Gerald Nash (Louth, Labour) | Oireachtas source

I appreciate the opportunity to come before the joint committee to present the general scheme of the Industrial Relations (Amendment) Bill 2014 for the purposes of pre-legislative scrutiny, an important stage of the process. As the committee knows, the general scheme of the Bill was approved by the Government last July. The scheme, together with the regulatory impact assessment, has been published on my Department's website and forwarded to the committee for pre-legislative scrutiny.

The main purpose of the proposed Bill is twofold: first, to 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 and individual enterprises; and, second, to provide for a new statutory framework to allow the setting of minimum rates of remuneration and other terms and conditions of employment for a specified type, class or group of workers. In effect, it is a framework designed to replace the former sectoral registered employment agreements struck down by the Supreme Court in the McGowan judgment. These agreements, prior to structural changes codified in the Industrial Relations (Amendment) Act 2012, were made between a trade union and an employer's organisation through a relevant joint industrial council and, subject to certain conditions, registered by the Labour Court. This registration meant that the agreement applied to every worker of a particular class, type or group and to his or her employer, regardless of whether the worker or employer was a party to the original agreement. Their utility was reflected in the fact that prior to the McGowan judgment, six sectoral REAs had been registered or varied by the Labour Court and between 70,000 and 80,000 workers were covered.

The Government was of the view that a framework to facilitate sectoral terms and conditions was in the public interest and the general scheme, as published, is designed to deliver one. There has been extensive consultation with stakeholders on these proposals. In early 2014 a framework document setting out draft proposals on the issue was circulated by the Department to relevant employer and worker representative organisations and the subject of subsequent engagement and discussion. The input of these stakeholders in the context of the consultation process has been very constructive and informed the approach proposed in the Bill. While stakeholders have concerns about some elements of the overall scheme, it is fair to say there is broad support from employer and worker representative organisations for the proposed new framework and a desire to have it put in place as soon as possible.

For the purposes of outlining the background, the committee will be aware that in May 2013 the judgment in the McGowan case was published. The Supreme Court held that Part 3 of the Industrial Relations Act 1946 was invalid, having regard to Article 15.2.1o of the Constitution. That articles provides, in effect, that the exclusive power to make laws is vested in the Oireachtas. In that case, the Supreme Court took the view that the registered employment agreements were instruments having the status of laws made by private individuals which impacted on all employees and employers in the relevant sector. While the Constitution allows for the limited delegation of law-making functions, the provisions of the 1946 Act went beyond what was permissible under the Constitution. The effect of this decision was to strike down as unconstitutional the registration of agreements previously registered under the 1946 Act. As a result, all such agreements no longer have any application beyond the subscribing parties and are not enforceable in law.

It is important to remember that the existing contractual rights and sectors covered by REAs were unaffected by the ruling. Contractual rights can only be altered by agreement between the parties involved. However, it means that since May 2013 new employees in these sectors can be hired at a rate agreeable between workers and their employers.

This is subject only to the provisions of the National Minimum Wage Act 2000. In addition, as a result of the striking down of the registered employment agreements, a not insignificant level of industrial unrest in relation to procurement contracts and appropriate rates of pay has developed recently, particularly in relation to construction-related projects.
From the parties' perspective, the primary objective of REAs was to provide them with a sense of certainty around terms and conditions that would apply when the employer was tendering for and working through contracts and to have in place agreed grievance and industrial peace provisions. The agreements also had the effect of ensuring industry terms and conditions were recognised and maintained. In addition, the existence of these legally backed agreements was recognised under European Union law and ensured, in accordance with the EU posted workers directive, that contractors from outside the jurisdiction who might be using employees from lower wage economies did not obtain an advantage over local contractors in wage costs.
The Industrial Relations (Amendment) Act 2012 included a number of provisions amending and inserting new provisions in Part III of the 1946 Act relating to the REA mechanism. The aim of these provisions was to make the mechanism more responsive to changing economic and labour market conditions, as well as making the legislative framework much more constitutionally robust, in the light of the 2011 High Court ruling in the John Grace's Fried Chickencase which struck down the system of making employment regulation orders, EROs, on similar constitutional grounds, partly by way of making ministerial orders to give registration sectoral effect. However, the effect of the 2013 Supreme Court ruling was to make Part III of the 1946 Act void ab initio and consequently the amendments and additional provisions inserted in the 1946 Act by the 2012 Act were no longer either coherent or effective. However, while the Supreme Court ruling only addressed Part III of the 1946 Act in its unamended form, there is uncertainty as to whether the new provisions of the 1946 Act, as then amended, would withstand constitutional scrutiny based on the approach taken to Article 15.2.1^oin the McGowanjudgment. Accordingly, having considered the legal advice from the Attorney General on the implications of the Supreme Court ruling and given the importance of the issue for employers and their employees, particularly in relation to rates of pay and tendering for contracts, the Government has decided to legislate to address the ruling and provide for a revised legislative framework that would be fully informed by the Supreme Court judgment and expected to withstand constitutional challenge to the greatest extent possible.
As I said, the primary objective of legally binding sectoral terms and conditions is to provide a sense of certainty around terms and conditions that would apply when the employer was tendering for and working through contracts and to ensure industry terms and conditions and standards were recognised and maintained. The draft scheme does this. The new framework will provide a mechanism whereby the existence of legally binding terms and conditions of employment relating to rates of remuneration and sick pay, pensions and mortality provision in a particular sector will contribute to the promotion of harmonious industrial relations between workers and employers and assist in the avoidance of industrial unrest in the sector, the promotion and preservation of high standards of training and qualifications in the
sector and ensuring fair and sustainable rates of remuneration in the sector, in the light of EU law on the transnational provision of services.
In the future it is proposed that the Labour Court, when requested to do so, will initiate a review of the pay, pension and sick pay entitlements of workers in a particular sector and, if it deems it appropriate, make a recommendation to the Minister in the matter. A trade union or employer body that is substantially representative of workers or employers of such workers in a sector may make an application to the Labour Court to initiate the process looking for a possible recommendation to be made to the Minister to make the order. Interested parties - this is an important point from a legal perspective - will be given an opportunity to make submissions to the Labour Court in the context of such a review. The new legislation will provide the Labour Court with specific principles and policies that it will be obliged to take into account when considering whether to make and, if so, what recommendation to make to the Minister in relation to pay, pension and sick pay terms in a particular sector. If satisfied, the Minister will give effect to the recommendation by order. The standard Oireachtas oversight provisions will apply.
In addition, the Bill provides for mandatory dispute settling procedures to be included in a Labour Court recommendation to the Minister in the event of a trade dispute in relation to the provisions of the order. Provision will be made to allow firms in financial difficulty to apply for a temporary derogation from the obligation to pay the rate of remuneration provided for in an order.

Additional protections will be introduced in the form of anti-penalisation measures to protect workers who invoke any right conferred on the worker by the Act or take other specified actions under the Act.

The enforcement and compliance measure to be provided for in regard to the new sectoral terms and conditions will be drafted to ensure consistency with the measures proposed in regard to employment rights compliance and enforcement provisions under the separate workplace relations Bill. In addition to the new sectoral framework, it is proposed to reintroduce the facility for the registration of employment agreements to which there are only subscribing parties and which are voluntarily entered into by those parties. Enterprise-level registered employment agreements provide certainty for the employer and worker in terms of rates of pay and other terms and conditions over the period of the agreement. Furthermore, all such agreements will be required to contain a provision that, if a trade dispute occurs between workers and their employer, a strike or lockout shall not take place until the dispute has been submitted for settlement by negotiation in the manner specified in the agreement, thereby contributing to industrial peace in the enterprise or enterprises. As such agreements are not legally binding beyond the subscribing parties, the constitutional issues regarding the delegation of legislative authority that arose in the McGowan case do not apply in those cases. For the same reasons, it is not considered necessary for the registration of such agreements to be confirmed by ministerial order.

I will now briefly outline the purpose of each head of the scheme. Part I is the preliminary and general aspect. Heads 1 and 2 include provisions on Short Title, citation, constructive provisions and commencement. Part II provides for the reintroduction of a legislative framework governing the registration of employment agreements between individual enterprises or a number of such enterprises and trade unions that will be binding only on the parties to the agreement. Head 3 provides for definitions of key terms to be used in this part of the Bill. Head 4 provides for the register of employment agreements to be maintained by the Labour Court.

Head 5 provides that, where an application is made to the court to register an employment agreement, the court shall register the agreement in the register only where it is satisfied that there is all-party agreement that it should be registered, and it is satisfied that it is desirable or expedient to have a separate agreement of a class, type or group of workers covered by the agreement. Similarly, the court shall only register the agreement where it is satisfied that the trade union of workers is, or trade unions or workers are, substantially representative of such workers, that the agreement is not intended to restrict employment generally, or the employment of particular workers, and that the agreement provides that, if a trade dispute occurs between workers to whom the agreement relates and their employer, a strike or lockout shall not take place until the dispute has been submitted for settlement by negotiation in the manner specified in the agreement. In addition, the court shall not register any such agreement unless it is satisfied that registration of the agreement is likely to promote harmonious industrial relations between workers and their employers and the avoidance of industrial unrest.

Head 6 provides for the variation of registered employment agreements in certain circumstances where all parties to the agreement so agree, or, where one party wishes to vary the agreement but the other does not, the court, after exhaustion of dispute provisions, local discussions and LRC conciliation, or the workplace relations commission variant thereof, or a Labour Court recommendation, may refuse or grant such a variation as the court deems appropriate. In addition, provision is made for a party to withdraw from an agreement following any such variation where the agreement provides for the party to do so in such circumstances.

Head 7 provides that the court may cancel the registration of an employment agreement where all parties so request, or where the registration of an employment agreement has continued after the finishing date of the agreement, on the application of any party made after three months' notice to the court and consented to by all parties, to ensure all parties are aware that the termination date is due and imminent. It may also cancel the registration where it is satisfied that the trade union or trade unions of workers who are party to the agreement are not any longer substantially representative of the workers concerned.

Head 8 provides for the incorporation of the terms of any registered employment agreement in respect of remuneration or conditions of employment to be incorporated into a contract of employment. Head 9 provides for publication of particulars in regard to registered employment agreements and the right of persons to obtain copies.

Head 10 provides that, where a trade union representative of workers or a worker affected by an REA complains to the proposed workplace relations commission that the employer has not complied with the agreement, the WRC shall consider the complaint, and if, after such consideration, the matter has not been resolved, and where an adjudication officer of the WRC is satisfied that the complaint is well-founded, such officer may direct the employer to do such things, including the payment of any sum due to a worker from remuneration in accordance with the agreement, as will, in the opinion of the officer, result in compliance with the agreement by the employer.

Where an employer fails to comply with such a direction, the provisions of the WRC Bill shall apply, i.e., determination by the Labour Court and order of the District Court. The head also provides that where the Labour Court is satisfied that a strike is in contravention of the agreement and has as its object the obtaining of remuneration or terms and conditions other than those fixed in the agreement, the court may direct the trade union concerned to refrain from providing funds to assist the strike, or cancel the registration.

Head 11 provides that the court may, where asked, give its decision on any question as to the interpretation of a registered employment agreement or its application. In addition, a court of law, in determining any question arising in proceedings before it as to the interpretation of a registered employment agreement or its application, shall have regard to any decision of the court on the agreement, or it may, if it thinks proper, refer the question to the Labour Court for its decision, and the decision of the Labour Court shall be final.

Part III of the Bill covers sectoral minimum rates of remuneration and other terms and conditions. It provides for a revised legislative framework to address the issues arising as a result of the absence of any sectoral wage-setting mechanism following the Supreme Court ruling in the McGowan case. Head 12 provides for definitions of key terms to be used in Part III of the Bill, including the definition of "remuneration". Head 13 provides that Part III will not apply to close family members. This provision mirrors the exclusion of family members for the purposes of the National Minimum Wage Act.

Heads 14 and 16 provide that any organisation that satisfies the Labour Court that it is substantially representative of employees or employers or a particular class, type or group of workers can separately or jointly request the Labour Court to examine the terms and conditions relating to the remuneration, under head 14, or the sick pay, pension and mortality pay provisions, under head 16, of workers of that particular class, type or group, and request the court to make a recommendation to the Minister as to what the court deems appropriate remuneration and terms and conditions of such workers.

Head 15 provides that the rate of basic pay recommended by the court may be in excess of the national minimum wage. The recommendation may also provide for not more than two higher hourly rates of basic pay, based on length of service in the sector or enterprise concerned or the attainment of recognised standards or skills in the sector concerned, and minimum rates of pay in respect of young workers which are lower than that of an experienced adult worker, as provided for and in accordance with the relevant percentages set out in the National Minimum Wage Act. The recommendation may include a minimum rate of remuneration for apprentices and provisions regarding any pay in excess of basic pay in respect of shift work, piecework, overtime, unsocial hours worked or travelling time.

Head 17 provides for the scope of a Labour Court recommendation in relation to the requirements for pension and mortality and sick pay schemes. I should point out that head 17(i) provides that the Labour Court recommendation may provide for the requirements of a particular pension and mortality scheme or schemes for a class, type or group of workers, including a minimum daily rate of contribution to a scheme by workers. It is appropriate that it makes reference to the employer as well, and this will be dealt with in the Bill.

Head 18 provides for the submission of supporting evidence from employers and trade unions in relation to their being substantially representative of relevant employers and workers, respectively.

Head 19 provides that the court shall not undertake an examination unless it is satisfied that the request applies to all workers of a particular class, type or group and their employers in the identified sector and the court is satisfied that it is desirable or expedient to have separate terms and conditions relating to pay or pension schemes and sick pay schemes for that class, type or group. In addition, the court shall only undertake an examination where it is satisfied that the organisation or organisations making the request is or are substantially representative of the class, type or group of workers or employers in the sector to which the request is expressed to apply, and any recommendation is likely to promote harmonious relations between such workers and employers.

Head 20 provides for procedures in relation to the holding of a hearing by the court on an application for a review under Part III.

Head 21 provides the necessary guidance to the Labour Court in terms of the principles and policies that it will be required to take into account before making a recommendation to the Minister.

Head 21 provides the necessary guidance to the Labour Court in terms of the principles and policies that will be required to be taken into account before a recommendation is made to the Minister.

Head 22 provides for mandatory dispute settlement procedures to be included in a Labour Court recommendation in the event of a trade dispute arising in regard to provisions of the order. Heads 23 and 24 provide for the submission by the Labour Court to and for consideration by the Minister of the Labour Court recommendation. The Minister shall refuse to make such an order if not satisfied that the process has been complied with. Otherwise, the Minister shall make the order. The standard provisions dealing with the laying of orders before the Oireachtas are proposed.

Head 25 provides that if an order has not been amended or revoked within three years, the Minister may request the Labour Court to undertake a review of the terms and conditions of the previous order. Head 26 provides for a mechanism to allow an employer experiencing financial difficulties apply to the Labour Court for a temporary derogation from the requirement to pay the remuneration provided for by order. Head 27 provides that the enforcement and compliance measures to be provided for in regard to Part 3 of the Bill will be drafted to ensure consistency with the measures proposed by the Minister in regard to employment rights, compliance and enforcement provisions under the Workplace Relations Bill 2014, approved by the Government on 8 July this year.

Head 28 provides that a provision in a contract of employment is void in so far as it purports to exclude or limit the operation of any provision of this Bill when enacted. Head 29 provides for anti-penalisation measures to protect workers who invoke any right conferred on them by the Act or who other specified actions under the Act.

While the drafting of the legislative proposals has also been informed by comprehensive legal advice, I would welcome hearing the views of this committee on the general scheme, which will be of assistance to me in informing the drafting of the Bill.