Richard Bruton (Dublin North Central, Fine Gael)

The two amendments proposed by Deputy Tóibín deal with the issue of the maximum duration of a derogation under the inability to pay clause. Section 9 of the Bill inserts a new section 33 into the 1946 Act. This provides that where a registered employment agreement, REA, makes such provision, an employer in financial difficulty may apply to the Labour Court seeking a temporary exemption from the requirement to pay the rates of remuneration contained in the agreement. The new section 33A(2) provides that the maximum period of an exemption will be 24 months and that such exemption must be for a minimum of three months. The new section 33A(3)(b) also provides that the Labour Court may enable an employer to qualify for up to two consecutive exemptions from the statutory pay terms of an REA where financial difficulties in an enterprise persist after the expiry of a shorter time limit than the maximum permitted under the legislation. Accordingly, two consecutive exemptions will be permitted within the overall two-year time limit rather than a single one, as was the position under the Bill as originally drafted, where this is necessary to safeguard employment.

Amendment No. 10 would reduce the maximum exemption to 12 months, while amendment No. 11 would restrict the extension of an exemption to an overall 12-month limit. The inclusion of the provision to permit the extension of an exemption within the overall two-year limit is a requirement arising from the most recent review of the programme for financial support agreed with the EU, the IMF and the ECB. While the inability to pay provisions relating to REAs are substantially the same as those proposed in respect of employment regulation orders, EROs, it is important to stress that the former would only apply where an REA so permits. It will be a matter for the Labour Court to determine the appropriate length of an exemption on the basis of its consideration of an application for such an exemption. Accordingly, I cannot accept the amendments.

The Deputy portrays what is proposed in the Bill as a way for employers to gain competitive advantage. The relevant sections in the legislation have been designed to require the Labour Court to ensure that applications in respect of the inability to pay clause are genuine and that there is a threat to employment. These are not casual provisions that will allow employers to build competitive advantage. There are demanding requirements in the context of obliging employers to submit the accounts relating to their businesses to scrutiny in order that the Labour Court may assure itself that applications are not being made for the motives to which the Deputy refers. The sections are designed to ensure that this mechanism will be used rarely and in a very prudent way. None the less, we recognise that an inability to pay clause is appropriate. As already stated, the troika was of the view that the Labour Court should have the flexibility to consider two applications from the same employer within the overall time limit of 24 months. That is what has been provided for in the Bill.

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