Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I welcome Ms Jean Winters, Mr. Tom Parlon and Mr. Michael Stone, all of whom are from the Construction Industry Federation, and Ms Maeve McElwee and Ms Gillian Verrecchia, both of whom are from IBEC. I thank them for attending today to make presentations on the general scheme of the Industrial Relations (Amendment) Bill 2014. Their submissions have been circulated to members so I ask them to address their comments to the specific draft heads of the Bill. This meeting is an opportunity for them to inform the committee of issues they may have with the heads, as drafted, and to propose measures to address these issues. It is important that the time available to us be used constructively and for the intended purposes I have outlined. All proposals will be considered by the committee when it is preparing its report for the Minister.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.
The format for the discussion is that Ms Winters from the Construction Industry Federation of Ireland will make her opening statement first, followed by Ms McElwee from IBEC. The members will then be invited to ask questions.

Members are reminded when asking questions to state the number of the head to which they are referring. I now invite Ms Winters to make her presentation.

Ms Jean Winters:

We thank the joint committee for giving us the opportunity to attend here today and to outline our observations on the general scheme of the Industrial Relations (Amendment) Bill 2014. The Construction Industry Federation is the representative body for employers in the construction industry. We represent contractors and members throughout all sectors of the industry, including general contracting, specialist sub-contracting, civil engineering contracting, mechanical and electrical contracting, and house-building. We have 13 branches throughout the country representing the interests of our members and we have offices in Dublin, Cork and Galway.

We welcome the publication of this Bill. The Supreme Court judgement in 2013 left a vacuum in the industry, which has caused huge difficulties for our members. There have been difficulties in tendering and trying to resolve disputes that arise, and we have been left without any kind of certainty in the industry with regard to labour costs. We are hopeful that the industry is emerging from recession and that over the coming year and into the future the industry will be capable of creating jobs. Since the recession hit, approximately seven years ago, over 180,000 construction workers have lost their jobs, which is a huge number of people left without work. We are hopeful that when we emerge from recession we will be capable of creating jobs.

What we need in the industry is certainty about labour costs. We need a level playing field for contractors when they are tendering for work and we need a robust and vigorous disputes resolution procedure to enable us to resolve the disputes that will inevitably arise. The construction industry is characterised by its competitive nature. Contractors are in competition with one another for jobs, both within the State and outside the State, and it is essential that they can compete for work on a level playing field with regard to costs. Labour costs account for over 50% of any tender and when our members are trying to compete we need certainty about labour costs. We also need a vigorous disputes resolution procedure. The industry is labour-intensive. A worker in the construction industry can expect to have a job for the duration of a contract. If that contract is finished, the employer may transfer the worker to another site if another site is available. If that is not the case, that worker could be made redundant. Construction workers, therefore, are constantly moving from employer to employer and from site to site, so the industry is transient in nature and because it is labour-intensive it is prone to volatility. That is why a vigorous disputes resolution procedure is essential to us.

Part II of the heads of Bill provides a legislative framework to allow individual employers and trade unions to come to an employment agreement and to register that agreement. Registered employment agreements, REAs, are binding only on the parties to the agreement and therefore we believe that REAs will not really be of benefit to the construction industry in general. The industry is competitive by nature and we must ensure that there are universally applicable rates of pay for all employers and workers in the industry, regardless of whether they have been a party to the agreement or not. We are therefore concentrating in particular on Part III, which deals with registered employment orders. These are sectoral agreements or provision for sectoral orders, which we believe are more applicable to the construction industry.

There are a number of issues in connection with the registered employment agreements which we would like to address. I will go through some of the heads on which we would like to comment.

Head 13 deals with non-application of the Act. It sets out the various family members, generally speaking, to whom the Act would not apply. The reason we are looking for this legislation to be enacted in the industry is that it would apply to all employers and all workers of a certain category, class or type. Therefore, we would look to have head 13 omitted from the Act because it would not apply to, say, a family firm. The construction industry is characterised by small- to medium-sized enterprises. There are family firms throughout the country. If a family firm was exempt from this part of the legislation purely because the owner employed family members, that would place the firm at a competitive advantage in comparison to other contractors. We believe this would defy the basic principle of the legislation and therefore we would look to have the head omitted.

Our comments on heads 14 and 16 are similar. The wording in the heads states that an organisation representing workers, on its own behalf or jointly with an organisation representing employers, can apply to the Labour Court for it to carry out a review and make a recommendation to the Minister. It does not specify that an organisation representing employers can apply to the Labour Court for a review on its own or jointly with an organisation representing workers. We have been assured by the Department that the intention is that any organisation representing either employers or workers may make an application to the Labour Court, but we would like clarity on that issue. The framework document that was issued in February in connection with this legislation and the briefing document issued by the Department in July would lead us to believe that any organisation could apply to the Labour Court. These comments apply to heads 14 and 16.

Head 21 looks at the recommendation of the Labour Court and sets out the principles and policies that the Labour Court must take into consideration when making its recommendation. One of those is that it must take the general level of wages applying into account. We would like that extended to include the general level of wages applying to workers of a similar class, group or type, not just in Ireland but also in other EU member states. This would be to ensure that Irish construction workers' rates of pay are not out of line with those that apply in other EU member states. In particular, we would be thinking of contractors in the North, because Irish contractors have traditionally been in competition with contractors from Northern Ireland and we would like to make sure that the Irish construction workers' rates of pay are not out of line with other jurisdictions.

Head 22, on the dispute settling provisions, is of particular importance to us. The wording in the heads of Bill provides that, in general, if a dispute occurs between a worker and his employer in relation to something that is in the order, a strike or lockout cannot occur until the dispute has been put forward for resolution by the LRC or the Labour Court. We would like the dispute resolution procedure to be strengthened, and for the Bill to state that if a dispute occurs between a worker and an employer to whom the order relates, a strike or lockout will not occur until the dispute has been put forward. In other words, the dispute resolution procedures should not apply just to a dispute that may occur about an issue in the order. The disputes resolution procedure should apply to any dispute that may arise between workers and employers. The only issues that would be covered by the order would be rates of pay and conditions of employment and pensions and sick pay. There may be disputes.

The only issues that will be covered by the order will be rates of pay, conditions of employment, pensions and sick pay. There may be disputes. As I said, the industry is a labour-intensive one. It is transient in nature and, therefore, prone to volatility, which is why the dispute resolution procedure is very important to us. We would like a strengthened dispute resolution procedure that would help to resolve any disputes that may arise in the industry.

Head 26 deals with exemptions and derogations. While we accept that the conditions set out in the Bill attaching to exemptions are quite strict, which is good, we believe the basic principle of an order is that there is a level playing field in regard to tendering on labour costs from an employer's perspective and that there are fair, sustainable and reasonable rates of pay from an employee's perspective. We would prefer to see the derogations omitted from the legislation because, again, we believe that defies the basic principles of the order in the first place.

Lastly, but of huge importance to us, are the compliance and enforcement provisions. The Bill states quite rightly that the compliance and enforcement provisions would be consistent with those set out in the Workplace Relations Bill, but the importance of compliance and enforcement cannot be overstated from our perspective. In the past, when we had registered employment agreements, the issue of compliance with, and enforcement of, those agreements was hugely important. As I said, many of our members and contractors in the Republic would be in competition with contractors from the North. It is essential that there is provision there for those who will carry out compliance and enforcement and that they have the necessary authority and powers to ensure that all contractors, regardless of origin, will be forced to comply with the provisions of the order. It is our view that the National Employment Rights Agency is the appropriate body to carry out compliance in the industry and that it should have adequate resources to ensure that it is capable of ensuring compliance with the provisions of the order.

We believe NERA should have a unit dedicated purely to the construction industry, because of the size of the industry, the number of workers involved in it and the transient nature of it, and that it would have the necessary authority and powers to ensure that contractors, not only those based in the State but those based outside it, comply with legislation. If that necessitates provision being made for contractors outside the State having bases or offices in the State to enable NERA carry out its functions in compliance and enforcement, that should be done. Those are our views and observations on the legislation.

As I said, the important aspects of it are that it would bring certainty to the industry. We had that certainty until May 2013 when the Supreme Court struck down REAs. We need certainty in regard to labour costs because the industry is emerging from recession. We believe we are capable of creating employment. Currently, 106,000 construction workers are employed in the industry and we are only emerging from recession, so we hope we will be in position to create more employment. That is the reason we need certainty in regard to labour costs, stability and a proper dispute resolution procedure and to ensure that whatever order is put in place can be enforced and complied with.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank Ms Winters and invite Ms McElwee to make her presentation.

Ms Maeve McElwee:

I thank the Chairman. IBEC thanks the joint committee for the opportunity to provide a written submission to it on the heads of the industrial relations (amendment) Bill 2014.

IBEC is slightly different from the CIF is that it is representative of member companies across all sectors and all industries and therefore has a different view in respect of the heads of the Bill that have been produced. IBEC has a number of key observations and recommendations that it would like to draw to the attention of the committee.
IBEC welcomes the introduction of a proposed wage setting mechanism that would have some statutory force but would like to see it balanced with a mechanism that is both appropriate and sustainable. In the first instance I will deal with the heads in Part 2 of the Bill. I have a couple of small issues with the heads of the Bill and make the following proposals.
In regard to head 5, IBEC is concerned about the lack of requirement to specify when a registered employment agreement would cease to have effect. I respectfully submit that this head should be amended to provide that the court shall not register an employment agreement unless it contains a provision that specifies when it will come to an end. Employers would be unlikely to enter into an REA where it felt there was no end date. Given the potential that an REA could be varied without the consent of an employer, again that would be an important factor in coming towards an REA in a positive way. IBEC believes that every REA should have a termination provision in order that it would be drawn to a conclusion at a particular point in time.
The issue with head 6 is that no consent is required to vary an REA. This head would give the Labour Court the power to vary an REA which has already been made, even where the employer and the union concerned are not agreeable to that variation. IBEC respectfully submits that the agreement of the parties should be required before REAs could be varied, except in cases of force majeure, such as a major economic crisis. IBEC proposes that, in Part 2, the court could not vary a termination provision to ensure that an REA would last forever and that the head would be amended to preclude that as a possibility.
In Part 3 of the Bill, the definition of "remuneration" is set out in head 12 and it creates a material difference between the registered employment order, REO, and the joint labour committee-employment regulation order, JLC-ERO, systems. IBEC would be concerned about the likelihood of forum shopping, something it has seen in other areas of employment law and industrial relations. This head proposes to define remuneration to include matters such as basic pay, piece work, overtime, Sunday premium and travel time. We have concerns that a definition would extend the scope of registered employment orders beyond the scope of what is already contained in JLC-EROs and bring about the danger of forum shopping. Joint labour committees, JLCs, are not empowered to make recommendations in respect of Sunday premium and we submit this head should be amended to reflect the same provisions.
In head 14, the registered employment order application mechanism does not require the agreement of those to whom it applies. The proposed absence of a requirement for agreement is a radical departure from the former REA mechanism. The issue arises that this may give greater rise to challenge on constitutional grounds than the former system.
One of the failings of the former system was that some relevant employers could have an REA imposed on them. Under this new proposal, all relevant employers could have an REO imposed on them, as no agreement is required from either the employer side or the employee-trade union side for any level of agreement on what is proposed in an REO. IBEC is concerned that significant constitutional issues may arise. I have some proposals to address that and I will do under head 21.
In head 18, there is a lack of clarity about evidence the court would require to establish substantial representation. The head proposes to permit the court to specify documentation which tends to confirm whether an applicant for an REO can establish that it is "substantially representative" of the workers or employers in question.

A provision might need to be made in relation to the provision of that evidence. We submit that such provision could extend to requiring applicants to swear to statutory declarations about the relevant numbers of members or workers, as the case may be, who fall into the relevant categories. Provision for statutory declarations of this type is already included in the proposed amendment to the Industrial Relations (Amendment) Act 2001.

Head 21 relates to recommendations to the Labour Court. As I have said, IBEC's fundamental concern about the heads of this Bill is that they would facilitate the imposition of a registered employment order even if most or all of the affected employers opposed the order. We suggest that head 21 should be amended to provide that "the Court shall not make a recommendation if it is satisfied that trade unions representing, or the employers employing, a substantial number of the affected workers do not support the proposed recommendation". This fundamental protection would prevent the court from making a recommendation unless there is substantial agreement from relevant trade unions and employers. However, it would not mandate that a recommendation would be agreed simply because there is agreement. Other principles and policies would still have to be considered in the normal way to ensure any registered employment order that eventually came out adhered to those principles and policies. In the absence of such a protection, the court would have unduly broad powers to set wages in all sectors of the economy.

We have an issue with the adequacy of the principles and policies under head 21 in regard to the proposing of a registered employment order. One of the fundamental reasons the two former wage-setting mechanisms were struck down was the absence of sufficient policies and procedures to guide the court in making subordinate decisions. The Industrial Relations (Amendment) Act 2012, which restored the joint labour committee and employment regulation order system, provided detailed principles and policies for joint labour committees. Eleven policies and procedures were provided for to guide the committees in making their decisions. We believe it would be reasonable to expect the new legislation governing registered employment orders to contain similar provisions. However, the new legislation that is proposed includes just four of the 11 policies and procedures set out in the 2012 Act. For that reason we are concerned that the new proposals significantly dilute the principles and policies in question.

This dilution occurs in the context of the proposed new registered employment order mechanism, which will place an extraordinary level of decision-making in the hands of the Labour Court. The court will not have the constraints that apply under the joint labour committee and employment regulation order system. Under that system, proposals for an employment regulation order must be formulated by the joint labour committee. The court may accept or reject the committee's proposals - it might make recommendations to the committee about the content of the proposals – but it may not substitute its own views for those of the joint labour committee. We are suggesting that where the court has these broad powers, it is extremely important for them to be guided by further policies and principles. There is no requirement for agreement to be reached in the setting of a registered employment order.

We believe it is particularly important for the guiding principle in relation to competition between enterprises in the member state and enterprises in other member states to be reinstated in the consideration of a registered employment order. The court should have regard to the general level of wages in enterprises in any other member state and take account of the cost of living in the member state as set out. A wage-setting proposal is a very draconian measure. Given the broad scope of a registered employment order in any industry or sector, we think it is important for the competition consideration to be set out. It will not always be the case in every sector of industry that other legislation will be in a position to amend or contain that, as it would be for posted workers in the construction sector, for example. We need to take cognisance of the competitive markets that are in force in that sector and other sectors that are in operation in the Border counties.

We believe the court should not make a recommendation unless it is satisfied that it is in the public interest to do so. The court should always have a wider view of the public interest when it is making a wage-setting recommendation. It would not be sufficient for it to confine its consideration to the sector involved.

The potential imposition of pension schemes that are not in line with public policy is a key issue to be brought to the attention of the committee under this head. In the past, the wage-setting mechanisms under the Industrial Relations Acts included pension provisions that would certainly not meet modern-day standards. We suggest that the court not make a recommendation in respect of a pension scheme unless it is first satisfied that the request is in a form that is in compliance with national pensions policy.
On head 24, pertaining to a decision by the Minister, the lack of ministerial discretion to decline to register an REA is a matter of concern. We respectfully submit that such a provision would undulyfetter the power of the Minister and would amount to undue delegation of legislative power to the court. We suggest that the head be amended so the Minister would be obliged to make an order only in certain circumstances. As it stands, the Minister would be required to make the order even if it were contrary to public policy, if it would create an unacceptable cost to the State, if it had the effect of causing indirect discrimination or if it caused Ireland to be in breach of international treaty obligations. The Minister should have unfettered discretion to decline to make an order. Furthermore, Ibec believes the Minister should have a positive obligation to be satisfied that making the order is in the public interest before he or she makes any such order.
Head 27 concerns compliance and enforcement provisions. Our submission indicates there are excessive measures being proposed to enforce compliance with REOs. This head proposes that compliance with REOs is to be addressed through the adjudication process, compliance notices and fixed-payment notices, as provided for in the Workplace Relations Bill. We have already raised this in the context of that Bill. However, we submit that employment law is not an appropriate area of law for fixed-payment notices to be introduced, and that the criminal element of the compliance notice regime is not an appropriate system for employment enactments. We propose that provisions for compliance and enforcement notices be removed from both the Workplace Relations Bill and head 27 as there are already sufficiently rigorous provisions within the workplace relations structure to deal with any such issues that arise.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank both witnesses for their contributions. I call Deputy Dara Calleary.

Dara Calleary (Mayo, Fianna Fail)
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I welcome the delegates from the Construction Industry Federation and Ibec. I have several questions, some of which overlap. A frustration under the old system, experienced in particular by smaller companies, was that the bigger companies could sustain the cost associated with implementation. They could take the cost on board because of their size and economies of scale. Particularly in the CIF presentation, the delegates seemed, wittingly or otherwise, to emphasise that. They seem to be trying to take out of the Bill whatever supports exist for small business. There are not many. They seem to be against the proposal. Head 13, pertaining to family business, specifically small local businesses and not big family businesses, was specifically mentioned. Head 26, on the inability-to-pay mechanism, which is incredibly restrictive, is opposed by the delegates also. How do they respond to the argument that their stance is to protect the big companies? The majority of the federation's members are big companies, but there are some small building companies also. The federation's proposals would take away whatever few supports exist at the expense of SMEs or small companies and to the benefit of larger companies.

The CIF delegates stated Part 2 of the Bill is not appropriate to the industry. Have they any alternative structure? On head 27, on compliance, has the delegation come across any comparisons we could use in terms of outer jurisdiction enforcement - for example, in Europe where borders are shared? I refer to circumstances where we have similar issues. This is a major problem, particularly where outer jurisdiction construction tendering uses different cost bases and methods. Have the delegates come across any models in their work that we could use as a guide in framing this legislation?

In the IBEC presentation, the area of substantial representation was mentioned in relation to head 18. This is a big issue. The witness was vague about how we define what is substantial representation. Representatives of CIF can come in on this. What test would the witnesses suggest, both in terms of employer organisations and unions? This is an area I am interested in pursuing because it is a major flaw in the system. Will the witnesses comment on the cross-Border issue and how we manage shared borders in terms of implementing tendering and cost aspects? On point 3, what model would IBEC use for labour measurement? Would it use an EU, OECD or UN model? This applies to CIF too. There are so many different models for measuring labour rates. Is there a preference?

Both submissions have much food for thought in them. I am just picking up on those issues, but I may come back to the representatives of CIF and IBEC separately.

Ms Jean Winters:

With regard to Deputy Calleary's point about protection for the larger employers, I apologise if it has come across like that, but that is certainly not the intention of our submission. We represent contractors of all sizes across all sectors, and in fact the majority of our membership is made up of small and medium enterprises. Many of these small and medium enterprises employ the largest number of workers in the industry. We are certainly not about trying to protect large contractors. I believe, and the federation believes, that having a registered employment order in place in the industry that covers all workers regardless of the size of their employer is the best way to ensure protection for large, medium and small enterprises. That is why we would prefer to see heads 13 and 27 omitted from the legislation.

Head 13 is about the non-application of the Act to family members. In some parts of the country, there could be, for example, a plumbing contractor who employs his sons and they compete for work in their particular town or village in the country. If a registered employment order does not apply to that small firm, it is at an advantage when tendering for work against another firm that might employ the same number of workers - one or two plumbers - if these workers are not family members. The registered employment order will protect small and medium enterprises in exactly the same way it will protect larger contractors because, regardless of the size of the firm, it must still go out and compete for work. That is the nature of the construction industry - contractors must go out there and compete for work. As labour takes up a huge portion of any tender, regardless of the size of the firm, rates and terms and conditions should be universally applicable and should not depend on the size of enterprise.

On Part II, which deals with registered employment agreements, the reason we believe REAs will not be applicable to the industry in general is that they will only be binding on the parties to these agreements. For example, if CIF, representing employers, reached an employment agreement with all the unions involved in the construction industry and registers the agreement, that is fine if contractors who are members of CIF are a party to that agreement. It is binding on them. However, contractors from the North, for example, or contractors who are not members of the federation would have a competitive advantage.

We believe that the registered employment agreements are not applicable to the construction industry, because they are binding on the parties to the agreement only. The alternative, as we see it, and the better system for the industry, is the registered employment orders because they have universal applicability and are not confined purely to the parties to the agreement.

With regard to compliance and whether there are models in other countries, the difficulty we have had in the industry over the years, and particularly during the busy years, was with contractors from the North who might come down to the Republic, carry out their business and then go back to the North. These contractors would not have an office in which the National Employment Rights Authority, NERA, could inspect the records and ensure workers were being paid the appropriate rates and so on. The posting of workers directive was introduced in most other EU member states several years ago. I cannot remember exactly what the date was but it was a number of years ago. I believe there are difficulties in transposing that directive in Ireland. It is not an Act in its own right. We had a difficulty with our Constitution, and with the issue of enforcement, in ensuring that workers from other jurisdictions would get the same terms and conditions. If a worker found that he was not getting the proper rate of pay in the construction industry, where did he bring a case? Did he bring it to the Labour Court here in Ireland, or, if he was, say, a Northern Irish worker, did he go to the equivalent Labour Court in the North? If he came to the Labour Court here and it issued a determination, how could that be enforced if the worker's employer or ex-employer was based in a different jurisdiction? Other European countries have not had this difficulty with the posting of workers directive. I understand the issue is to do with our Constitution. One way around it is that, if contractors working here in the Republic were required to have a base or an office here while they were carrying out work, then NERA, with the proper statutory powers, could visit that office and look to inspect the records to ensure that all workers working in the industry here received the same terms and conditions. That might be a way of sorting that issue out.

Ms Maeve McElwee:

Regarding the question of representation posed on head 18, the matter of "substantially representative of any particular group" is always considerable. Looking at it from the point of view of how it could be defined, rather than what would actually constitute substantial representation, is one of the issues. We suggest there should be a standard mechanism by which "substantially representative" can be measured and verified. Defining "substantially representative" comes first, being conscious that we are looking across all sectors and industries where a registered employment order in particular, or a registered employment agreement, might be in place. It does not necessarily need to define what exactly "substantially representative" is within each sector and industry. The Labour Court, having received a standardised set of information, could probably take a view as to the representativeness of any particular party to an application for an registered employment order. There will always be fluctuations and differences in the level of representation in any individual sector and it might be impossible to capture one way or the other. A very low number might actually be representative in some circumstances.

The other question posed was on labour costs. I do not have a specific model that should be in place and that we could necessarily use, but at a very basic level we should be cognisant of the wages that are being paid in our nearest competitor markets, as should the Labour Court in its principles and policies.

When contracting in and out of Ireland and Northern Ireland, for instance, those contracting rates will necessarily apply. Other sectors and industries will have a problem with labour costs potentially rising where in some instances there is a business across the road that will not be subject to the same inflation in labour costs because it will not be subject to a registered employment order. The court needs to have taken into account where the sector is operating and its direct competitor market. It may be a case in retail or in the hospitality industry, in pubs, restaurants and clubs.

Feargal Quinn (Independent)
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I did not hear the consumer mentioned. Ms McElwee seems to be saying that the construction industry is different from everything else. I grew up in the grocery business and almost everything Ms McElwee said about the construction industry applies to the grocery business. There are family businesses, with sons and daughters working in the business, and huge international competitors. In the long term the winner is the consumer. Why does Ms McElwee believe there must be rules and regulations and REOs for the construction industry that do not exist in other industries? What makes the construction industry different? All industries are competitive. We want to make sure of that. The winner in a competitive market is the consumer.

If there are registered sectoral orders that ensure the prices go up because costs go up, as in the example Ms Winters gave of a business from Northern Ireland being able to compete in the Republic because it did not have the same costs, the benefit to the consumer is a lower cost construction. Why was the consumer or customer not mentioned once? I would like to think the person who buys the construction plays a part. Why does the construction industry have to have different rules?

Mr. Tom Parlon:

Ms Winters pointed out that labour is 50% of our costs so construction is labour intensive, which is a big difference. In the Senator’s retail business he might have own brands and large multinational brands. In construction one has to tender for a particular job. Having a registered employment agreement or an REO would give better service to the customer because as soon as the REA disappeared and there was a major decline in the industry, the tendering became so intense that in many cases it was below cost. Some projects were not finished and some, unfortunately, were finished to a poor standard. In attempting to keep their business alive through gaining cashflow some people went in below cost and then attempted to cut their wage bills and ended up not paying people. We feel the absence of an REA. When we had it we went regularly to the Labour Court, met our counterparts in the unions and negotiated. The rates went up steadily until 2009, when we got a 7% reduction, which did not represent the nosedive the industry took. Apart from that we thought it was good for our workers.

We have a pension scheme for construction workers and as Ms Winters said, it is very transient work. If one gets a job worth €20 million and takes on 100 guys, they will have to disperse and seek work elsewhere unless one gets another, similar contract immediately. The pension scheme is voluntary. It is not really referred to in this legislation but we hope it will become part of it. That is a good support for construction workers.

It might be easier in later life to work in a shop. While I am not saying it is, construction sites are not the place for people facing retirement . They would certainly appreciate the pension.

If one looks at low-cost retailers, one would be hard set to find a person working in some of the large foreign stores. Everything is stacked high and one finds a person at the cash desk, so the labour element would be very low. In terms of the consumer and the employee, having a registered employment order which creates a level playing field will give a better product to the consumer.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Would Ms McElwee from IBEC like to comment?

Ms Maeve McElwee:

When one looks at a broad span of sectors where the REA is in place, the consumer is taken care of from the point of view that this is a negotiated and agreed rate between employers and their employees. That will obviously be of benefit to business. It is an agreed and registered piece. Generally, it has a payback to the industry and to the consumer as well.

We have some concerns in regard to REOs because there would be no requirement for an agreement. There is no clear guidance as to what constitutes a sector or what constitutes the area over which the Labour Court may define that an REO applies. As happens in already existing JLCs, such as the retail grocery JLC, one has everybody, from the major players right down to the very smallest players. It does have an impact on the consumer. It is part and parcel of our concern in terms of a wage-setting mechanism that is not based on an agreement between the parties, and that potentially has an impact on the consumer.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank the representatives of the CIF and IBEC for attending today and for their presentations on the heads of the industrial relations (amendment) Bill 2014.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I remind members and witnesses once again to turn off their mobile phones. I welcome Mr. Chris Lundy of the Association of Electrical Contractors of Ireland, Mr. John Smith of National Electrical Contractors Ireland, Mr. Brian Nolan of the Technical Electrical and Engineering Union and Mr. Ned Costigan of the Construction Workers Alliance. I thank them for attending today's meeting of the joint committee to make presentations on the general scheme of the Industrial Relations (Amendment) Bill 2014. As their submissions have been received and circulated to members, I ask them to address their comments to the specific draft heads of the Bill. This meeting is an opportunity for the witnesses to inform the committee of issues they may have with the heads, as drafted, and to propose measures to address these issues. It is important for the time available to us to be used for the intended purposes I have outlined. All proposals will be considered by the committee when it is preparing its report for the Minister.

Before we begin, I would like to inform the witnesses that they are protected by absolute privilege in respect of the evidence they are about to give to the joint committee. However, if they are directed by it to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

The format for the discussion is that Mr. Lundy will make his presentation first, followed by Mr. Smith, Mr. Nolan and Mr. Costigan. The members will then be invited to ask questions. I ask Mr. Lundy to make his presentation.

Mr. Chris Lundy:

I am the executive secretary of the Association of Electrical Contractors of Ireland, which represents between 180 and 190 electrical contractors of different sizes.

We have gone through the 29 heads of the Bill and I will comment on some of them.
Head 6 refers to the variation of registered employment agreements, REAs. Variations to rates of pay in the past using the analog system have been cumbersome, difficult to handle and difficult to achieve agreement. I think other methods for varying the rates up or down should be examined. The analog system is very difficult to handle.
Head 7 relates to cancellation of a registration, be it of a REO or a REA. We have found it very difficult to get a REA cancelled. We are seeking an easier method of trying to agree changes to the registered employment agreement or to get it cancelled. A case went to the Supreme Court. We feel that it should be easier to bring people together when all agree that the system is not working.
Head 8 deals with the adaptation of worker's contracts. When the REA was in place, a contract of employment for the employees simply followed the lines of the agreement. We suggest that the employment contract will follow the format of the agreement.
Head 9 refers to the publication of particulars in relation to employment agreements and right to obtain copies thereof. We suggest that the publication of new employment agreement could be carried out by employer associations and trades unions; using the websites; and through the national newspapers.
Head 10 deals with breaches of a registered employment agreement. We have a question on whether the Labour Court will be the means by which breaches of agreements will be heard.
Head 12 refers to definitions for the purposes of Part 11 of sectoral minimum rates of remuneration and other terms and conditions. With regard to remuneration our members will have major difficulties agreeing to the proposals on travel time. This has been a bone of contention for a long time, particularly where roads have improved. It will take far less time to get to Monasterevin now than it took many years ago. We have no problems with regard to subsistence and long distance travel.
We also think it is very important to state in the terms of the contract that 21 days are the agreed number of holidays in our industry. The reason is that if companies are coming from other countries they may have only ten paid days holiday. That would make a very big difference in the costing of a job.
Head 14 refers to submission to request terms and conditions relating to remuneration.The term "substantially representative of workers" comes up time and time again. We always have a great difficulty in trying to find where we lie on this and how it is achieved. We would like to look at this issue deeply and have it clarified completely before this term can be fully expressed.
Head 15 refers to Labour Court recommendation. AECI see three rates of pay applying to three different sectors in our electrical contracting industry. We have played around with this many times because we feel there is a "domestic" "commercial" and an "industrial" market. There may be something that we could consider. We are convinced that one rate does not fit all.
Head 16refers to the terms and conditions relating to sick pay, pension and mortality schemes. This provision was included in the old REA, however more thought and time is required in this area to form a decision because it is a very heavy area and we need a great deal of time to consider it.
We will now jump to head 22, which relates to dispute settling provisions. With regard to dispute procedure, we believe the recommendation should read "any dispute at all". I acknowledge that it singles out various way that a dispute should be handled but we believe that any dispute should go through the procedures as set out in head 22.
Head 25 refers to a review of order. As mentioned in the head, we concur with the provision for a three year review.
Our final comment relates to head 27 compliance and enforcement provisions.This is one of the most important elements of the proposed legislation. We think the policing and enforcement of the legislation needs to be convincing as many efforts in the past have failed and we would like to know whether the National Employment Rights Authority, NERA, or a similar body would carry this out.

Whatever is put together with agreements is going to fall at this head if it is not enforced and policed properly.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank Mr. Lundy and invite Mr. Smith to make his presentation.

Mr. John Smith:

I am the CEO of the National Electrical Contractors Ireland, NECI. I thank the committee for affording us this important opportunity to make it aware of the opinions of our members regarding the proposed Bill.
NECI was founded in 2008 and we represent mostly smaller electrical contractors. Our members were significantly and negatively impacted by the previous registered employment agreement, REA. Despite the fact that we had no input into the 1990 agreement, and in fact were largely unaware of its very existence, large numbers of our members were brought before the Labour Court and forced to pay substantial back moneys to the construction workers pension scheme, CWPS, under its terms. The demands for these back moneys, some of which sums were in excess of €300,000, put many small contractors out of business. The strain of dealing with the Labour Court led to ill health for many others, and in fact we know of two contractors who took their own lives following enforcement of the 1990 electrical REA by the Labour Court.
All this was happening when there were no complaints from the contractors' employees. In fact it sometimes seemed to us that the sole purpose of the REA was to ensure compulsory membership of the CWPS. When NECI set up a competing pension scheme, every attempt was made to discourage membership and undermine an alternate pension scheme. It is a fact that nothing has changed in the 1990 electrical REA except upward pay rises in the 23 years of its existence.
NECI was at the forefront of the McGowan and others v. the Labour Court case which ultimately led to the Supreme Court declaring Part III of the 1946 Industrial Relations Act unconstitutional in its entirety. We welcomed the decision of the Supreme Court. We have been happily agreeing terms and conditions with our own employees on a one-to-one basis since 9 May 2013. Despite scaremongering by the unions, the industry has not descended into chaos and we have not seen mass exploitation of electricians. In fact contractors have, as was necessary, become more competitive and have used the flexibility they now have to streamline their operation.
Registered employment agreements by their very nature are inflexible and strangle companies when they need to adjust to meet demanding trading conditions. It is our opinion that the REA system is anti-competition and borders on cartelism. In an industry as diverse as the electrical contracting industry, it is universally accepted that a one size fits all agreement does not work. NECI is of the opinion that the 1946 Industrial Relations Act in its entirety should be consigned to the industrial relations bin. It has been amended a number of times, the last being in 2012, and is clearly not fit for purpose. The 1946 Act cannot deal with issues which exist in the Ireland of 2014. The industrial relations landscape today includes issues which were inconceivable to the legislators in 1946. If new legislation is required, and it is our opinion that it is not, it should be drawn up from scratch.
It is also our opinion that, while these global legally binding agreements might suit the large contractors who are forced to deal with unions, they are incompatible with small businesses which, in the main, employ non-union labour. NECI reserves the right to agree terms and conditions with our own employees on a one-to-one basis. While----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I must interrupt Mr. Smith as it is not appropriate to make comment on other people's positions on this. We are here to discuss the heads of the Bill, please.

Mr. John Smith:

We are extremely disappointed that the proposals in the heads of the Bill make no attempt to define once and for all the term "substantial representation". The lack of clarity on what constitutes substantial representation will lead to many challenges. We have no doubt that this matter will eventually end up before the courts. We are also disappointed that the heads of the Bill do not refer to mandatory education of all employers and employees of any sector into which any global agreement is introduced. The lack of education on the previous REA led to contractors being criminalised under the terms of an agreement of which they were unaware.

We note that, once again, the proposals contain no provision for parties which are bound by an agreement into which they were allowed no input to apply to vary the terms of that agreement. This deficiency of the old system was highlighted in the Supreme Court judgement and allows, for example, no method for a new entrant into an industry to ever vary its terms. We are disappointed that no attempt is made to correct this unacceptable situation.

NECI welcomes the exclusion of close family members from any future agreement. The inclusion of this welcome safeguard was suggested by us. This will ensure that, as happened under the previous REAs, small employers will not be criminalised and forced to pay back moneys for simply training their own sons and daughters in the business.

NECI members in the main are happy with the industry situation since May 2013 where they can operate their business without interference. Our members are happy to compete in an open market and are confident that without the constraints of a registered employment agreement, we can compete with other contractors in a free market that will serve our customers best.

Our members are happy to compete in an open market and are confident that without the constraints of a registered employment agreement we can compete with other contractors in a free market and serve our customers best. On behalf of the electrical contractors of Ireland, represented by NECI, I thank the committee.

Mr. Brian Nolan:

The Technical Electrical and Engineering Union, TEEU, is Ireland's largest craft union, representing over 40,000 members employed throughout the Irish economy, including many thousands in mechanical, electrical and power-lines contracting, all of which were covered by the following REAs prior to the McGowan v. Labour Court Supreme Court judgement of May 2013. Those agreements would be the construction industry wages and conditions of employment agreement-----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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May I interrupt Mr. Nolan for a moment? Somebody has a mobile telephone swtiched on-----

John Lyons (Dublin North West, Labour)
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It must be somebody where there is a microphone on-----

Mr. Brian Nolan:

I have mine turned off.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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It interferes with the broadcast, so if anybody has a telephone, they might check that they are turned off. I understand aeroplane mode is fine.

Mr. Brian Nolan:

Sabotage.

John Lyons (Dublin North West, Labour)
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We can start again. Take 2.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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It is just that you would not be heard properly, and it would not record properly.

Mr. Brian Nolan:

Maybe I am exuding electricity. That is fair enough.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Thank you.

Mr. Brian Nolan:

The agreements in question would be the construction industry wages and conditions of employment agreement, the construction industry pension assurance and sick pay agreement, the electrical contracting industry employment agreement and the overhead powerline industry agreement. These were all collective agreements between the appropriate parties in Ireland, namely the employer representative bodies and a trade union or group of trade unions, in addition to which their registration with the Labour Court gave universal application to the terms and conditions to a worker or body of workers from outside the Irish jurisdiction. Universal application is a key factor of this proposed legislation and something we would support on the basis that we could return to a position where universal application would provide protection to workers and employers alike throughout Ireland.

One example of the effect of universal application was 96 Serbian linesmen employed by the Belgrade-----

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Perhaps Mr. Nolan could deal specifically with the heads of the Bill. I notice that contractors are going to be named, which we will not allow here this afternoon, so if he could stick with the heads of the Bill I would appreciate it.

Mr. Brian Nolan:

That is fair enough. Apologies.

Omitting names, the debate is on universal application. The examples given were primarily on the basis that with the REAs in place we discovered breaches of not just the registered employment agreements, but of the Organisation of Working Time Act, 1997; the Unfair Dismissals Act, 1977 to 1993; the REA for the Electrical Contracting Industry; the Payment of Wages Act, 1991; the Terms of Employment (Information) Act, 1994; and the National Minimum Wage Act, 2000. The mechanism delivered by the registered employment agreements allowed us to address those. While they are not directly covered by the registered employment agreement, the existence of this agreement allowed us to access these workers, uncover their story and remedy the situation. There have been several other examples of that, which I will abstain from naming, but they are well documented and most people know about them anyway.

We are concerned that since the Supreme Court judgement of last year, and with judgements such as Rüffert and Laval, there is a void in the system we have at present. The TEEU has taken a case to the European Court of Human Rights in Strasbourg on the void created in relation to collective bargaining. I referred to Rüffert and Laval as two examples and Laval could highlight that there is a recognition of the right to collective bargaining, but in Ireland we hold the firm view that Supreme Court judgements have been detrimental and created a deficit in the recognition of collective bargaining rights. That is why the union has taken the case. The TEEU, in the absence of legislation supporting REAs, welcomes the Industrial Relations (Amendment) Bill as a means to at least restore some elements of workers' rights to an appropriate level of remuneration, sick pay and pension commensurate with their knowledge, skill and experience.

We have highlighted some of the heads of Bill with minor alterations but our major concern is the significant deficiency in the Bill relating to the enforcement of the terms of the order. The National Employment Rights Authority, NERA, does not have the capacity to manage such a task, which will have a negative effect on the legislation. The impact of the legislation would not be felt, and that would be detrimental to employers, workers, and all involved in the industries.

We seek confirmation that the legislation or orders will apply to agency workers. There is currently a massive effort on the part of some agencies to undermine the industries and workers. There are many industrial disputes and there is much unrest because of unscrupulous recruitment agencies. These are undermining the employers, not only the employees.

By and large, I have outlined the views documented in our submission. I invite members to raise anything they wish me to talk about further.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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If Mr. Nolan would like to go through each head, he is welcome to do so. Is he satisfied he has covered everything?

Mr. Brian Nolan:

The main issue is that of enforcement. We have a grave fear based on when NERA had a role to play regarding the last registered employment agreement. By May 2013 and the time the Supreme Court decision was issued, we had 760 outstanding cases. Some pertained to minor infringements while others concerned workers losing out on in excess of €2 million in pension contributions that were taken from their wages. There were employers who were failing to remit their contributions to pension schemes. We also had quite a number of cases concerning people who had next of kin seeking to make a claim in respect of death in service. It transpired the employers had not forwarded the remittance. It is not plain sailing and contrasts with the circumstances when someone is left short of just a few quid at the end of the week. There is a more sinister element to this.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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If anything further occurs, Mr. Nolan may raise it later.

Mr. Brian Nolan:

That is fair enough.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I invite Mr. Ned Costigan to make his presentation.

Mr. Ned Costigan:

I am a member of Construction Workers Alliance Ireland. We primarily represent non-union and unemployed construction workers. We have had dealings with some contractors and suppliers in the industry. We believe the legislation is seriously flawed and will explain why.
Head 3 implies a representative group or groups will enter into a deal to create a registered agreement. The previous legislation described those groups as comprising the unions and the employers. This description is being removed in the Bill. We are concerned that any ad hocgroup could come together and describe itself as substantive in the industry and, therefore, together with some group on the employee side negotiate an agreement detrimental to the rights of construction workers. We are concerned that many of the unions in the construction industry would find it very difficult to describe themselves as substantive because of the lack of membership in reality. This can be challenged in court. I will return to this.
Section 5 implies there is no longer to be a sectoral agreement. The previous REA was a sectoral agreement that was legally binding on every employer in the industry, yet there was never any more than 20% or 25% of construction workers covered by it. The new proposal is not as inclusive so the figure for coverage will be lower than 20% or 25%.
The Government decided to impose the relevant contracts tax at a sectoral level for the construction industry. This is the scourge of all sections of the industry. At present, there are 46,000 workers in the industry subject to relevant contracts and some 26,000 of them are on a tax rate of zero. These people get their entire earnings paid to them at the end of every week but the Revenue Commissioners will chase them down after a couple of years. However, they have mortgages, etc. When chased down, they will have spent all the money and will have kept none to pay the tax. This drives them into the black economy.
The Oireachtas made a change to the relevant contracts tax approximately ten years ago to the effect that before a worker became subject to it, he would have to sign a declaration stating he was self-employed and was to lose various rights. The Revenue Commissioners, off their own bat, cancelled that arrangement so an employer can now register an individual online as self-employed without his permission.

Revenue will write to an individual to outline the facts, such as who his or her employer is and how much the contracted rate is. It will provide the names, etc. It will give the person 30 days to make an objection if there is a problem with any of that information. The individual is no longer expected to sign a declaration at the beginning. We believe construction workers would not sign a declaration if they were allowed to choose whether to do so. The Oireachtas introduced that choice, but Revenue off its own back decided to reverse it. We met a group of unions in October of last year at a meeting organised by the Irish Congress of Trade Unions. We were there as a consultative group for unemployed and non-union workers. We questioned Revenue officials on this. We asked them when this happened. None of the unions could understand when this happened and neither could the Revenue officials. They said they would get back to us but 12 months later, they have yet to do so. We believe any agreement should be sectoral and should be industry-wide. If an industry-wide agreement is not reached, this legislation will end up being nothing more than a fix-up.

We would call head 26 of the Bill the opt-out head. A minimum wage is introduced as a minimum wage, but it always becomes the actual norm. Under the registered employment agreement, before it went down, the rate of pay for a craft worker was reduced to €17.21 an hour. That was supposed to be a minimum wage, but it became the norm. The rate of pay was €17.21. If there is an opt-out in legislation, it will become the norm regardless of any regulations that are provided for. This is one of our concerns. We are calling on the Oireachtas to set up a commission to look into the reality of what is going on in construction, as opposed to the fantasy that is being explained by the unions and the employers. It is a fantasy. The commission should look at below-cost tendering, relevant contract tax, sphere of influence agreements, the non-payment of contractors, workers and suppliers in the industry, and the effect on the industry of agency workers.

We have a problem with the question of what constitutes a representative group. I have listened to what the Chairman said, so I will not name names here. I would like to refer to a document that was handed to us by an employer in the industry. It had been handed to him. If one were to google the name of the company in question, one would find this material on the front page of its website. I have a copy of that page with me. An agency that is recruiting for work is giving this information to builders. Among the claims listed on the website are that having "No PRSI to pay" saves 10.7%, "No holiday pay to pay" saves 8% and "No Pension to pay" saves 10% to 12%. Reference is made to having "No Bank holidays to pay", "No Sick Leave to pay", "No Redundancy payments to pay" and "No administration cost". It is claimed at the bottom of this list that the agency in question has the ability to engage and disengage workers anywhere in the country at one hour's notice. I wonder whether a group of agencies could join together, claim to be a representative group and ask to be allowed to go to the Labour Court to organise such terms of employment as a registered employment agreement. I suggest that could be done under the legislation being proposed because it is not between unions and that. No one in this committee can say it could not be done. They could represent themselves as a representative group. While I am referring to an agency in Ireland, I believe agencies outside the State could join employers outside the State - they might be from eastern Europe or somewhere else - in coming to the Labour Court to register a registered employment agreement on similar terms. That could legally happen under this legislation because it does not define what a substantive group is.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank Mr. Costigan.

Dara Calleary (Mayo, Fianna Fail)
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I thank all the groups for their presentations. It strikes me that the only thing that unites them is their doubts about the notion of substantial representation. I would like to repeat a question I have put to previous groups. Do any of the groups have specific proposals that might assist us in our deliberations on this specific issue, which has consistently been cited as a weakness in the legislation?

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Who would like to come in on that question?

Mr. John Smith:

Substantial representation has always been a bugbear. It will be very difficult to define it. We do not need to set it up as a target to be reached. If we were to do so, it would allow groups to come together, get to 49%, declare themselves substantially representative of the industry and try to reach a legally binding agreement.

It will be difficult to define what constitutes substantial representation. Others will say 20% of employees could be substantially representative of an industry. That percentage could become a target, however, and once it is reached, it could be set down in law and we would all be bound by it, but a year later if 2% of the employees in an industry retire or whatever and the representation falls under that percentage target, where do we go from there? It is great wording but it creates doubt and confusion. It is a difficult concept to define and I do not know who will do that.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I call Mr. Lundy.

Mr. Chris Lundy:

In response to Deputy Calleary, on the issue of substantial representation, if we take two employer bodies, say, the ECA and the AECI, or even ETCI, one of those bodies could represent a member company with thousands of employees, and if we compare that body with another association that has, say, 60 member companies, we could find that the total number employees in all those companies would not number the employees in the member company of the other body. Therefore, one employer with 1,000 employees could be substantially represented. There is something radically wrong in that sense. Other organisations might have other data, like ourselves. Our total number of employees might range from 3,000 to 4,000. It is difficult to get a handle on this concept in terms of how to class something as being substantially representative.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Would anybody else like comment?

Mr. Ned Costigan:

We also considered this element. The previous 1946 legislation described a group of unions and the employer organisations as substantive. We still believe that is basically true but there would have to be a change for this legislation. On the employee side, the group of unions would have to come together with other groups outside the group of unions and come to a body which represents the employers, which includes other groups outside the employer organisations, and form a substantive group. In other words, there would have to be pre-talks among both sides for them to establish that they are substantive. I refer to the group of unions together with people outside the unions. The vast majority of construction workers are members of our union. There are 95,000 on the live register. I have been unemployed for the past 12 months. Who would represent me? I am 54 years of age. I have worked for 50 employers in the industry since I started my apprenticeship when I was 17 years old. Who represents me in this respect? In the absence of anybody else, I would represent myself in this respect, but I would insist that unemployed construction workers and non-union construction workers would have to be facilitated. A mechanism to facilitate that would have to be put forward.

It is up to the group of unions, which are the leaders on the workers' side to establish a body. We have written to the Construction Industry Council on many occasions to be recognised at least as an observer group, but we have been continuously blanked on that request. In terms of providing for that in this legislation, it will come down to the group of unions to say that they are substantive because they take account of the opinions of others and the same will apply to those on the employers' side. Any employers who say they are a substantive group would have to take into consideration what I have read about the agencies, as they are employers too. They would have to say that they are in their representative group, they have spoken to bodies such as agencies and they are now in a position to negotiate. That is the only way in this industry one could envisage forming a grouping that would have any legal basis that would not be open to challenge and that would come under the proposed definition. In our submission we are saying that such a definition was not put forward. The members are asking other people for a definition and such a definition would have to involve the broadest possible group of people on both sides.

Seán Kyne (Galway West, Fine Gael)
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Like Deputy Calleary, I am concerned about the notion of substantial representation. I am not sure I am clearer on it but it is an issue of concern and it needs to be examined more closely.

Mr. Nolan mentioned subcontractors who constitute a particular group of people and it was the subject of a recent "Prime Time" programme. Mr. Nolan highlighted a case, which I will not name, and he said that his union was able to represent them and to secure backpay for them. He mentioned NERA in that context and said that it did not have the necessary capacity. In what way does it not have the capacity? Does it not have the necessary staff or resources?

Mr. Brian Nolan:

It is my understanding from when we engaged with NERA during the previous registered employment agreement that while NERA has a wealth of knowledge in terms of the different industries and sectors, manpower is a difficulty for it. At the time there were fewer than 100 inspectors to cover every sector of industry. At the time, if I am not mistaken, there was a particular initiative relating to restaurants and NERA carried out a covert operation which required a lot of focus. Construction goes on all day, every day and breaches have the potential to happen at any point in time. Having people with a little knowledge of everything is not enough. We need people who have their feet on the ground and who are able to engage with workers. They must have a relationship with the order or the agreement to which an order might be attached, which is important.

Previously, with registered employment agreements, we had a mechanism where union members, regardless of the particular union, could very easily revert back to whichever union they were in to question whether their entitlements were being breached. The authors of the agreements on the one hand were the unions on behalf of workers, so they were in the best position to advise and then pursue the non-compliant contractors. Our view on how to fix the situation might differ from other people but at least one other employer said at the meeting that NERA might not be the fix that is required because it does not have the capacity in terms of manpower and that it is not close enough as it cannot focus all the time on this one industry. We share that concern.

Seán Kyne (Galway West, Fine Gael)
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Does Mr. Nolan think there should be a body within NERA or an independent body to cover the wider construction sector, including electrical contractors?

Mr. Brian Nolan:

There is a fear that without some form of sufficiently strong compliance body that acts both as a deterrent and enforcer of the legislation, the legislation will not be worth the paper it is written on. One key focus of the legislation as I understand it is the creation of a level playing field for contractors and workers so that nobody is undermined within the industries to which the agreements apply. At the same time, a key component is industrial peace. Reference was made to scaremongering but the fact is that since May 2013 there are industrial disputes all over the country because there is a void as employers are not applying terms and conditions, not just the ones relating to existing agreements but the other breaches I spoke of such as those relating to the Organisation of Working Time Act. Once exploitation begins, it gets worse. We are very much of the opinion that whatever mechanism is agreed, it must be sufficiently strong and robust. Our view is that unions would play a part no matter what because our members will always revert to us with their concerns and queries.

Seán Kyne (Galway West, Fine Gael)
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Perhaps Mr. Costigan has a view on that area as well. Reference was made to 46,000 workers on relevant contracts tax, RCT. Are those figures from Revenue?

Mr. Ned Costigan:

They came from the Department of Finance in response to a parliamentary question from a Deputy. One figure from the Department states that in excess of 60,000 are on RCT and another figure stated 46,000. We assume that 46,000 of 60,000 relate to the construction area as that was the focus of the question. Relevant contracts tax covers meat processing and forestry. The figure is based on an assumption and it remains to be clarified.

Seán Kyne (Galway West, Fine Gael)
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When Mr. Costigan met with the Revenue Commissioners, did they not explain it?

Mr. Ned Costigan:

We have been briefing Deputies all over the country in recent years. They must realise that Revenue takes the path of least resistance. The only interest it has is to collect tax. It could not give a hoot about workers’ rights or other such issues. When Revenue sees a bunch of workers, it sticks them on relevant contracts tax and plans to hit them later for a few bob before they skip across the Border or get out of the State. That is the only interest Revenue has. The committee is examining how workers and employers are represented. Revenue does not care about any of those things. It only cares about collecting tax. Parliament had set a reasonable parameter, in so far as relevant contracts tax was concerned, but Revenue dismissed it. We asked Revenue about it and we were told that nobody could remember who did what. We also put the same question to Deputies and they cannot remember either. In our opinion, NERA has no role whatsoever in construction. Construction is an industry. NERA is fine if one is working for an hotel or other such body where one has long-term employment.

For the majority of construction workers, however, the average duration of a job is six months.

As I said earlier, I have worked with more than 50 employers in my lifetime. Some 12 months ago I was employed on a school project but it was 11 weeks after I signed off the live register before I got paid. I had no pay for a full 11 weeks. Six weeks into the project, I made a complaint to Contractors Administration Service, CAS which was appointed by the former Minister for Education and Skills, Deputy Quinn, to monitor school building projects. CAS sorted out the problem within five weeks and I received my full, backdated pay for the 11 weeks work I had done. Had I gone to NERA, I would be sitting here today saying that I am still waiting for the issue to be sorted out by that authority. It would never have happened.

NERA has no role in construction because as an industry it is too fluid and the majority of employment in the sector is too short-term. NERA does not even have a view on Relevant Contracts Tax, RCT, for example. If representatives of NERA enter a site and find a worker there who is in the black economy, in other words, a worker who is working and signing on, it will not even inform the Department of Social Welfare. It will do nothing about it because it has no role in that regard. NERA has no role in the construction industry although it can be of assistance to workers in other sectors.

The CAS model in the context of the school buildings programme in the Department of Education and Skills could be hardened up. CAS acts like a referee on the field of play. It is not interested in the concerns of employers or workers. It is only interested in ensuring that the game is played according to the rules. That is the only kind of entity that could work.

John Lyons (Dublin North West, Labour)
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I thank the witnesses for coming here today. I have a quick question for Mr. John Smith. Having read back over his presentation, I am slightly confused. Is he saying that there is no place for registered employment agreements, REAs? He said that his organisation has not seen mass exploitation of electricians but in saying that, he is admitting that there has been some exploitation. We all recognise that businesses need to be competitive. Indeed, we have met representatives of small and medium sized businesses at many meetings of this committee who are really are struggling, while others have made it through the tough days. I am very confused, both as a Deputy but more so as a person, as to how Mr. Smith could support a system that allows some people who have gone through the apprenticeship system to qualify but then be undermined by their boss because of a lack of legislation. Perhaps I am misinterpreting his presentation and I ask him to correct me if I am wrong. He suggested that there has not been mass exploitation, which implies that there has been some exploitation of electricians. At the same time, he is suggesting that we should not introduce legislation to protect workers such as electricians. I am confused about his position and his view that a free market would be better for everybody. I pass by a teaching institution every day on my way here from Ballymun and I see people protesting outside because of the lack of REAs. Not all employers are good and decent. Some people will only adhere to legislation and will not act out of decency.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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Deputy Lyon's question is directed at Mr. Smith, is that correct?

John Lyons (Dublin North West, Labour)
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Yes, Mr. John Smith.

Mr. John Smith:

In our experience, the old REA system was used as a stick to beat good contractors by the monitoring agencies already referred to. That is not right. Do we agree with employers who stop paying employees' pension contributions? No, we do not. There are at least 39 items of employment legislation in force at present. NERA is the body charged with enforcing that legislation. It is up to NERA to ensure that the laws of the land regarding employment are upheld. We do not need another REA that will restate the existing employment law. Issues such as working time, holiday pay and so forth are already governed by law. It is a matter for the bodies empowered to enforce those laws to do so.

I agree that regulation is good. This country needs regulation and indeed, we already have a great deal of employment regulation. The problem, as we see it, is with enforcement. Without proper enforcement, we are going nowhere. The way to solve regulation problems is not to regulate further unless one has enforcement systems in place. We must sort out the issues with NERA, which is the body with enforcement powers at present. NERA must enforce the existing regulations.

We had three different models of regulation in the past. Electrical contractors paid more to be monitored than any other construction sector workers but still it was not right. We do not need another agreement because it is not a one-size-fits-all scenario. At the same time, we do not condone any employer exploiting employees. The people who work with us are predominantly in small, family businesses and have been continuously employed for ten to 15 years or even longer. There is not a high level of transience in that sense. It is in the more transient areas that the discrepancies lie.

John Lyons (Dublin North West, Labour)
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I thank Mr. Smith for his reply.

Marcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I thank the witnesses for attending today's meeting to discuss the heads of the Industrial Relations (Amendment) Bill 2014. It has been a very valuable engagement which will help to inform the report we will be drafting for the Minister. All of today's submissions will be included in that report. I also take this opportunity to thank all of the stakeholders who came before the committee as well as the officials of the Oireachtas Library and Research Service and the Department of Jobs, Enterprise and Innovation for their assistance and the briefing material they provided. The committee will finalise the report for submission to the Minister in the coming weeks.