Dáil debates

Wednesday, 22 May 2013

Ceisteanna - Questions - Priority Questions

Registered Employment Agreements

1:30 pm

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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1. To ask the Minister for Jobs, Enterprise and Innovation his views on the implications of the Supreme Court ruling on Registered Employment Agreements; his plans for legislation following the ruling; and if he will make a statement on the matter. [24550/13]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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In recent years, there has been a continuing series of legal challenges to the JLC and registered employment agreement, REA, systems, including the 2011 Grace Fried Chicken case that resulted in the High Court striking down all employment regulation orders, EROs, and the recent Supreme Court ruling in respect of REAs.

As the Deputies will be aware, on 1 August last, a new legal framework for REAs and EROs was put in place by way of the Industrial Relations (Amendment) Act 2012. The Act provided for a comprehensive suite of measures to strengthen their constitutional and legal framework, to allow for enhanced flexibility of application and to restore and underpin the protections afforded to workers.

The recent Supreme Court judgment held that Part III of the Industrial Relations Act 1946 was invalid having regard to Article 15.2.1 of the Constitution. That article provides, in effect, that the exclusive power to make laws is vested in the Oireachtas. The Supreme Court took the view that REAs are instruments having the status of laws made by private individuals, subject only to a limited power of veto by a subordinate body. While the Constitution allows for the limited delegation of law-making functions, the provisions of the 1946 Act went beyond what is permissible under the Constitution.

The effect of this decision is to invalidate the registration of employment agreements previously registered under Part III of the 1946 Act. In consequence, the Labour Court no longer has jurisdiction to enforce, interpret or otherwise apply these agreements. As a result, all such agreements no longer have any application beyond the subscribing parties and are not enforceable in law. However, existing contractual rights of workers in sectors covered by REAs are unaffected.

There were six existing sectoral REAs registered or varied by the Labour Court in recent years. It is estimated that between 70,000 and 80,000 workers were covered by these sectoral agreements. In addition, there were more than 50 employment agreements covering individual enterprises that had been registered. The striking down of the REAs means that new employees in these sectors can now be hired at a rate agreed between workers and their employers. This is subject only to the provisions of the National Minimum Wage Act 2000.

From the parties' perspective, REAs established industry terms and conditions and provided a sense of certainty when tendering. They were recognised under European Union law and, through the posted workers Directive, ensured that contractors from outside the jurisdiction, who may be using employees from lower wage economies, did not obtain an advantage over local contractors in terms of wage costs.

This is a significant judgment that requires careful consideration and I have asked the Attorney General to advise on all issues. That advice is awaited as is the order of the Supreme Court and, until these are received, I am not in a position to indicate what, if any, legislative response may be required.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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Can I make a general comment about questions today? I tabled eight questions about the serious issue of SME finance and finance for business and its implications for job creation and enterprise growth. All of the questions were transferred to the Department of Finance for answer by the end of June. I am writing to the Ceann Comhairle on the issue. SME finance is a major issue for business. The understanding of the Department of Jobs, Enterprise and Innovation is completely different from that of the Department of Finance, which is why we asked the Minister for Jobs, Enterprise and Innovation for his views on a range of topics. It is unacceptable-----

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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It is not a matter for the Chair.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I want to put it on the record of the House. It is unacceptable that we are not allowed to raise SME finance and the various challenges surrounding it with the Minister for Jobs, Enterprise and Innovation.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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There is one minute per question and one minute per reply.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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In his response, the Minister outlined that the key challenge is that new employees can now be taken on by existing companies and others under the minimum wage. That gives such companies a huge competitive advantage over those companies that are part of the REA and have contractual obligations to it. As long as there is some sort of doubt over this, that competitive advantage will grow and there will be a loss of existing employment and existing terms and conditions. Is it planned to implement legislation before the summer recess or will this be allowed to drag on into the autumn and companies who are currently signed up to the REA will suffer loss of contracts and an inability to be competitive in applying for tenders because they are adhering to the REA and their contractual obligations? Has the Minister any emergency legislation on this issue under consideration?

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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This Supreme Court action was taken under the 1946 Act. It was not taken under the Act passed in 2012. It preceded that. That is important in terms of timing. In drafting the 2012 Act, we were aware of this pending action and have sought to make the legislation robust to such challenges. Obviously, we have not yet got a final order from the Supreme Court nor have we got advice from the Attorney General so I will not speculate on any of those avenues about which the Deputy is asking.

In respect of the transfer of the questions to the Department of Finance, these are matters of ministerial responsibility in different areas but there are questions on access to finance down here which I am answering later on the floor.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I emphasise that there is a serious lacuna here for companies adhering to their contractual obligations under the REA system and who will continue in good faith despite the striking down of the REA as opposed to other companies who will now use the competitive advantage open to them while that space is there. The Minister said the REAs are not enforceable in law and there is now a huge competitive advantage open to companies in terms of tendering for major projects while that lacuna is there. It is a matter of urgency that needs to be addressed as soon as the Minister has the Supreme Court order and the information from the Attorney General.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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I accept that but I presume that the REAs must renew under the new legislation.