seek to vary the agreement. EROs and REAs are legally binding agreements which cover specific sectors or industries, and set out the minimum rate of pay and condition applicable to all employers and workers in these sectors or industries. The Bill has set out a number of changes from the original drafting and as discussed the most notable is that new provision allowing employers or workers who were not involved in the drafting of the agreement, but still covered by the REA, to apply to the labour court to vary it (the agreement).  In order to be heard the applicant must satisfy the Labour Court that there has been "substantial change in the economic circumstances" of the Sector to which the REA applies. There is however time restrictions on such hearings, and there can be no applications in the first 12 months of an REA, or within 12 months of any other such application being refused by the Labour Court. The Department of Jobs, Enterprise and Innovation have stated the main rationale behind this amendment is to avoid a scenario like we encountered last year with the JLCs and offer a defined route for people who were not a party to the REA to apply for a variation of the agreement. A further exemption made to the Bill include an amendment in relation to the setting of the wage rates. Previously the Bill highlighted that the Labour Court would take into account “the general level of wages in comparable sectors, including where the sector is in competition with enterprises outside the State, the general level of wages in such comparable sectors in other relevant jurisdictions”. Now the changed wording reads “where enterprises in the sector in question are in competition with enterprises in another Member State, the general level of wages in the enterprises in that other Member State taking into account the cost of living in the Member State concerned” This narrowed definition has been considered at the behest of Trade Unions in order to not only take the actual wage rates into account but to also the cost of living in the “Member State” (also limiting the scope to only EU member states). IBEC have expressed their disquiet at this in a comment to the IRN magazine, and reasoned that wages should not chase the cost of living. The amended Bill also included an amendment to tackle abuse of the “Inability to Pay” clause, which allowed the Labour Court to grant an exemption from the REA or ERO to an employer if the majority of workers had agreed to it. The concern in this instance was that some employers could conspire with their employees to agree an exemption in order to undercut their competition. This would lead to a situation where one employer by virtue of this exemption could effectively monopolise a market due to a lower cost base, and as such jeopardise employment in the sector. The new amendment required that the Court must be satisfied that the employers business is experiencing severe economic difficulties in order to obtain an exemption, even if the majority of employees agree. An additional amendment is one which has been suggested several months ago by the EU/ECB/IMP Trioka, who in light of bailouts etc. have taken a special interest in this Bill. The Trioka had suggested that any employer who was in receipt of an exemption from the REA/ERO could appeal to receive an extension to the exemption subject to a maximum of 24 months. Currently the Bill allows exemptions for between three and 24 months for employers, to the impact of this is that an employer cannot be in receipt of an exemption(s) for a total of more than 24 months, and under the Trioka amendment if they got an exemption for less than 12 months they can get it renewed to a time not exceeding 24 months, so for another 12 months in this case. Agreement may be reached relatively soon on the Bill, and the amendments highlighted above will have a significant impact on Employment Law in Ireland, some are welcome changes that will benefit employers(exemptions and inability to pay), which others seem to be more employee focused (wage rates in other countries set against cost of living). We will endeavour to keep you updated of any changes that may occur in the interim on this Bill.  

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