Pat Breen (Clare, Fine Gael) | Oireachtas source

I know the committee has had a very long day and a very comprehensive discussion earlier with the other witnesses as well. I thank the committee for inviting me to attend the committee today to discuss the Banded Hours Contract Bill 2016. I welcome the opportunity to be here with the members. I know the committee has put a considerable amount of work to date into consideration of the Bill and has engaged with a wide range of stakeholders over the course of recent months. The committee is to be commended on the approach it has taken in this regard.

I will first explain the Government position on the Bill. Members will recall from last summer that when it was debated on Second Stage in the Dáil, the Government did not support it for the reasons which I and my colleague, the Minister, Deputy Mitchell O'Connor, explained in detail at the time. In summary, the Bill, as drafted, is flawed, lacks balance and does not achieve its stated aim. Moreover, it would have very significant adverse consequences for employers across the economy, including job losses. In contrast, the legislative proposals recently approved by Government for priority drafting represent a balanced response to the commitment in the programme for Government to address the problems caused by increased casualisation of work and, very importantly, to strengthen the regulation of precarious work. I will elaborate on these proposals later.

Let us start with the Sinn Féin Private Members' Bill. What is wrong with it? The Bill does not focus on low-paid vulnerable workers. Instead, it requires that all workers in every sector of the economy be given additional hours on request, unless the employer can prove severe financial difficulties. Under the Bill, employees could keep asking for more hours every six months. They would have to receive the additional hours until the employer reaches the point of severe financial difficulties. It does not matter if the employer does not have the work. The effect of this provision is that the employers would find themselves having to appear before the Workplace Relations Commission, WRC, and the Labour Court attempting to prove severe financial difficulties. The right to seek more hours kicks in after six months in a job. The six-month reference period is too short to take into account the normal peaks and troughs of a business, including seasonal fluctuations, and it would produce skewed results. I ask the committee to think about someone working during a busy summer season from April to September. At the end of this period, he or she would have the right to get more hours than he or she worked over the summer and get those increased hours for the upcoming low season of October to March. This does not make sense and would cause untold difficulties for many businesses.

One of the problems highlighted in the University of Limerick study was the issue of employees whose contract of employment does not reflect the reality of the hours they work consistently. There may be, for example, employees who have been working 30 hours per week consistently for many years but whose contracts only state ten or 15 hours per week. The Government's proposals include measures to make contracts reflect the hours people actually work. The Sinn Féin Bill does not. Instead, it would require employers to give extra hours to employees that they did not have to begin with. This is totally different and does not address the problem identified by the University of Limerick study.

Further, the Bill makes no allowances for employers in the following situations. First, they may have no more work to give. This Bill would require them to increase hours until they reach severe financial difficulties. Second, they may be worried they might lose contracts due to Brexit, for example. They must give extra hours until they reach severe financial difficulties. Third, they may be setting aside funds to expand. It does not matter. Extra hours would have to be given whether needed or not. I know the committee has already discussed the test of severe financial difficulties at one of its earlier meetings with a number of experienced barristers practising in the area of employment law, one of whom referred to it in the following terms. The severe financial difficulties test "imposes such a disproportionate burden on an employer that there is a real risk that the legislation will be struck down as unconstitutional".

While I acknowledge that the Bill may be well intentioned, I must point out that it will have adverse impacts across the economy and jobs will be lost. I ask the committee to think about an employer with 100 hours of work to give per week and five employees each working 20 hours. Through this Bill, they would have to be put on a higher band if they so request. If they move to 25 hours each per week, that is 125 hours per week, 25 more than the employer has to give. One could expect one of them would have to be made redundant. This pattern could keep repeating itself every six months under the Bill.

The other major issue with the Bill is that it requires every employer covered by it to display notices in their workplaces. These notices have to show the number of hours being allocated to workers in the next week or month and the relevant bands. These notices will have to be in English, Irish and any other languages as required. This is clearly a significant additional burden that would apply to every employer, even if everyone works full-time and there are no rosters. The Bill requires this from every business ranging from the corner shop to the largest multinational.

In addition to the aforementioned flaws, the Bill does not deal with a range of issues encompassed in the Government Bill. Overall, while the Banded Hours Contract Bill 2016 may be well meaning, it is misconceived, flawed and inappropriate. There is a very real danger that employment will suffer and competitiveness be damaged if the Sinn Féin Bill is passed.

Having addressed the Sinn Féin Bill, I wish to outline what the Government proposes to do about banded hours, low-hour contracts, zero-hour contracts and related matters. I think everyone in this room would have empathy with employees who cannot access mortgages or even loans from credit unions because their contracts of employment do not reflect the reality of their hours worked. We would also empathise with people who may be in low-paid, insecure employment and those who are not informed of even the most basic terms and conditions of employment within a reasonable period of starting a new job. Further, we know of people being called in to work but who do not receive the promised hours. These are the key issues which have been identified as needing to be addressed. This is why the Minister, Deputy Mitchell O'Connor, and I brought proposals to Government in this area in response to the commitment in the programme for Government to address problems in this area. I am very pleased to say the Government approved our draft legislative proposals earlier this month and the draft heads of Bill have been referred to the Office of the Attorney General for priority drafting. It is very important to understand that our proposals are the result of extensive consultations. These include a public consultation carried out by my Department following the University of Limerick study on zero-hour contracts and low-hour contracts as well as a detailed dialogue process with the Irish Congress of Trade Unions, ICTU, and the Irish Business and Employers Confederation, IBEC, over a period of several months.

Regarding banded hours specifically, our draft legislative proposals will ensure employees on low-hour contracts who consistently work more hours each week than provided for in their contracts of employment are entitled to be placed in a band of hours that reflects the reality of the hours they have worked over an extended period. The proposals provide for the creation of a new right for an employee to seek to be placed on a band of hours. However, after much consultation and consideration, we propose a reference period of 18 months. This is sufficiently long to allow for the normal peaks and troughs of businesses, including those subject to seasonal fluctuations. It also reflects that the academic year does not match the calendar year. so those working in the education sector can avail of these proposals also. I note that the definition of "worker" included in the Sinn Féin Bill excludes teachers, which I accept may be accidental. Our proposals also provide a mechanism for a review of the arrangement after a period of 18 months, that is, after the employee has sought and been placed in a band of hours in exercise of their right under this proposal.

One provision that our proposals share with this Private Members' Bill is that an employee will be able to seek redress through the WRC. Redress will be limited to being placed in an appropriate band of hours. This is to prevent vexatious claims.

The proposals include reasonable defences for employers to refuse an employee's request where the facts do not support the employee's claim, significant adverse changes have impacted on the business such as the loss of an important contract, emergency circumstances, for example, the business has had to close due to flooding, or where the hours worked by the employee were due to a genuinely temporary situation, such as cover for another employee on maternity leave.

Some employers in the retail sector already have banded hours arrangements that work well and the Government does not wish to interfere with them. Therefore, the proposed banded hours provision will not apply to an employer who has entered into a banded hours arrangement through an agreement by collective bargaining with employees.

The bands in our proposals are kept deliberately wide to provide flexibility to employers and employees. Our draft legislative proposals cover much more than just banded hours arrangements. They also address four key issues. First, they ensure workers are better informed about the nature of their employment arrangements and, in particular, their core terms at an early stage of their employment. Currently, 15 terms of employment are required to be given by employers to employees within two months. The UL study recommended that all 15 items be given on the first day. Following consultation, we consider that to be excessive. Instead, it is proposed that employers must inform employees in writing within five days of commencement of employment of five ordinary, albeit core, terms of employment: the full name of the employer and employee; the address of the employer; the expected duration of the contract regardless of whether the contract is temporary or fixed-term; the rate or method of calculating pay; and what the employer reasonably expects the normal length of the employee's working day and week will be.

This proposal is a better solution than putting rosters in prominent places in the workplace in both Irish and English as suggested in the Sinn Féin Bill. Under our proposals, an employee will have to be told early in his or her employment what the working day and week will be. The proposals also provide for the creation of a new offence where an employer does not provide the proposed statement of the five core terms of employment within one month of commencement of employment. Strengthening the sanction for non-compliance will help to promote better work practices and provide greater clarity around the essential elements of the employment relationship for both the employer and the employee.

Second, our proposals strengthen the provisions around minimum payments to low-paid, vulnerable workers who may be called in to work for a period but not provided with that work. It is also intended to introduce a floor payment of three times the national minimum wage or three times the minimum rate set down in an employment regulation order, ERO, to compensate low-paid workers who are called in to work and then sent home without the work promised. Most people in this room would sympathise with a cleaner who got a text to come in to work for a six-hour shift and got the bus in only to be told there was no work for him or her that day. Under our proposals, that cleaner would receive three times the €9.75 minimum wage, which is €29.25. This is to discourage employers from the unscrupulous practice of calling employees in to work unnecessarily and not paying them. However, our proposals are balanced and include reasonable defences for employers, for example, in emergency situations. Unlike the Private Members' Bill, this proposal is specifically targeted at low-paid vulnerable workers.

Third, our proposals prohibit zero-hour contracts in most circumstances. To this end, the proposals will provide that an employer will no longer be able to engage an employee on a contract within the meaning of section 18(1)(a) or 18(1)(c) of the Organisation of Working Time Act 1997 where the stated contracted hours are zero, unless it is genuinely casual work, emergency cover or short-term relief work for the employer. It is also proposed to delete the phrase "zero hours working practices" from the title of section 18 of the Act. This proposal is to avoid the contagion of an increase in zero-hour practices in this jurisdiction.

Fourth, I note from the transcripts of previous committee meetings that this Private Members' Bill has been criticised because there is no penalisation provision. In our proposals, it is intended to provide against an employer penalising or threatening to penalise an employee for exercising any right under the proposed legislation. Members will be aware that I have referred the draft legislation to the Oireachtas Committee on Jobs, Enterprise and Innovation for consideration as to whether it wishes to engage in pre-legislative scrutiny of the proposed Bill. I appreciate that the committee may not have had an opportunity to consider this question, but I would welcome the opportunity to engage further with members on the Government Bill. In any event, I look forward to the constructive contributions of the committee in advancing these proposals through the Oireachtas to ensure the legislative provisions in this important area of employment rights are enacted as soon as possible.

I cannot support the Private Members' Bill as its provisions are not workable in practice. The Bill would place too onerous a burden on all employers, especially start-ups and microenterprises. As Minister of State with responsibility not just for employment rights matters but also for small business, I am acutely aware of the need to strike a balance between protecting vulnerable workers while encouraging a climate in which businesses can survive and grow. I thank members for their time and look forward to taking their questions on this issue.