Oireachtas Joint and Select Committees
Tuesday, 14 February 2017
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Banded Hours Contract Bill 2016: Discussion (Resumed).
I remind members, visitors and those in the Visitors Gallery to ensure their mobile phones are switched off or left in flight mode for the duration of the meeting as they interfere with the broadcasting equipment, even when left in silent mode.
I welcome from the Irish Hotels Federation Mr. Joe Dolan, president, and Mr. Tim Fenn, chief executive; from the Small Firms Association Ms Patricia Callan, director, and Ms Ciara McGuone, executive; and from the Restaurants Association of Ireland Mr. Adrian Cummins, chief executive, and Ms Kim Leonard, public affairs and membership services manager. We are discussing the Banded Hours Contract Bill 2016 which was deferred for 12 months by resolution of the Dáil, dated 7 July 2016, to allow the committee to engage in scrutiny of it, consider submissions and hold hearings.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, 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 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.
I remind our guests that their presentations should be of no more than five minutes duration. The presentations submitted by today's attendees have been circulated to members. I invite Mr. Fenn to make his presentation to the committee.
Mr. Tim Fenn:
I thank the Chairman, Deputies and Senators for inviting the Irish Hotels Federation, IHF, to address the Joint Committee on Jobs, Enterprise and Innovation. The IHF which was founded in 1937 is the national representative organisation for the hotel and guesthouse sector. As a key stakeholder in Irish tourism, we work with our industry partners to ensure there are the right conditions for tourism to grow and prosper, thereby enabling it to contribute to recovery and job creation in the economy. We welcome the opportunity to contribute to the work of the committee on the Banded Hours Contract Bill 2016. I stress that the IHF is supportive of employment regulation that is balanced and proportional and that takes into account the requirements of employers and employees in an equitable manner.
We have serious concerns that the Bill would impose disproportionate and excessive restrictions on employers in the tourism and hospitality sector by limiting their ability to manage the flow of work in their businesses. The hospitality business requires a level of flexibility in order to respond effectively to varying levels of customer demand, which is seasonal in nature. Employers must be able to respond to fluctuations in staffing requirements on an ongoing basis. For example, a premises may be asked to cater for a large event on short notice. When this arises, hotels examine their staffing requirements, looking first at their full-time and part-time employees and seasonal staff, including students, and perhaps a small pool of additional staff that would be available to be called upon on a voluntary basis. This approach is mutually beneficial for both the employer and employee and provides a degree of flexibility that is required in the sector.
Before outlining our specific concerns about the Bill, I would like to comment briefly on the study carried out by the University of Limerick. This study showed little evidence of the use of zero hours contracts in Ireland. We are not aware of any of our members who operate this type of contract. The report also cites that only 2.6% of employees in Ireland are working variable hours on a part-time basis, which is very low and this includes those who are satisfied with this arrangement, as their preferred option.
The following provisions of the Bill give cause for serious concern. Section 3 poses a particular concern in that it effectively eliminates the ability of businesses to determine the number of hours they can provide to an employee. Section 3(1) in effect means that the new minimum number of hours for a given employee after six months has to be greater than the average number of hours worked during the previous six months. This would result in the employer being required to provide in an ever increasing minimum number of hours for a given employee. This would require the employer to provide more hours than the business can justify. We view the six month reference period as extremely short. It would be detrimental to tourism related businesses given the seasonal variations in the industry. In particular, the Bill does not allow for situations where the number of hours worked in a six month period is irregular or exceptional.
We also have serious concerns about the provision in section 3(4) which provides that an employer can only refuse an employee’s request for additional hours if the business is experiencing severe financial difficulties. This is excessively restrictive and entirely unsuitable for businesses that require flexible working arrangements in order to meet varying customer demand.
In response to the five specific matters identified for consideration by the committee, the first area relates to low hour and zero hours contracts. As noted earlier, zero hours contracts are not found to be prevalent and levels of variable part-time contracts are very low. As to whether zero hours contracts should be banned, we believe that a legislative response banning zero hours contracts would be excessive and disproportionate. While zero hours contracts are not prevalent in Ireland, under certain circumstances there may be a desire on the part of both employees and employers that they should remain in place, where such arrangements are mutually beneficial. Any legislative change should therefore only be implementedbased on credible evidence demonstrating a clear need which we believe does not exist.
As towhether the Bill provides sufficient flexibility in its application for small businesses, employers in the hospitality sector, including hotels and guesthouses, need to be in a position to respond to varying levels of customer demand. Examples include when events catered for by a premises arise at short notice and the seasonality of tourism levels during the year. This requires a level of flexibility that would be seriously adversely affected by the proposed Bill. The impact on a small seasonal hospitality enterprise, the backbone of Irish tourism, would be even more pronounced and would be detrimental to their ability to effectively manage their businesses. It is therefore very concerning that the Bill does not provide any flexibility in its application for small businesses and creates a new level of administrative burden.
As to whether workers should be able to request a minimum set of hours, it is our view that it would be detrimental to businesses for employees to have a statutory right to vary the terms of their contracts of employment. Such a right would have serious consequences for competitiveness and for employment in our industry.
On the question of changing the remit of the Low Pay Commission, we do not believe the remit of the commission should be extended to review proposals on banded hours contracts. The priority of Government should be to review available enforcement measures as opposed to responding by introducing additional legislation that would have substantial unintended consequences.
In carrying out scrutiny of the Bill, the Irish Hotels Federation, IHF, would urge the committee to take into account the realities employers face when managing flows of work in their businesses. In particular, we urge the committee to consider the disproportionate adverse impact the proposed restrictions would have by limiting flexibility, increasing costs and imposing an unnecessary additional legislative burden businesses.
I thank the Chair for the opportunity to address this Oireachtas Joint Committee and we look forward to addressing any matters that the members may wish to raise
Ms Patricia Callan:
I thank the Chairman, Deputies and Senators for the invitation to share the concerns of our members on the Banded Hours Contract Bill 2016. As members are all aware, small firms are the backbone of the Irish economy and of the 238,000 businesses, more that 98% are in the category of small businesses. A small business is defined as a company that employer fewer than 50 people. In some 21 counties we are the majority employer. Last year approximately 20,000 new people decided to that risk and set up a business venture. It is important to point out that studies consistently show that only one in two of those firms will make it beyond five years. Among all the other challenges they are facing in terms of markets, customers and finance and all of the usual things, the regulatory burden is becoming more of an issue, and in terms of labour legislation in particular it is becoming a barrier to employment and increasing employment. We need to be cognisant of that in any review of potential new legislation.
We particularly welcome that in the “Action Plan for Jobs” this year, the Minister saw fit to call out the fact that we need to formalise our concept of “think small first” and that there should be a test implemented. I encourage the Joint Committee on Jobs, Enterprise and Innovation to take the lead on it and in the context of this specific Bill to apply the principles that were defined by the EU around understanding the real consequences on business prior to any legislation.. We would advocate that this should be done at principle. At a basic level we need to look at the problem we are trying to address, we need to see whether they are other options we could use prior to legislation and if there is no alternative other than new legislation we need to cost it and on balance decide whether it is worthwhile going forward or not.
In everything to do with the Bill and going back to the University of Limerick study, our biggest consideration is the fact that there is no evidence. Nobody should be making decisions on the basis of anecdotes. I have my share of anecdotes and I know from the transcripts of last week's meeting that the employees side also had a series of anecdotes. We need to get to a better bar of evidence based policy making across the board and we should start here. In parallel, as on many other topics we have a Private Members' Bill moving at the same time as the Government Bill. Even from our perspective in terms of trying to track that Bill, never mind the Government Bill, the time and efficiency of our legislative process is questionable.
On the basis that the Bill under discussion is being given due scrutiny, I will go through the specific matter have been raised and share our insights on them. I mentioned that submitted a detailed response to the Department in January 2016 on the prevalence of zero-hour contracts and low hour contracts among Irish employers and their impact on employees. I have also sent that submission to the committee secretariat. Our response gives members a flavour of the practicalities from a variety of sectors and regions about how they saw these types of measures playing out. If the members scan through that response they will notice the reality in most employment is that employers ask employees to tell them what hours they are available and they then create the entire roster and schedule around that. It is not about imposing on employees, it is the other way around.
In essence, the power balance, from the perspective of most of those companies, is with the employee already and we are simply trying to fit their lifestyle and other needs and desires into what we are trying to do.
The committee was anxious to ask about how we solve this problem and one of the issues raised was the difficulties for workers with variable hours in getting mortgages. I would call on the committee to start questioning the logic of that. We campaigned long and hard to have business banking changed from asset-backed lending to cashflow lending because the former is not an acceptable way of doing business. Equally, why are banks still hung up on permanent full-time hours when a P60 will tell a completely different story? One should start to think about matters in terms of how else we might tackle the issues of concern at the root cause of this because we must have innovation in everything that we do and the world is moving on. I have just come from a briefing in Revenue on the PAYE modernisation system. It is changing its entire system to reflect the new way of working, new hours, different requirements and integration of welfare. We must also replicate those concepts here in our discussion of labour law.
On the question on whether zero-hour contracts should be banned, the SFA's members and anyone I have advised have looked at this and decided that their use is unaffordable.. I have no direct knowledge of any of the SFA's members using zero-hour contracts. When these were being introduced - this came from an EU directive - the labour movement, in essence, the trade union movement, argued for zero-hour contract provisions in terms of recompense to be introduced to protect workers. Where there is that give and take, where one is asking workers to be available to do work and, therefore, they cannot take up other opportunities, there should be recompense. Equally, if it is casual on both sides, then there is no need because those concerned can do other things and be productive in their time should that employer not have opportunities. They are not causing any harm and they work well as they are.
In terms of the third question raised, there is no flexibility in the Bill. It is a poorly drafted Bill and is open to all kinds of interpretation. It is very important on Committee Stage to get it right.
In terms of the position of the notice, I have run this by a number of members. The idea that one would put up on a notice board personal details of every employee and his or her hours of work raises significant data protection issues of concern for workers as well, but the idea that one would have to translate it into English, Irish and any other language is nonsense. On the translation costs alone, one cannot merely Google it. If it is in law and one will be held liable, one must ensure it is correct and one cannot merely put it into a translator mechanism. All such practical issues involve a greater administrative burden than any other legislation currently on the Statute Book and we must guard against that.
The committee had a discussion here as to whether to exempt small business. I represent small firms. We never argue for exemptions because in the real world doing so overly complicates everything and also stops firms growing. If one states this will only apply to companies with more than five or ten employees, one will soon see a common thread where no one will go over that if he or she does not have to unless he or she is scaling up. We do not want to impose such barriers and complexities on the system. We need legislation to work for every business all of the time but we need to think small first in our approach to how we legislate and regulate. I would also point out that our surveys show the average number of employees one has before a HR professional is employed to deal with all of this is 52. Some 98% of businesses do not have a HR professional and coping with 40 pieces of legislation is a massive burden. That is the same whether one has one employee or 500. One has to come up to speed, understand and know of these rules. That is a huge issue.
On the fourth question, in terms of the need for flexibility, it is definitely our members' understanding that if-and-when contracts work for many. The committee will see in the submissions testimony from members that they concern here those who one might expect, such as students and females with balancing requirements, but also those pursuing other interests, such as artists and those who want to do their ideal job but who cannot afford financially to stick with it and need other work at the same time. There are many reasons we would want to use these. We definitely need to maintain such flexibility. There is a huge assumption that low hours and low pay are the same; they are not. Indeed, most of the ultra-flexible contracts that we see are at the high end, involving those who choose, because they can, in the IT professions, in engineering, in medical, to come and work in different ways. That is certainly important.
On the right for a worker to request increased hours and to permit refusal only on objectively justified grounds which grounds are restricted to experiencing severe financial difficulties, the idea in the Bill is that one must concede to give hours. As the Bill is worded, the only way out of giving hours is to go public stating that one is financially in dire straits. This will not happen. Despite the fact that many businesses during the recession could have claimed under the National Minimum Wage Act 2000 that they were experiencing severe financial difficulty, they never did. They never invoked that exemption. They simply made workers redundant or, if they could hang on to them, put them on short-time or lay-off provision. Having measures such as this in place will not work. In reality, one cannot get beyond the reputational damage.
The other point then, if such is the case, is that if the first employee who requests these additional hours gets them, does that mean everybody else has to lose out because there are only a certain number of hours, and one employee wins and everybody else loses? When one gets into the practicalities of this, merely dealing with it is complex.
On the final question on the Low Pay Commission, the commission has a big enough job to do as it is. It has a specific remit and it needs to be better at it. It needs to produce better evidence, going back to the fact it has not produced any new data since it was established. We need to focus on that area. The Workplace Relations Commission is already well established. We have members in and out of the WRC all the time. Clearly, persons can already bring cases on all of these issues under the Industrial Relations Acts, the Organisation of Working Time Act 1997 or the Terms of Employment (Information) Act 1994.
Mr. Adrian Cummins:
I thank the Chair and members of the committee for the invitation to attend today's meeting.
The Restaurants Association of Ireland is the representative body for restaurants throughout Ireland, with over 2,500 members and business owners nationally. The restaurant sector employs 72,000 and contributes €2 billion annually to the economy.
I do not intend to go through our detailed submission which I circulated already to members but I will outline our reasons as to why the Bill is not fit for purpose. At the outset, I believe it is important to note that the Restaurants Association of Ireland is supportive of employment legislation that works for both the employer and the employee. The restaurant sector is a key part of Ireland's tourism product and has been an important contributor to the improvement in Ireland's tourism performance over the past couple of years.
It is essential that the policy environment for the sector is conducive to the survival, growth and maintenance of a high-quality competitive offering. The restaurant sector has a wide geographical spread and supports rural as well as urban economic activity and employment. The sector has a broad geographical footprint and provides valuable full-time and part-time employment in every county around the country.
For most restaurants, labour costs account from close to 40% of total operating costs with profit margins on average between 2% and 5%. Hence, the sector is sensitive to increases in rates of pay. It is a seven-day-a-week business but restaurants' busiest part of the week would be Thursday through to Sunday.
To be a successful restaurant business, one must operate with a large amount of flexibility. Restaurants take bookings for lunch and dinner in good faith. While some operators take deposits, many customers are unwilling to pay deposits for the dinner. No shows for bookings are widespread in the sector and have a negative impact on our daily labour and food costs.
The association is of the view that the Bill, in its current format, does not take into consideration the workings of the restaurant and hospitality business and the realities within which establishments work on a day-to-day basis. If the Bill were to be enacted in its current form, it would have substantial negative consequences for employers and employees. The Bill does not take into account the need for businesses to operate with flexibility.
Under the Bill, it does not appear to matter if the employer does not have work to offer. Given the nature of the restaurant industry, this would be impossible. Many of our member restaurants operate in seasonal areas where they would only be operational between mid-April and mid-October. These businesses are dependent on large numbers of tourists visiting their localities, villages and towns. They provide local employment but if they had to be provide guaranteed hours in the off-season, they would have to close their doors. The Bill does not contain a provision for employers to move employees back to a lower band where necessary, for example, when the season comes to an end or business deteriorates.
The RAI is concerned about section 3, under which employers would be obliged to demonstrate that they cannot provide more hours because they are in severe financial difficulties. No restaurant owners would want to publicise or state that they were in financial difficulty. The restaurant industry operates on tight margins and having to publicise to their local community and competitors that they are in financial difficulty could result in them losing even more business and having to close.
I refer to the study on the prevalence of zero-hour contracts among Irish employers and their impact on employees carried out by the University of Limerick. As pointed out in our submission to the Department of Jobs, Enterprise and Innovation on the UL report, the study which the university was commissioned to undertake was on zero-hour contracts and not on "if and when" contracts. The study found that zero-hour contracts are not extensive in Ireland. The report also states that the Central Statistics Office found that only 5.3% of those working in Ireland are on "if and when" contracts. It also found that of the 57,100 jobs created in 2015, 56,800 of them were full time. Part-time contracts are used in the restaurant, hospitality and tourism sector where there are seasonal fluctuations in work, where it is difficult to predict the minimum level of staff required or where the need for urgent cover can arise. Restaurants increase their workforce as needed during business peaks on Thursdays, Fridays and Saturdays.
The Bill offers zero flexibility for employers whose trade depends on those with disposable income and tourism. It would only increase costs and the administrative burden on restaurants. Banded hours contracts are more likely to have the effect of reducing the total number of employees rather than increasing the total number of hours per employee. We thank the committee for its time and the invitation to attend. We are happy to engage with all stakeholders on the issues raised. I reiterate that were the Bill to proceed in its current form, it would have serious ramifications for the restaurant industry, increasing costs as well as affecting the ability of restaurants to expand and create new jobs.
I also thank everyone for their presentations. They were similar and there was a great deal of repetition, which is reflective of the nature of the businesses in which they are all engaged. I cannot help but note the irony that over the years, working lives have changed. Work practices have changed and there have always been objections from employers to benefits that might accrue to workers. When an attempt is made to introduce legislation that might improve the lot of workers, employers always throw their toys out of the pram.
I read the debate on the Factory Act 1833 in Britain recently. It was implemented to limit child labour. Similar arguments were made by employers then. They said the legislation would make life impossible, and it would ruin employment and competitiveness and decimate profits. I do not wish to compare any of the representatives with the terrible employers of the post-Industrial Revolution era who had children up chimneys and on factory floors but, nevertheless, the pattern is that when legislation that could benefit workers is brought forward, employers tend to complain bitterly. While I welcome it, it does not go far enough.
I would like to take some of the facts in the presentations to task. It is wrong to say there is no evidence that there is a connection between low pay and low hours; on the contrary, there is a great deal of evidence. The CSO has published studies, while TASC and Social Justice Ireland have published evidence that there is a direct link between low income and low hours. We attended a briefing last year when the Bill was brought before the House. A Dunnes Stores worker described her working life and that of her colleagues. She said:
Three quarters of the 10,000 Dunnes Stores workers are employed on what they call "flexi-hour contracts" with a minimum of 15 hours per week. Despite this, most of us work above that. Some of us work 25 or 35 hours, some work less but the average hours are between 25 and 30. All we want is a new contract that reflects the hours we actually work so that we can have an income we can depend on from week to week. Our income can fluctuate from €400 one week to €150 the next, entirely at the discretion of the local manager, and this makes it impossible for us and our families to plan our lives. Many of our colleagues have been denied loans with credit unions and mortgages because a bank looks at the amount of money we have, then looks at our contracts and sees how unreliable they are and how low the hours are.
That is one of many people who have given evidence in this regard. It is, therefore, ridiculous to say there is no relationship between low pay and low hours.
There is a worrying and shocking prevalence of low pay in the State. Approximately 24% of the entire workforce is officially deemed to be low paid and we are one of the highest low-paid economies in the OECD. Legislation such as this is necessary both to protect livelihood and lifestyle of workers and to protect the income they can earn. I ask the witnesses to consider the consequences of doing nothing. Reference was made to the need to think about this and one witness stated the way we are going about this business is flawed and leaves a lot to be desired. If the witnesses think that, then perhaps one or two of them should put themselves forward for election the next time on the basis that they could do this better. Our business is protect workers and to enhance their lives. Currently, the lives of hundreds of thousands of workers are being severely impacted because of anti-social and anti-family contracts and a lack of contracts in many cases. My worry is that the contracts in place are becoming increasingly precarious and difficult. For example, Deliveroo only takes on workers on the basis of work being available. Otherwise, they are considered to be self-employed and they do not even earn the minimum wage. They are subject to accepting work through an app and it is extremely competitive. There are many "maybes" for workers and families. This issue affects one quarter of the working population. This matters and data show there is a relationship between low hours and low pay.
If zero-hour contracts are not prevalent and if they are not such a big deal for their industries, why are the representatives so worried about the impact of legislation that will give workers limited access to a contract that will allow them to approach a credit union or a bank and to be able to depend on their income and their working life? If, on the one hand, people are saying there is no such thing as zero-hour contracts and the UL study is flawed, what is the panic?
The Deputy referred to an issue that is raised all the time, which is the uncertainty of working hours. Some weeks they might only have ten hours' work and more weeks they have 25 hours. They cannot plan child care, in particular, or apply for a car loan or mortgage. The lack of certainty about their working conditions is one of the messages being fed back to us loud and clear, as elected representatives.
Perhaps the witnesses might address that point as raised by Deputy Smith.
Mr. Joe Dolan:
I thank Deputy Smith for her comments. I take her point about the repetition. We share the same grave concerns, hence the repetition. I certainly do not share the thoughts that employers are always against any additional benefits for employees. I operate a small to mid-range sized hotel in Leitrim in an area that is very disadvantaged economically in tourism, industry and agriculture. I will do anything I can do to enhance the prosperity of my employees - and I know I share the sentiments of my colleagues who would agree with me in that regard.
I just want to clarify what I said, if I did not say it clearly. Employers kick up when legislation is brought in. I am quite sure that all employers are not all cruel and that they do try to enhance their workers' lives. I am talking about legislation that enhances workers' lives.
Mr. Joe Dolan:
On the issue of low pay, and my property probably typifies many similar operations, my highest-paid people are my part-time book-keeper, my part-time marketing person and my part-time IT person. They are probably on the smallest and lowest hours in my business. Many small to medium-sized rural hotels would probably be in that category, so I certainly do not share the sentiment that low pay and low hours go hand in hand. My colleague will address the Deputy's other point.
Mr. Tim Fenn:
Our industry is open 24 hours per day for 365 days per year. There are a lot of hours involved in trying to run a hotel. Hotels also have huge variations in demand for services. By and large, in the industry we see a lot of full-time jobs that involve people on full-time contracts. We also have part-time jobs with people who are happy to take part-time jobs. We have people who take the seasonal jobs and there is a small coterie of people who are on flexible hours and these may be students. The federation spends a lot of time promoting human resources best practice. We also spend a lot of time working with the agencies to try to develop new apprenticeships, new traineeships and new ways of creating full-time employment for people who may start out in part-time positions. It is our job, not to seek to have 3,000 employees on our books, but to seek to minimise the number of employees and thereby give as many people as possible the full-time contracts the Deputy believes they should have, and which we also think they should have. I must be clear, however, that a huge amount of people have made lifestyle choices; they do not want to work the traditional nine-to-five hours five days per week. They are quite happy to work in different hours. Even today, as we looked at the new initiatives being put in place by the Revenue Commissioners around the PAYE structures, it is interesting that the Revenue figures show the amount of people - over 200,000 - in Ireland with more than one job.
Mr. Tim Fenn:
Yes. I can double-check that figure but we just saw it in passing today. It reflects the change in the way people do their work. If there is some belief that we, as employers and employers' representative organisations, spend our time being disparaging to any employment law that comes in, I can say that we do not. In fact, we seek at all times to ensure that the people who are employed in our industry are well served by their employers and by the relationships between the employer and the employee. It is our belief that the more an imposition is put in to the legislation, the more it damages the relationship between the employee and employer. By giving a certain amount of rights, as this legislation entails, it is only going to damage the relationship between employers and employees.
Ms Patricia Callan:
We have tried to be quite clear in our contributions with regard to the difference between zero-hour contracts, flexible if-and-when contracts and other types of contracts because legally they are very different. We fully accept that there are many variations in employment. The specific zero-hours piece is the one that does not exist because one has to compensate people for a minimum of 15 hours or 25% of hours worked, regardless of whether the employer needs the person or not. My colleague, Ms McGuone's full-time job is in helping our member companies to be compliant, to deal with the other side of this, and it is certainly not the case that people are trying to undermine employees' entitlements. If anything, employees tend to come to their employers, as the first port of call, to ask about their entitlements. It is interesting that the Deputy named a specific company, which is a concern, because we should not legislate for what is going on in one company or even a number of companies. There are 238,000 businesses and we cannot control that one company. We certainly do not speak for it. People like that will come up with other ways around the issue, regardless of the legislation. It behoves us to look at how the majority of businesses are behaving and what this legislation might do to them. All of us here have one common aim, which is to get the country back to full employment. This requires more people to set up businesses, to navigate these complexities and to deal with these issues.
On the issue of low pay, Ireland has the second highest minimum wage in Europe, so the Deputy cannot argue that our workers are underpaid, as of today. I believe that our experience in that regard is that every time the minimum wage goes up, workers reduce their hours. If the members read the testimony I forwarded to the committee, I show the scenario where people keep cutting back their hours because they want to retain welfare benefits. People are actually leaving the labour market because they are worried. Real reform around welfare is needed to look at these factors and ensure that it is not mitigating against people working. Time and time again I have seen situations where companies had to put people on a three-day week during the recession. Now there is enough work to bring them back for five days a week but people are refusing to return. That is the biggest problem. These are skilled workers and their employers want them to work more but they have decided that it is not worth their while after tax - Ireland is still very heavy on taxation - and welfare are taken into account. It shows there are loads of other factors at play, but our ambition is to create good quality jobs for everybody. That is in all our interests.
Mr. Adrian Cummins:
The last two speakers covered a lot but I want to make two points. With regard to the restaurant sector, the vast majority of employees in the industry are probably in their first job. They are students who are looking for a job to pay their way through college and so are waiters or waitresses. When we look at benchmark Irish employees in our sector against other European norms, Ireland has the second highest wage rate in the European restaurant industry. This is a proven fact. At the end of the day, these are businesses that must make a profit to keep their doors open. If a restaurant does not make a profit the doors must close. Across much of rural Ireland we can see many businesses closed and those that are still open are finding it tough to keep their doors open. In my submission to the committee I have explained how the margins in our sector are small at between 2% and 5%. This is a fact and anyone in the business will tell one that. If there are employers who are not compliant - and a company that is directly involved in our area has been named - then employees should go to the National Employment Rights Authority, NERA, which is the avenue to go to if the employee has a problem with an employer. That is what we would say to any employee who wants to find out more information, which is their right.
The National Employment Rights Authority only covers employees. We now have these bogus self-employed contracts, so a person is not deemed to be an employee and does not have any rights as an employee under the labour legislation because he or she is deemed to be self-employed. The company I mentioned carries out this sort of thing. With regard to Ms Callan's comments, of course I am not proposing to legislate because of one company. Obviously that would be daft.
However, just as her association has to consider the majority of businesses, we have to consider what is a pattern for the majority of workers.
There is a majority of part-time workers whose part-time hours are connected to the fact that they are low paid. I am not making up the statistics. These are EUROSTAT figures on the prevalence of low pay in this country. Ms Callan may argue that the reason they do not want to work more is because they can do better on welfare, but does that not tell us something about the rate they are paid and the sort of contracts they have rather than the other way around?
It must be stated at the outset that no one wants to see workers exploited, but no one wants to see anyone going out of business either. Therefore, it is always a balancing act. Perhaps I have missed them, but would it be possible to be furnished with statistics on low income and low hours and high income and low hours? I have worked in retail and in bars and restaurants. I have also worked as an IT recruiter, where I had IT contractors on very healthy hourly salaries. They wanted to work on contracts and they wanted zero-hour contracts and the flexibility of being able to work remotely or from home at hours of their choosing. We have to mindful of that type of situation also. If I have missed the statistics, I would be grateful if they could be furnished as they would be useful to the committee.
What is happening in terms of arrangements on profit sharing, etc., particularly in retail and the hotel industry, as commercial improvement happens within the business? Is anything set in stone by the organisations on the issue? We also have to be mindful that there is a change in working culture, as has been stated, because of the crash and what has happened. Now it is being pushed and rolled to employees to look to having micro-earnings across multi-streams because this mitigates risk in the event of, God forbid, another crash. If something goes down, not all their eggs will be in the one basket. Many thought leaders are telling employees, particularly those in the digital economy, that they should have multi-stream incomes and that these may be micro-incomes across multi-streams. It is similar to the economy we are trying to build, that is, that there are a number of different pillars so, if one drops, at least more are in place that are sustainable. This seems to be the new model towards which we are moving.
Given that the representatives of the organisations are here, I have a flip question for them. In their opinion, what would improve the commercial environment for their organisations and thus, perhaps, increase employment? The Government introduced and retained the 9% VAT rate in the hospitality industry. What other suggestions would they have?
I would like to hear more statistics on the likes of bogus self-employment contracts, which have been referred to during the meeting. Could we get those statistics? I understand that it may be going on in the market and people have evidence of it, but we need statistics on it for transparency and information purposes.
Mr. Adrian Cummins:
I will reiterate that the margins in our sector are quite low at between 2% and 5%. On the job creation question, first we need long-term certainty on the 9% VAT rate. Every year the rate is up in the air and we cannot allow that situation to continue. We need five-year certainty on it. Tourism agencies predict growth in visitor numbers into the country and Fáilte Ireland predicts an increase in job numbers, with approximately 50,000 extra jobs being the growth potential of the tourism and hospitality sectors. That brings with it its own problems for our sector, including a skills shortage. I have addressed this committee in the past on skills shortage. It is for another day, but there is a serious problem around training and skills shortage.
We have 29 inspecting bodies or regulatory licences or some person wearing a white coat and carrying a clipboard looking for a licence, asking if something has been paid for or if something else has been checked, etc.
Mr. Adrian Cummins:
There are 29 different inspecting bodies of some shape or form. Six years ago we were promised that it would be streamlined. For example, there is duplication of inspectors. One might come in to deal with environmental health, another to check grease traps in a business and another to check a smoking area, etc. Could all that not be pooled together to reduce the regulatory burden on our businesses? That would help because we find that there is always a cost associated with them as well as the time and paperwork to do it. We are not saying that everything should be got rid of but that there must be a better way of doing business and encouraging people to open a business.
At the moment, the rural economy has not taken off. It has taken off in tourism hot spots, but those who are not in a tourism area are not seeing a major recovery. Local authorities have a major part to play in this issue with regard to rates and the amounts being paid. We need to have a serious look at our local authorities to see if we are getting value for money and whether we can reduce the cost imposed by local authorities on businesses.
Those are some of the matters we would be advocating. We will play our part in creating more jobs. As I stated earlier, the vast majority of young people in the country will have their first job in the hospitality sector and more than likely in a restaurant as a waiter or waitress. Businesses will take them on but it will be transient employment. They will move on to become a solicitor or a doctor, etc., after their studies, but we are the first port of call for creating jobs.
I thank Mr. Cummins. Our next body of work will be on the cost of doing business, so all the delegates may be sitting in front of us again in three months time or so. Much of what Mr. Cummins referenced will be very important then. I call Mr. Dolan.
Mr. Joe Dolan:
Deputy Neville asked how we could enhance the trading environment, in addition to the VAT rate measure which has been absolutely wonderful. There are hotels that are open today which otherwise would not be and hotels are reinvesting and people are employed as a direct result of it. That said, it is not really a reduced rate but a realignment with our European counterparts with whom we compete.
Tourism has been the shining light in our economy but for many reasons that are outside our control and for which we should not really take the credit. We are happy to take the benefit, but it is the result of external factors such as fuel prices and cheap airfares covering our destination markets, events in southern Europe and that sort of stuff. If we really want to control our own destiny and enhance our trading environment, we have to start reinvesting in marketing now. Our overseas marketing has been reduced by 40% since 2008 and is still flat. I have heard a silly argument, which is that it has been cut successfully in that we tend to do better every time it has been cut. It is like running a car on an empty tank. We know what will happen eventually, which is that it will grind to a halt. We need to put money back into investment, particularly in light of Brexit. We have a huge dependency on the UK market, particularly in rural Ireland, because the UK visitor has the greatest and broadest regional penetration. We also have to invest in our product, which is getting very tired, including product renewal, product development and infrastructure.
Finally, there are skills shortages, so we need to start putting money back into training and professional development, particularly at craft level. Those are some of the things that would enhance the trading environment in the hospitality sector.
Ms Patricia Callan:
To deal with profit-sharing first, we certainly noticed a trend among members that all pay increases are related to the profitability of the business. We still have 0% inflation. Inflation has not increased since 2008, so most businesses are adopting the approach that, essentially, it will make decisions around it doing well if it does well. On profit-sharing in the traditional sense, a cash based profit-sharing scheme is taxed in exactly the same way as income tax. We need more innovative employee share option-type models. Revenue and the Department undertook a consultation last year but in the Budget Statement last year it was kicked to touch until this year. This is particularly an issue for tech-type startup businesses, where highly valued employees are being asked to take a big gamble by going with a startup to begin with but they have no potential to benefit on exit if the business is successful.
More innovative measures are needed in order for these startups, which may not be able to afford €100,000 salaries, to attract talent. This would help certain sectors of the economy.
A very interesting finding of our most recent conditions of employment survey was that during the recession, people became much more focused on benefits. We have seen stark increases in the number of small companies paying, for example, maternity and paternity leave top-up, health insurance and so on. Again, it is not necessarily just a matter of basic pay. This is all about building loyalty and engagement, rather than shopping around, and how people feel in the workplace. We have certainly seen a move in this regard as well.
On the broader commercial environment aspect, business costs are the biggest issue, whether it is labour, insurance, energy, commercial rates or whatever else. It is great to hear that the committee is considering this next. The capital investment aspect is also massive. I know the Minister for Public Expenditure and Reform, Deputy Donohoe, is planning to bring forward the mid-term review of the capital investment plan. If we do not get broadband, do not build out our roads and do not get our infrastructure right, we cannot benefit from any potential increased investment. These are becoming huge blockers, particularly to activity in the regions. Dublin's economic activity accounting for half the entire GDP of the economy is not good for anyone. London is about 20% of the UK's economy, most capital cities are 8% to 12% of the country's economy and our figure is 45%. It is unsustainable and a very significant issue.
Regarding the taxation side of things, matters such as the capital gains tax, CGT, incentive for entrepreneurs and PAYE are definitely important. I attended a meeting this morning at which public procurement was discussed. We need to get our act together on public procurement and understanding how to get small businesses into that spectrum. That would be very helpful.
Some of the discussion has moved on a little from what we were talking about, namely, banded hours, but I wish to comment on something Ms Callan said. Infrastructure is crucial, especially for our regional development. Broadband is the electricity of our generation and needs to be delivered. I have a few questions. I will say the same thing I said last week. I thank Ms Callan for her presentation but I believe she is trying to complicate what I believe is a simple Bill. The witnesses have not come here with any solution as to how they would solve the problem. Ms Callan mentioned anecdotal evidence. "Anecdotal" means not exactly reliable. I recently talked to people, including families, involved in low-pay work. They said banded hours would give them some kind of security and should mean they could get a loan and buy a car or get a mortgage from a bank. None of the witnesses has come with any solutions as to how we could work on this.
This is a simple Bill. Why are the witnesses complicating it? Ms Callan referred to the posters put up on walls and the need to have them in different languages and she complicated that aspect. That is a simple thing to do. Some companies do it already and they do use Google for the translations. Ms Callan said they would not do so, but I know companies that already do so because they have Polish staff. It takes them two minutes every month to do it. Ms Callan is complicating this. The Bill is simple. If the witnesses have amendments that would work, I think Deputy Cullinane himself said when he was here that he is open to accepting any sensible amendments to his Bill. However, we need to address the issue of people who are on if-and-when contracts, do not know when they will be working, cannot get loans and cannot plan their futures. I do not see the witnesses coming forward with any solution.
Ms Patricia Callan:
I watched the session with Deputy Cullinane last week. What strikes me is the idea that Deputy Quinlivan can say it is a simple Bill. It should be read word for word. We are the ones who ultimately must comply with the legislation. We are giving the committee our best guess as to how difficult it will be to comply with what is in the Bill and its unintended consequences. Any of us can come up with a good concept, but if one goes through the Bill literally, word for word, it has many unintended consequences. Is that good legislation? We have demonstrated today many of these practical issues.
Going back to the point about Googling, if the Bill is made law and I am the employer and does not want to be in breach of the legislation, I cannot rely on this in my defence before a tribunal, wherever I might end up, if I make a mistake. Again, good employers comply properly but they will also consider this and will make decisions to ensure they avoid any of the liability under the provisions of the Bill. Therefore, one must ask whether the Bill will achieve the desired consequences in the majority of employments. Again, going back to Deputy Neville's point, no matter what Deputy Quinlivan says, we have not seen the evidence. Where is the evidence? Where are the numbers? Deputy Quinlivan has his anecdotal stories from individual employees; I have my anecdotal stories from vast numbers of employers. That is no way to make legislation. Going back to the drawing board, is legislation required to deal with this?
I have a spare Tesco workers support badge if anyone wants one. I only have one left but it is no problem: it is here if someone wants it.
The obvious question is are the witnesses in denial. It is a little like last week, when we had a panel of people saying there is no real problem and that very few people are employed on precarious work. Yet all of us, I think, from across the parties know there is a big problem. Perhaps I will take up our colleague from the Hotels Federation. My previous job was as a SIPTU official so I have worked with a number of hotels in Limerick. Not one of them issues contracts different from this one. I refer to a contract issued by the Strand Hotel. It is a fine hotel, in fairness, in Limerick. The contract states, "As a casual employee, your hours will be communicated to you by the departmental rota". How many hours is this lady going to have to work next week? Unless she has worked there for three and a half years so far, is that acceptable in the witnesses' eyes? This is a big problem. I challenge Mr. Fenn to name for me hotels in Limerick that do not issue contracts such as this. I can assure him that I have worked to try to organise all workers subject to these contracts and I know exactly the type of contracts the Hotels Federation's members issue. They issue contracts such as this one, that is, if-and-when contracts, which guarantee no hours and whereby people do not know from one week to the next what hours they will get and what pay they will get. When they raise this, if they have the temerity to do so, what happens? They do not get any hours the following week.
That is no problem. I am simply stating for the record that I know from my previous job how widespread these types of contracts are. To be frank with the witnesses, it does them no credibility whatsoever to come in here and effectively say there is not really a problem because we know there is. We may differ as to what the solutions are, but to come in here and tell us it is not a problem and that the Bill is complicated does not do their credibility any good. There is a problem. In fairness, Sinn Féin has brought forward legislation to rectify this but, as has been acknowledged, the Government is working on similar legislation. This problem needs to be addressed so that tens of thousands of workers can have some security in terms of their hours of work. I ask the witnesses to address this issue.
Mr. Tim Fenn:
What we see, day in, day out, in our industry is the desire on the part of employers to take on people, train them and move them on as quickly as possible into more permanent employment and permanent contracts. There may be individual cases which are different. What I said earlier before Senator Gavan came in was that our industry has full-time employment, part-time employment, seasonal employment and a certain portion of casual employment. By and large, there is a big fluctuation in the demand for the hours required. Given that hotels are open 365 days a year, 24 hours a day, there is a huge number of hours to be filled. What we see is employers seeking to reduce the number of employees they have on their payrolls, get people to stay with their businesses for longer periods and improve retention. In so doing, they will do their best to move these people from what I would call initial part-time casual labour into the more full-time work. Perhaps this was not the case in Senator Gavan's past experience, but that is what we see today.
All day, every day we seek to promote HR best practice.
Ms Patricia Callan:
I will return to the UL study, because it is only one we have. It states that 2.6% of employees are employed on variable hour part-time contracts. Again, it does not state whether they are working for both sides or not. By my reckoning, with 2 million people at work, that is 48,000. However, under the legislation every business and every employee would be on a notice board.
How does Mr. Fenn justify his organisation refusing to engage with a joint labour committee, JLC, given that his organisation is receiving a subsidy of over €600 million per year in VAT? It refuses to use the industrial relations machinery of the State to protect some of the lowest paid and most vulnerable workers in its industry.
Mr. Tim Fenn:
The Senator's second point related to JLCs. We are on the record many times as saying that JLCs are not fit for purpose. They are fit for a different time. They lost their relevance in the Irish economy with the introduction of the national minimum wage. In addition, we refer to 40 to 50 other legislative measures to protect employees in this country and the active and professional Workplace Relations Commission to look after the rights of workers. In that context, employers make their choices on an individual basis. In law, we have a voluntarist industrial relations system. Employees have a choice and they can join a union if they wish. Employers also have a choice and they can engage in political bargaining if they wish, but they are not required to do so. Our industry experienced difficulties in the past when dealing with the JLCs. They were inflexible and created huge difficulties for the industry. The industry has no wish to re-engage in the JLCs at any time in the future.
Like Deputy Neville, I do not believe we are against expanding or increasing the rights of workers. There is much common ground between the various parties and, indeed, between the various employers in terms of trying to improve the lot of workers. We should try not to be confrontational about that.
I would like to have a little more data. Much of what we are discussing here is anecdotes from both sides of the spectrum. Deputy Neville expressed that to me too. It would be helpful if we could hone in on data in the cross tabulations. If there is 2.6%, what percentage of those are students, what percentage of them have multiple part-time jobs and so forth? That would be helpful.
Ms Callan raised an interesting point about the regulatory impact assessment. Are the RAI and the Irish Hotels Federation in favour of that too? I presume they would be. It appears that it should be a minimum requirement for this. In addition, if this Bill was enacted without any amendments, as some are proposing, how would it affect the witnesses' member organisations? Have the organisations quantified how many jobs it might cost or the type of impact it might have financially on an individual business? Have any assessments been carried out in that regard?
In terms of the specifics mentioned by Ms Callan, the point made about banking, mortgages and the need for banks to look at matters differently is commendable and is certainly worth examining. However, it is also quite easily manipulated and if we went back in that direction would there not be further problems in the mortgage sector? I am concerned about the idea of looking at P60s alone and trying to project forward into the future for people. Obviously, a business can be seasonal. Somebody could have one good year for income but could have five bad years thereafter. It appears to be a bad way of doing things.
The witness is correct with regard to the flexibility around the hours per week and posting the hours. Regarding the requirement to post in English, Irish and any other language, given the nature of restaurants and hotels with new staff joining and other staff leaving, it appears that the any other language requirement would be a serious burden. I doubt that one could simply Google and chance it. One would open oneself to a serious court challenge or a serious employment tribunal case if one got it wrong. If one got it wrong on a consistent basis and ended up dismissing an employee thereafter, one would be open to a serious challenge if it turned out one's translations were incorrect. That is a serious burden to place on people.
My final question is directed in particular to Mr. Fenn. Does he think that if these regulations are imposed they will have a substantial impact on the organisation's members, in the context of the federation competing with relatively unregulated entities such as Airbnb and the like? Is that a potential problem in the future? There is much talk about self-employed versus employed. I named one organisation but we see this happening more extensively. It is not confined to the food delivery sector, and I will be careful not to name individual organisations. In the home cleaning area, for example, people are being displayed as self-employed rather than employed. It also applies to industries that we have considered to be self-employed for a long time, such as taxi driving. There are over-arching organisations, people wearing uniforms and elements that are normally associated with traditional employment, yet they are on self-employed contracts. That is probably worthy of discussion in and of itself on another occasion. What exactly constitutes an employee and a self-employed person at present is a worthy topic. However, perhaps the witnesses would respond to my questions.
Mr. Tim Fenn:
In the last part of that question the Deputy referred to an individual company, so we might talk in general about what we refer to as the shadow economy, the sharing economy or the like. We are conflicted in that we are involved in providing accommodation. We are seeking to achieve a situation where there is a level playing pitch in terms of taxation, health and safety legislation, planning law, which is critical, insurance and redress for the consumer. The difficulty we are experiencing is that there is not a level playing pitch at present. There is much wonderful rhetoric about disrupters in the economy and so forth, but ultimately it comes down to the fact that there are people who are working in jobs, employers who are trying to create employment for them and people who are providing the best service they can for their customers. Customers might decide to go elsewhere, which is fine. That is part of the cut and thrust of competition. However, what should not happen is that the others are advantaged in a way that is unfair to the people who, over many years, have invested billions of euro in the Irish economy, particularly in tourism, and to allow "disrupters" to arrive and just change that without recourse. We do not think that is fair.
Ms Patricia Callan:
I will respond on the banking issue and explain it. Obviously, I have done a great deal of work on banking for small business during the recession in about ten different initiatives the Government introduced, which was great. However, the most fundamental initiative was the move from asset-backed lending to cashflow lending. A business is much more risky in terms of forecasting cash than is the case with what an individual employee might earn, yet we are able to do that.
We can, reasonably and with proper assessments, still look to determine the future cashflow of that business. There must be other ways than having the traditional bricks and mortar. To get a business loan it used to be necessary to back it with an asset, and that is no longer the case. A person can back it with a personal guarantee.
The Deputy is saying this is a multidimensional problem and that there are many different facets in the economy. I am also suggesting looking at all those other areas to see how people's lot could be improved by tackling those broader issues which are the outcomes.
A case can be made for applying imagination to the seemingly intractable problems. Many of these people will not get full-time pensionable jobs. I am of a generation of people who will not be guaranteed to get these jobs. It is absolutely worthy of discussion. In that case there may be a lot of refining to do, but it is something that is-----
Ms Patricia Callan:
Even if I give someone a permanent contract with full-time hours today, I am no more likely to be able to guarantee that next month than somebody who is building up the hours towards the maximum, because this is just the reality. In the old days we had people in full-time contracts and then we invoked lay-off and short-time measures to reduce their hours when we did not have the work.
An analysis of the welfare bill will probably show that there are people who have been on short time for about five years and there is no cut-off ever. There are all sorts of other issues within the system in terms of looking at it from the other angle. The labour market will move because people are only needed for a certain number of hours and they only want to work a certain number of hours.
Mr. Adrian Cummins:
The question addressed to me related to the regulatory impact statement. It is in contained in our submission. I did not mention it in my opening address. I totally agree that there should be a regulatory impact assessment of any Bill, but specifically on this one.
With regard to disruptor economies, Deputy Bríd Smith mentioned a company, which I will not name. Let us talk about disruptor economies. That is a business that has grown phenomenally worldwide. The vast majority of those who are working with that company are students who want to work and want to get extra hours in order that they can go to college. People will use those avenues to gain employment if they so wish. That is a matter for that technology company. They are in our hospitality-restaurant space. It is working extremely well. Right across the world, they are growing.
I have a question for Mr. Cummins. Has there been any analysis of the financial impact if the Bill were introduced as is without amendment? Restaurants have tight profit margins of between 2% and 5% on average. Surely this would have a detrimental impact on jobs.
Mr. Adrian Cummins:
"Yes" is the answer to that. As I said earlier, we need to consider how a small business in a small town could cope with this type of legislation. It is coming loud and clear from members with whom I have discussed this legislation that it is not flexible. There is no point in introducing bad legislation. We need legislation that is proper and fit for purpose. This is not fit for purpose.
I apologise for not being here for the presentation by the Restaurants Association of Ireland. I want to debunk one issue that has been thrown in here which is that the reduced VAT is some sort of subsidy. It is not a subsidy. It was a very clear financial policy decision to encourage business in the hospitality sector and create jobs, which is exactly what it has done. It is not a subsidy.
Having said that, there has to be a realisation that there is a problem. We are not certain about the quantification of that problem. We have the UL study and Ms Callan mentioned a figure of 48,000 people. If my son, sister, mother or father were one of those 48,000 people, I would be very exercised over them being affected in this way and that they are exposed to some employers who may be less than scrupulous in this regard.
I want to be constructive. I heard very clearly two weeks ago from IBEC and others that this is bad legislation and I can see many problems with it. However, it is not helpful to say that there is not a substantial problem here, even if it is not as widespread as some people make it out to be. We only have anecdotal evidence. However, we all acknowledge that we have a problem. What do the three groups represented here today suggest to deal with the problem? I hear clearly what they are saying about this legislation being a bit of a sledgehammer to crack a nut, not being flexible and ignoring many of the realities on the ground for many people who want to work different types of hours.
I am an employer. I employ locum doctors in my surgery. Some of them work part time and some work full time, but they have predictability if they want it. I understand the difficulties with some of the features of this Bill, especially in the hotel industry where some hotels shut down for the winter because the business is not there. Obviously six months is too short and it would need to be a year. However, that is not the core of this.
I ask the witnesses to help us to move this on because there is a problem. As this might fall, it is not good enough to have nothing put in its place that might help the situation.
Mr. Tim Fenn:
The first thing we would suggest is that this Bill be forgotten about. We need to go back to basics and do some real research where there is and if there is a problem. Employers will not be found wanting in helping at that stage when we have evidence to work with. There are requirements for flexible employment. There is a change in the way in which the world is operating. There is also a requirement to look after staff in terms of permanency and clarity when those jobs exist. We suggest that this legislation is not fit for purpose and we could not support it. We would be happy to assist in any research that might be required and to work with the Department in drafting something that might be of assistance.
Ms Patricia Callan:
The figure I gave comes from simple maths based on a UL study. It encompasses everybody who is on this contract. We know that many people want flexible hours. It works on both sides. An employer can ring somebody up and if they are not available, the employer can move on and come back to them the following week. That is absolutely fine and it is how people want to go with it. The scale of the problem is much smaller. Specific companies have been named by the public representatives here today. It is about asking how we can stop that company from doing this, which comes back to enforcement machinery. We already have three bodies of legislation in this area, the Organisation of Working Time Act, the Industrial Relations Acts and the Terms of Employment (Information) Acts, all of which give people rights. A person can bring a case to the Workplace Relations Commission, WRC, and seek a recommendation on that.
Mr. Adrian Cummins:
I fully agree with my colleagues. This Bill needs to be put to one side and we need to start from scratch. We need good quality research on the matter. When the previous Minister decided to look into this, he looked into zero-hour contracts. The UL was given a job to do and found none of that. Then they said they had better find something and they found so-called if-and-when contracts. We need to ensure that any proposed legislation is good legislation. It needs to be fit for purpose. There is no credible research to back up this Bill.
I apologise for not arriving sooner. We were tied up with Seanad business. I am very interested in this area. I am from Galway and the hospitality sector is very important to Galway.
We are doing some research on the sector in Galway and we will share the results with the organisations present when we have them.
I am hearing reports that there is an issue with basic compliance with current regulations, for example, on the provision of work contracts with terms of employment that reflect existing law. In some cases, contracts do not state the name of the employer and employee or place of work or stipulate the mechanisms available for resolving problems, work breaks, holiday entitlements and so forth. In percentage terms, what level of compliance with the law is achieved by members of the organisations present in respect of working contracts, leave and so forth? I am hearing stories that there is widespread abuse of the legislation. While the witnesses may not concur, the evidence available to me is that non-compliance is common across the board.
Mr. Tim Fenn:
We engaged with the Workplace Relations Commission in the week before last, as we do frequently, and it has identified compliance for 2016. It must be understood that employers must follow a complex medley of legislation every day of the week. In the hotel sector, the non-compliance rate was 34%, which was below the average for all industries.
Mr. Tim Fenn:
The Workplace Relations Commission does not break down the figures in terms of serious cases. It provides overall figures in various categories. Categories may be failure to pay in accordance with the national minimum wage, compliance with sick leave regulations and so forth. We are subject to 40 or 50 separate laws and an inspector must check compliance with all of them when making an inspection. We work hard all the time to ensure we are acting within the law and that our members are compliant. At the end of the day, compliance is for the employees. If members wish to drill into the figures, perhaps they will take up the matter with the Workplace Relations Commission.
Ms Patricia Callan:
One of the main reasons our members pay us, as a representative organisation, is to provide specific advice on employment law. I am reasonably confident that virtually all of our members strive to be compliant but it is difficult to be 100% compliant all the time. We have worked for many years with inspectors and the Workplace Relations Commission, which has moved to a model of risk-based targeting, similar to the model used by Revenue. As such, inspectors should find high levels of non-compliance because they should not waste compliant employers' time by inspecting them. It may well be worthwhile to examine that issue.
The statistics are incredibly complex. I can do a sentiment survey and pool a sample but this is the type of thing one sees in regulatory impact assessments if they are done correctly and where one engages the arms of the State to investigate this properly. It was very disappointing that the University of Limerick study did not feature any original research and relied on data from 2010. We need to go back and do this properly. My organisation will certainly assist the joint committee with anything it needs.
Mr. Adrian Cummins:
To respond to Senator Ó Clochartaigh, inspectors from the Workplace Relations Commission visit premises to identify levels of non-compliance. If an inspector enters a restaurant and it does not have a poster on display outlining this or that, it is deemed to be non-compliant. What is the risk in such a case? Our argument has always been that a review is needed of the way in which businesses are classified as being non-compliant and what are the risk levels. From the information we have received from members, inspectors go through every minute detail and examine records dating back 12 months, two years and in some cases three years. It is a very detailed, scientific review of the business and it will find that a business may be perfect in every respect, except perhaps a failure to display a poster. In such cases, the business will still be found to be non-compliant. It is a little like the national car test where cars may have to be brought back for a second inspection. From dealing with members daily, I can safely say that 99.99% of them are compliant. Perhaps the survey will show a different figure but I would like to see the results.
I thank the witnesses for engaging with the joint committee, which has agreed to meet a wide range of stakeholders to discuss the Bill. Representatives of the Retail Grocery Dairy and Allied Trades Association, RGDATA, Retail Excellence Ireland and the Convenience Stores and Newsagents Association will appear in our next session. I hope we will see the witnesses again later in the year when we discuss the costs of doing business. We will suspend to allow our next guests to take their seats.
The committee is now resumed in public session. I remind members, visitors and those in the Public Gallery to ensure their mobile phones are switched off or on flight mode for the duration of this meeting as they interfere with the broadcasting equipment, even when on silent mode. I welcome Mr. Vincent Jennings, CEO of the Convenience Stores and Newsagents Association, CSNA, Ms Tara Buckley, director of Retail Grocery Dairy and Allied Trades Association, RGDATA, and Mr. Tommy Smith, HR consultant with RGDATA. I also welcome Ms Lorraine Higgins, head of public affairs and communication for Retail Excellence Ireland. This is the second session of this meeting on the Banded Hours Contract Bill. I am sorry to keep the witnesses waiting. Our first session went on for quite a while.
Before we commence, in accordance with procedure, I am required to read the following. 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. If they are directed by the committee to cease giving evidence in respect of a particular matter and they continue to do so, they are entitled thereafter only to a 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 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.
I remind our guests that presentations should be no more than five minutes' duration. As the briefing documents already have been circulated to us it would be appreciated if the witnesses could keep the presentations short.
I invite Mr. Jennings to make his presentation to the committee. I apologise for the low numbers. There was a vote in the Seanad but they will filter back to us in a couple of minutes.
Mr. Vincent Jennings:
I welcome the opportunity afforded by the committee to the CSNA to present on this Private Members' Bill. The CSNA is not anti-employee or anti-trade union. It has never supported any political party and it recognises the efforts made by the drafters of this Bill to address what they perceive to be a particular problem with regard to the difficulties encountered by some workers in securing less precarious contracts. Our written submissions set out our response to the five specific matters for consideration that the committee requested. I do not intend to reintroduce these matters but I will obviously cover any of the queries that either the Chairman or the members may have.
We take the attitude that every Bill, whether Government sponsored or a Private Members' Bill, should be accompanied by a regulatory impact assessment, RIA, in keeping with better Government principles, as adopted over a decade ago. Such an assessment would analyse the cost implications for businesses, particularly small businesses, and consider alternatives to legislative intervention. It would also examine the size and scale of the problem, something that the University of Limerick study was lamentably shy on discovering. An RIA would also seek to meet all relevant stakeholders in advance of progressing toward a Bill. We understand that this Bill has not had the benefit of employer consultation. The CSNA does not believe that the committee's pre-legislative scrutiny is the correct approach for devising coherent and competent legislation, as it is dealing with a published Bill rather than being involved in creating the legislation. The CSNA does not accept that additional legislation, which by extension places additional regulatory burdens on an entire cohort of employers, is an appropriate or necessary response in the absence of evidence that would quantify a problem that could only be resolved by the introduction of new laws.
The Bill is one-sided in its direction and suffers from a lack of appreciation of the employers' perspective. It seeks to increase the rights of workers by way of increasing obligations on employers without any provision to offset them if and when their businesses require urgent attention. It does not make provision for how anomalies and unforeseen consequences that would follow from it, if enacted, would be addressed. A worker returning from maternity or extended sick leave would quite legitimately expect to be able to return to the position she had held prior to her absence. How would these returns be accounted for if the workers who had filled their hours had demanded their new banded hours contract replace the hours they had worked?
Many of our members employ workers in the evening, at weekends and on public holidays. The Bill makes a crude reference to hours worked without considering the nature of these hours. If a worker seeks an entitlement to receive a new contract based on hours worked in the preceding six months, there will be no restriction or obligation to restrict such hours to similar periods, as previously worked. It has the potential to restrict flexibility.
The business model our members adopt requires very significant elements of flexibility to meet an ever-changing retail environment. Convenience retailing extends across a substantial portion of the day, from as early as 6 a.m. to 10 p.m., at a minimum, seven days per week. There are, within each week, significant peaks and troughs. Local events can and do create the need for extra or fewer hours. These events are not predictable, nor are they constant. Granting an employee the right to be employed based on previous hours worked displays a lack of understanding of our businesses and the ever-changing nature of this most challenging environment.
Banded hours are most certainly one of the ways some employers can regulate their businesses. They cannot be applied by all employers who, by virtue of the size or nature of their business, need a greater degree of flexibility, whether for seasonal, structural or financial considerations.
The CSNA is very conscious that the Bill, if enacted, will create the potential for substantial additional costs for our members if they are involved in interaction with the Workplace Relations Commission and the Labour Court. These costs are not limited to the cost of engaging legal counsel. There are also costs associated with responding to the commission, attending the adjudication hearing and the Labour Court. There are additional costs involved in the provision of easily read notices in an unspecified number of languages. These have to be accessed, approved and completed, at a cost to every employer in the State. We consider such obligations to be unnecessary and disproportionate.
Ms Tara Buckley:
I thank the joint committee for the invitation to appear before it to discuss this Private Members' Bill. I am joined by Mr. Tommy Smyth who is a human resources expert with great experience in assisting Retail Grocery Dairy & Allied Trades Association, RGDATA, members and other retail employers. RGDATA represents family-owned independent grocery retailers in Ireland. Our members own and operate over 3,500 shops, convenience stores and supermarkets in every community throughout the country and are significant employers providing vital local full and part-time jobs in cities, towns and villages all over Ireland. It is a fact that independent stores have a far greater employment intensity than the multiples. The independent sector has a 35% market share and employs around 90,000 employees. The multiples have 65% of the market and employ about 35,000 staff. Lidl has an average number of 20 workers per store, while Aldi employs an average number of 24 workers per store. The employment intensity of an equivalent independent grocer is between 50 and 120 employees. We represent very important employers right around Ireland. The split between full-time and part-time workers is about 50:50 within RGDATA members' shops. This reflects the cyclical nature of convenience retailing. Some days are busier than others, while some periods within the day are more active than others.
Employees in RGDATA members' shops are issued with a contract of employment stating the hours they have been employed to work. The contract includes a flexibility clause which the employee signs to accept. As a roster is posted weekly all employees know their hours a week in advance. In general, full-time staff have set weekly hours and work the same days every week. Part-time staff have a set number of hours but may work on different days each week on a rota basis. Part-timers are usually college students and parents who want to work specific hours that fit in with their college courses or parenting commitments. Our members provide vital jobs for college students who travel home to work at weekends. The students are also available to work more hours during holiday periods. This is invaluable to shop owners who need cover in the summer months or the busy Christmas period. This is a mutually beneficial system. It suits the students who want to fund their college life and also suits our members who need staff who are flexible and want to work more hours on busy weekends and in holiday periods.
Our members pride themselves in supporting their local community and employees tend to live locally, show great loyalty to their employer and stay for many years. As the employers tend to be local; therefore, they too live and spend locally. Profits are not repatriated out of their county, let alone the country.
Continuity of employment within RGDATA members' shops is also very high. According to a Jim Power Economics report for RGDATA, over 64% of employees in independent shops have worked for the same employer for more than five years. This high retention rate clearly demonstrates that both part-time employees and employers are happy with the current system. Nearly 90% of employees are paid in excess of the statutory minimum wage. Labour costs are a huge issue for independent retailers who operate under incredibly challenging economic conditions. They face increasing levels of competition from major international giants and many are based in village and town centres that have not yet seen the benefit of economic recovery.
Retailing is a sector that bore the brunt of the downturn and is making a very slow recovery. Independent retailers work with employees to find a mutually agreeable roster, but they have to include a flexibility disclaimer in a contract of employment in order that they can react to external factors that can affect their business. Examples are bad planning decisions allowing a proliferation of supermarkets on the outskirts of small towns, changes in the road network that impact on passing trade and local job losses. The loss of jobs in Dell in Kildare will lead to a loss of lunch expenditure and passing trade for several RGDATA members. Even weather events, such as a big freeze affect footfall and expenditure in local shops. All of these factors impact on small local employers. Flexibility of hours, managed in a fair manner, is key to keeping a business open and jobs available. We are not talking about rich corporations but about local main street traders whose margins are very tight. In order to maintain local jobs in rural areas, these employers need to be able to react to change. Many RGDATA members draw a salary from their business at less than the minimum wage equivalent.
We have a number of concerns about the Bill. First, it is seeking to address a problem which is not present in our members' stores. Our members do not offer zero hour contracts. Second, the Bill goes beyond zero hour contracts to target banded hours. These are very different issues and we believe banded hours legislation is being piggy backed onto the negative headlines that zero hours contracts attract.
As I explained, employers need to seek some flexibility in regard to part-time roles to ensure that during times when quiet is trade, their wage bill does not become disproportionate to the lower sales. Employers do this through communications with employees and those who are most flexible are talked to first. If employees are aggrieved, they have many avenues open to them. They include internal grievance procedures; the Workplace Relations Commission's code of practice: the Workplace Relations Commission's conciliation, mediation and adjudication services; the Labour Court; the Organisation of Working Time Act 1997; and contract law.
Third, the Bill is prescriptive in intervening in the working relationship between an employer and employees. Excessively restrictive labour laws act against the retention of employees. RGDATA is aware of retailers who were unable to restructure existing employment arrangements with employees owing to legal restrictions and had to let people go rather than restructure their working conditions. These were all circumstances where the employees were happy to work reduced hours or accept reduced pay, but the law prevented this from happening.
The Bill seeks to make a certain roster legally fixed after a period of time and override any flexibility clause in a contract. If the Bill is passed, employers will shy away from giving mutually agreeable hours to an employee and will keep hours flexible all the time. This is likely to be less desirable to the employee.
While we are not aware of the analytical data used to prepare the Bill, we and the human resources experts that assist our members do not come across grievances arising in this area and we do not believe it requires further legislation.
In summary, RGDATA believes the Bill will introduce new rules and regulations governing the employment relationship between shop owners and their employees that are neither required nor necessary. Unnecessary rules add to the cost of doing business in Ireland and this adversely impacts on employment creation, local jobs, important part-time jobs and job retention.
Ms Lorraine Higgins:
Many thanks for the invitation to discuss the proposed Banded Hours Contract Bill. We in Retail Excellence welcome the decision to allow further scrutiny of the legislation, which, if enacted, will have far-reaching consequences for our industry and beyond. The retail industry is the heartbeat of the economy.
It represents 45,000 family-owned businesses and accounts for 282,000 employees, so today presents an opportunity for us to outline our misgivings on this proposed legislation, which would have a severe impact on those retailers.
At the outset I point out that we are not an organisation that sees itself in conflict with policies or legislation that are pro-employee. On the contrary, we are one of the few employer organisations that welcomed last year’s recent minimum wage increase. So, when we make arguments for and against legislation it is in a balanced manner, taking into consideration the essence of what we stand for, which is retail excellence, as without good employees we will never reach this ideal. We fully acknowledge there have been incidents of employment rights abuses but these are minimal and very much a peripheral exception rather than the industry norm. Therefore, we contend that a scramble to penalise everyone for the actions of a few is premature and that recent indicators point to the fact that more people are in a better position in terms of their hours of work and earnings. CSO figures indicate the number of casual and part-time workers continues to fall, as does the trend in the figures for part-time underemployment. Therefore, we do not agree with this attempt to stop what is often termed the "casualisation of work" as we feel it is a move that is out of sync with the aforementioned employment trends in the industry.
In light of the foregoing, it is imperative we strike a correct balance between the rights and needs of workers and that of employers. We must find solutions that make sense and that work in practice for all concerned and ultimately help retailers grow because when our members thrive, they in turn increase their employee capacity. We must desist from any actions that erodes the competitive nature of doing business. We have enough to do as a country to stave off the uncertainty and unpredictability of Brexit and President Trump, dual issues that are already impacting on consumer sentiment and general spend in retailers' outlets. Addressing employment issues should not mean changing the complete fundamentals of the relationship between employees and employer, which this Bill purports to do. It creates penalising burdens on Irish employers that could very well have the opposite effect of what is intended by Sinn Féin.
There are elements of this Bill that make little sense in a business environment. Section 3 provides the right for employees in a company to seek and be given more hours if they request to move to a higher band after six months of continuous employment. An employer may only refuse the request if the employer is experiencing severe financial difficulties. If it refuses, the employer may be brought to the Workplace Relations Commission and, on appeal, to the Labour Court, which will find in favour of the employee unless the employer can prove severe financial difficulties. This is a step too far and will destroy the largest employer in this State as section 3, in addition to this point will, in its entirety, will do three things. It will increase the cost of doing business in that the investment of time, resources and administration will deflect attention from the ordinary challenges of running a business in financially straitened times. It will create a situation wherein employees can continue to demand further increases in hours six months subsequent to the first time they have been awarded an increase in hours; band mobility is a rolling stone and this is a unilateral step too far. The section also compels business owners to disclose their sensitive financial information to their employees. This information should not be for an employee's consumption and instead of safeguarding an employee's position, it may very well have the completely opposite effect if such information made it into the public realm.
Under section 5, the requirement that notices in Irish, English and any other language be displayed showing the number of hours being allocated to workers in the next week or month and the relevant bands is again imposing a further cost imposition on business, investing time and efficiencies in further administration. Moreover, the six-month reference period is far too short and takes no consideration of seasonal work patterns or those working in some industries like health and education, or employees who cover for colleagues on a prolonged period of maternity leave, etc. The Bill unilaterally imposes an obligation on the employer to give more hours than he or she might not have a necessity for, which makes no sense in the circumstances. So, to counteract this, the logical act for employers to do if this Bill is enacted is to reduce hours and increase the numbers on low hours contracts. That is the very practice this Bill purports to stop.
We must be mindful that business by its very nature requires forward planning for contingencies. Now more than ever this practice has become pertinent in the face of Brexit. We have seen from December’s consumer sentiment index the increase in online shopping on.co.uk websites and that retail is already in decline and could very well enter into a recessionary space if the trends continue. So, many employers may be unwilling to grant additional working hours in the circumstances but may require the flexibility of employees in light of absenteeism, maternity leave and so on. Yet this Bill provides that unless they are in severe financial difficulties, they cannot refuse to give additional hours.
Many might say this Bill will act as a deterrent to employers but we would go further and say it is punitive and imposes intolerable burdens on employers. The inflexible nature of it and the administrative burden indicates that bad legislation is being created, which will make things inordinately difficult for small employers and will undoubtedly lead to jobs being lost and our competitiveness being damaged. It would be better to focus on those unscrupulous employers who created the issues rather than penalising the compliant majority because to enact this aspirational Bill would be to suggest that our recently reformed WRC mechanism is obsolete and ineffective, which is not the case. Again, I appreciate the opportunity to participate in this forum and thank members for listening.
There is an obvious trend in what is being articulated by a number of the organisations here today and I agree with much of it. There are particular flaws within this Bill, as has been highlighted by some members of the committee. As I stated from the outset, the nub of this is getting at unscrupulous employers who exploit employees, as the witnesses mentioned. That is the intention but it is a matter of how we go at this, particularly with regard to smaller businesses. I have worked in small retail businesses through the years. They are a flatter type of organisation and the owner of the business might get quite close to the staff and vice versa. The staff would have a good handle on how the business performs. It is not that there would be layers of management that could sometimes obscure information or massage the figures because the employees are so removed from the commercial side or figures in the business. The people running a cash register or counter in a drapery shop would know what way the sales are going. Over a period they get to know the business and understand when it fluctuates. I understand the sense in that. I asked the other witnesses as well about focusing on what is termed "unscrupulous employers". Given that the issue has been around for a while - perhaps before my time as I was elected to this House last year - have any studies been done by the organisations leading to statistics about unscrupulous employers either inside or outside the organisations?
Ms Tara Buckley:
We do a survey among members every few years through Mr. Jim Power, the economist. One of the questions asked is whether zero-hour contracts are offered. Of the replies, 100% indicated they did not offer zero-hour contracts. The Deputy might know what happens from working in smaller local shops where employees are not treated well in a small town. These employees are also customers and the relations of customers. One must treat staff well and, as the Deputy mentioned, there is a shared desire for the business to do well because it is important to everybody. It is a slightly different relationship and if a business is unscrupulous, it would not be a successful local, independent retailer. There would be no business.
Mr. Vincent Jennings:
It is important to remember that a Bill coming from this House has effect throughout the country for every employer, whether that employer has one employee or tens of thousands. It is very important that legislation referring to a contractual obligation for employers towards employees should be very cognisant of small businesses. It cannot be stressed often enough in these Houses that small businesses are the absolute lifeblood of this economy. We should not make legislation relating to the unscrupulous employers that I have no doubt are out there but which may be part of a wider company with 5,000, 10,000 or 15,000 employees. Hard cases make bad laws and it is very important for us to understand that small businesses would find it very expensive to bring in human resources personnel, notwithstanding Mr. Smyth.
It is not cost-effective for a company with fewer than 50 employees to have an in-house HR person. The minute a small business gets the dreaded envelope through the door demanding that it should do this, that or the other, it is a cost. It is important that we deal with this. I would have thought the existing Organisation of Working Time Act was sufficient. I suggest it would be more appropriate to look at such elements, including this country's well-resourced Workplace Relations Commission, than to bring in new legislation.
I suggest we need a little clarity in this regard. The Banded Hours Contract Bill 2016 was discussed in the Dáil in July of last year. I do not have the exact date. The Bill has not yet been passed on Second Stage. The Dáil voted to refer it back to this committee. As a result, we have no choice but to look at the Bill. The Bill will return to the Dáil in July of this year, when it may or may not be passed on Second Stage. That is exactly where we are at. In fairness to the Deputy who introduced the Bill, he is very open to changes and suggestions. That is exactly what we are facilitating at this committee. We are looking at the Bill from all angles. That is why we have invited in all the stakeholders. We will see it from both sides of the counter.
Ms Lorraine Higgins:
As employers, many of our members have very personal relationships with their employees. I suppose that is what Retail Excellence Ireland is all about. The maintenance of good relationships between employees and employers is absolutely fundamental. It is key to what we are trying to achieve. All the members of Retail Excellence Ireland with whom I have interfaced in my current role, which I have not been in for very long, recognise that the success of their businesses depends entirely on the happiness of their employees. We must bear in mind that any move which is made needs to be made with the best of intentions. We need to keep Irish businesses competitive and keep costs low, particularly in the context of the dual threat of Trump and Brexit. We saw before Christmas that the consumer sentiment figures were going down in December. The Visa spending index, which was published earlier today, makes it clear that there has been a shift to online shopping as a consequence of the devaluation of sterling. It seems that this trend is going to continue. I am not sure Irish employers can soak up any further threats to their cost base. We need to be mindful of that when we are making legislation.
Not at all. Before I call Senator Gavan, I would like to mention that my background is in retail. My family owned an independent grocery retailer for 17 years and was a member of RGDATA. We have a family jewellery business as well. I have been on both sides of the counter as an employee and as an employer. I accept Ms Higgins's point about the importance of businesses having good working relationships with their staff. A retailer who asks a member of staff to open a small shop in a small town at 7 a.m. must be sure that he or she will turn up to turn on the coffee machine and take in the newspapers, etc. It is very important. Although many smaller shops and businesses have good working relationships with their employees, it is fair to say that issues have been flagged to all of us as elected representatives. That is why we are looking at this proposal. The uncertainty of working mothers and fathers who do not know from week to week how many hours they might have is one of the issues that has been flagged to me on many occasions. The lack of regular hours from week to week makes it harder for such people to look for loans for cars or houses. I know it is more difficult to get a mortgage now. When people are organising child care, they need to know whether their child needs to be minded for two days next week or three days the following week.
I appreciate the points that have been made by the retailers because I have been in their position. However, we need to try to address the issues that exist. That is what the committee is trying to do. We accept there are many good employers who look after their staff. We are cognisant that the activities of some businesses are determined by factors like tourism numbers or the weather. We understand that a shop beside a university, a college or a school will be very busy in September, but will not do much business in June, July or August. As I have said, this issue has been flagged with all of us as elected representatives. The Government is examining it at the moment with the intention of introducing legislation. It would not be drafting legislation unless an issue had arisen at some stage. We need to tease this out. We have to try to get our heads around these important issues. We are not saying all employers are the same. We need to try to get a handle on the fact that some workers feel discommoded. They do not think they are getting the right treatment. I needed to put that on the record.
I apologise for missing the presentations. It has been a manic day. I have read the submissions and I thank the witnesses for them. Mr. Jennings has suggested that workers could use the Workplace Relations Commission as a vehicle in these circumstances. That point was made in a previous session as well. I would like to mention the case of a person who has been working in a hotel in Limerick for three years. I will not name the employer in this case.
I come from a trade union background. The witnesses might have noticed my Tesco badge. I refer to a casual employee on a typical contract whose hours are communicated to him or her by means of a departmental rota. I put it to the witnesses that there is no existing legislation on which the employee can rely to correct this anomaly and get some certainty. Having worked in the hotel for three years, this employee cannot use any current legislation. The only legislation that exists is the Industrial Relations Act. As everyone present is aware, that Act is not enforceable. It has no enforceability. I ask the witnesses to address the reality that if this employee complains to his or her manager because he or she is not happy about having no certainty of hours, he or she will not be on the rota the next week. Unfortunately, I experienced this reality, which has been described by the Chairman, on several occasions in my previous career. Can the witnesses give the committee the name of an existing piece of legislation that someone in this situation would be able to utilise to protect his or her rights and get the certainty of hours to which he or she would surely be entitled after being employed by a hotel for three years?
Mr. Tommy Smyth:
Many background questions would arise if a scenario like that described by the Senator was put to me, in my capacity as a HR consultant, by the likes of a client. The employee might be able to look at the equality legislation, depending on his or her circumstances. The use of whistleblowing legislation might arise if this person felt that other people were being given more hours than him or her for a specific reason. In such circumstances, this person could raise a grievance about other people getting hours ahead of him or her. Much would depend on the hotel's contractual position, its number of staff and its financial position. Employers are supposed to describe in contracts, as best they can, the number of hours their employees are expected to work. Unfortunately, the Senator has painted a vague scenario in which a hotel is saying that this person's hours will be determined according to a roster.
It is a standard contract. I could have picked any hotel in Limerick that is using these contracts at the moment. The use of such contracts forms the basis of the hotel model that exists at present. That is just how it is. On which grounds could a case be taken in this instance under the equality legislation mentioned by Mr. Smyth?
Mr. Tommy Smyth:
If the Senator wants to provide a credible example in support of the point he is making, he needs to tell us more about the employee, the department he or she is working in and the hours the other people in that department are getting. We need such details if we are to understand the Senator's argument that the employee is being treated less favourably. We also need further information about the employer's financial position.
I will ask the question again. I will be honest. I have used the equality legislation. It does not apply in this case because everyone on one of these contracts is treated equally unfairly. There are no grounds for discrimination from which to choose. I ask Mr. Smyth again to state what legislation is available to deal with this case right now. I am making this point in support of my contention that a Bill like this is needed.
Like Senator Gavan, I apologise for not being here earlier. We were delayed due to votes in the Seanad but I have read the witnesses' submissions. I have asked every group that appeared before this committee who have concerns about this Bill the same question, which I will also ask of the witnesses. We have a problem in that some people are being abused. A figure of 48,000 employees was given to us in a previous presentation based on a University of Limerick study that found the 2.5% of the workforce have these types of contracts. That is a large number of people. If unscrupulous employers are using these contracts as a way to avoid giving people regular work, we need to address that. In a previous life I was involved in a trade union but I am also an employer. I employ doctors, nurses, administration staff on a part-time and full-time basis but I can give them predictable hours. There are seasonal issues within the hospitality sector and in certain smaller businesses and that is fully acceptable, but there is also a problem with some people being abused. We do not know the scale of that, which was acknowledged by everybody, and therefore more research on this is needed. I do not believe this Bill is the way to address it but it raises the issue which needs to addressed. I apologise for the long preamble in asking the witnesses what suggestions they have for how we can address this issue. We have had some people appear before the committee who tried to tell us that there is not an issue, but there is an issue. How can we do address it? We do not want to be use a sledgehammer to crack a nut, which many people believe this Bill is because it is inflexible and so on, but there is an issue of equity and fairness involved. As I said to a previous group, the 48,000 employees with these types of contracts is quite a large number of people and if it was my brother, sister, son, daughter or mother, I would be very upset and cross about the fact that there is inequity in some instances. How do we protect workers from that? That is my question to the witnesses but it is not put to them in a pejorative or aggressive fashion. We are seeking to address an important issue. All I have heard from those who have come before the committee is that we should accept this Bill or that there is not a problem and we should discard the Bill. Neither of those views will fix this problem for us. We need something in the middle. I accept we need more research. I would be grateful to hear if the witnesses have any ideas that might help us to address this issue or on how we can protect workers from those who would abuse the current situation.
Mr. Vincent Jennings:
It is not our function as representatives of employers to bring about legislative change. That is what we allow the Oireachtas to do. We very much welcome the opportunity to consult and to be part of a stakeholders group in advance of legislation being considered and published. If there is a quantifiable number and it is found that there is nothing other than legislative action that should be taken, then a regulatory impact assessment would assist in doing that. The Department could then carry out a series of consultations to quantify the job involved. The University of Limerick study was lamentably light in providing evidence, even though it strayed well beyond its terms of reference. However, what is most certainly did was to state that there is not a problem but that there is this issue and it should be examined in another way. Why would the Department not home in on that, bring in the stakeholders, tell them these are the findings, having done an additional study, and ask them what are the solutions? We are not only employers but are mothers, fathers, grandfathers, uncles aunts and so on. We do not want to live in a society where there is a Victorian style of employer. It would not do any of us any good. The committee needs to quantify the issue and if there is a need then it should address it but it should be done by way of consultation.
Ms Lorraine Higgins:
It is very important to discuss this issue, of that there is no doubt. We have seen the highly publicised cases where some unscrupulous employers have acted very badly and wrongly when it came to their employees, but, as I pointed out in my submission, they are very much in the minority and on the periphery. More critically, more research was required when it came to presenting this Bill because research is very much the steering wheel of every issue. Unless we have research it is very difficult to drive an issue and to draft balanced legislation in the circumstances. Further consultation with employer groups before the legislation was brought forward would have provided an opportunity for all of us to put forward our proposals, think things through and brainstorm to come up solutions in those marginal examples of cases where employers have exploited their staff.
Furthermore, the word "uncertainty" has been used a good deal. There is no worse industry for uncertainty than the small business sector. I pointed out that there is a huge degree of uncertainty surrounding the retail industry. We saw that from the December figures with the consumer sentiment being down. Many small business people have restructured through examinership and so on during the recessionary period. They have cut costs as much as they can. They might not have created jobs but they saved a great number of jobs in this country over the course of the recession and people need to be mindful of that. Businesses have the same challenges as some employees in terms of uncertain hours. I mention the impact of President Trump's policies and of Brexit, of which nobody knows what will be the fallout. Many businesses plan in terms of longer-term contingencies. We must recognise the nature of doing business in this country in the circumstances. This is a very important issue to discuss but we would like a more balanced approach to be taken as a consequence of that and not a rush to enact legislation that might have unintended consequences beyond what is expected.
Ms Tara Buckley:
As I said earlier, some of this can be addressed by the public. I pointed out that we have not come across any instance of this type of grievance in our members' stores. Our members, in general, when they employ part-time staff, have a flexibility clause in the contract and they know many of the people they employ well. If they are parents, they work in the mornings and want to be finished to fit in with school times. The employers knows that. They might have students who work weekends and work shifts. If an issue comes up, people can swap their hours with each other. We are not aware that this grievance has come up. Our members say most of their part-time workers want to work about 20 to 23 hours a week. They are not pushing our members to give them extra hours. They are happy with that number. This matter has not come up as an issue. Our members' concern is that this Bill, if enacted, would introduce regulation with which they have to comply, but they feel a little aggrieved because this issue is not a problem in their stores. If they are not treating their staff well, their customers would not come into the shop, and the town will know about it. That is the point we are trying to make. We agree that if there are unscrupulous employers, that needs to be addressed, but a measure should not be introduced that would be used crack the nut with everyone.
It is actually 19. They are only allowed work a certain number of hours. That point has not been raised at the committee and it is one about which we should be cognisant. For example, a person participating on a community employment scheme can work 20 hours a week. Does Mr. Smyth want to add a further comment?
Mr. Tommy Smyth:
I would add one further point. The Oireachtas enacted legislation on collective bargaining last year. Certain cases involving representation rights have already gone to the Labour Court and there are further ones in the pipeline. It is predominantly larger employers who employ a substantial element of the 48,0000 employees referenced. Trade unions are currently organising to build up membership and they could build up membership where employees have legitimate grievances with their employers. Legislation was enacted recently to assist in that regard.
I think that concludes all the questions. I thank all the witnesses for their attendance today. I again apologise for keeping you waiting for so long but the first session was inclined to run on. That concludes all of our business on today's agenda. The joint committee will now adjourn until 11 a.m. on Tuesday, 21 February, when we will resume our discussion on the Banded Hours Contracts Bill 2016.