Dáil debates

Thursday, 6 November 2014

Other Questions

Public Procurement Contracts

10:10 am

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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7. To ask the Minister for Public Expenditure and Reform his plans to ensure full compliance with all legal obligations under labour legislation by companies awarded public procurement contracts, with respect to their use of subcontracting, in view of impending requirements under the new EU rules agreed in January 2014. [42059/14]

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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This question relates to public procurement. The Minister of State will be aware that I have taken a considerable interest in the matter. I am concerned, not least because of a number of very well publicised cases in which there has been evidence and allegations of flagrant breaches of labour law and exploitation of workers. I had cause to speak again yesterday with the workers who are in dispute with JJ Rhatigan in respect of Kishogue Community College in Lucan; that is ongoing. The question is straightforward. What are the plans to ensure full compliance with all legal obligations under labour legislation by companies awarded public contracts with respect to their use of subcontractors, which is the issue at the heart of the JJ Rhatigan dispute?

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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I thank the Deputy for her question and I note her ongoing interest in issues of procurement.

The main purpose of the EU public procurement regime is to open up the market and ensure the free movement of supplies, services and works within the EU, having regard to Treaty of Rome principles including transparency, proportionality and equal treatment. This is the rationale that shapes the detailed rules and directives governing the regime.

Under the current regime and standard forms of contract, there are requirements in place for compliance with legal obligations under labour legislation. For example, clause 2 of the standard form of the public works contract requires the contractor and his or her personnel and subcontractors to comply with all legal requirements.

There is a substantial body of legislation that directly or indirectly governs construction activities. However, two key pieces of industry-specific legislation, the Safety, Health and Welfare at Work (Construction) Regulations 2013 and the Building Control Regulations 1997 to 2014, both place considerable responsibility not only on contractors but on all those involved in construction projects, including designers, supervisors and individual workers.

The ultimate sanction for a serious breach of health and safety regulations is a criminal conviction and imprisonment. Compliance with health and safety regulations is separately assessed in a pre-qualification of works contractors, with supporting evidence required to demonstrate that the applicant possesses sufficient resources and is competent to carry out the proposed works. The works requirements, which are a key part of the contract documents, also set out detailed specifications on how regulatory standards are best to be met.

Contractors are required to submit ongoing certification under clause 5.3 of the contract, which deals with pay and conditions of employment, to show that they have complied in full with the requirements of that clause, which covers aspects such as compliance with employment law and deductions for social welfare. Contractors are also required under this clause to maintain records and timesheets in respect of all those engaged on the works.

The new EU rules comprise a suite of three directives that repeal the existing rules governing conduct in procurement across the EU, but the basic architecture of EU procurement will remain intact.

I note that I will run out of time. I will come back with a reply to the Deputy's supplementary question. The key message is that I have opened this up to consultation for six weeks. I encourage people to go to the website www.procurement.ieand examine the consultation document. The first question relates to labour law. We are eager to get this right. We get only one opportunity to transpose these directives correctly, and that is why, while consultation was not necessary, I decided it was prudent. Consultation is open until 12 December.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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I welcome that consultation, which is indeed prudent. I welcome that at call-for-tender stage a company may be required to specify what part of the contract it does not intend to perform itself but intends to assign to a third party, which is significant. The company will also be required to inform the public purchaser of the names and addresses of such subcontractors, thereby providing a chain of responsibility. These tougher rules on subcontracting are intended to fight what is called "social dumping" and ensure that workers' rights are respected. Equally, it allows that contractors who do not comply may be excluded from bidding. These are very welcome developments. Does the Minister of State accept that we have an issue with social dumping and breaches of labour law in respect of subcontracted work on public contracts?

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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I know that the Deputy has highlighted the issue, including during Private Members' time on Fridays. I accept her bona fides in bringing the issue to the House. I have asked the Office for Government Procurement to look into the matter when considering the implementation of the directive.

The directive obliges us to give consideration to how we wish to adhere to "applicable obligations" in labour law. While most of the directive is mandatory, each member state has a policy choice on which appropriate measures to adopt to ensure compliance with this obligation. That is the discussion I wish to have between now and 12 December.

I am approaching the matter with an open mind. The Minister, Deputy Howlin, undertook significant work during our Presidency of the European Council in getting this through the European Parliament. Considering Ireland's leadership role, I want to ensure Ireland is best in class and that we transpose these directives in a way that ensures flexibility and does not gold-plate them while also addressing the social and labour law issues that we have discussed here and that I am sure we will continue to discuss.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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It is very important - I am sure this will be reflected by those with whom the Minister of State consults - that we make the correct policy choices, and in so far as adherence to labour law and the rights of workers are concerned, they need to be watertight and robust.

JJ Rhatigan and Company has approximately 50% of school building contracts at construction stage awarded by the Department of Education and Skills. As the Minister of State knows, Unite is in dispute with JJ Rhatigan over the treatment of its members on the site at Kishogue Community College in Lucan. Following a ballot, the workers unanimously decided on industrial action, which commenced on 19 September. They will be in court tomorrow fighting an injunction.

JJ Rhatigan operates a complex system of subcontracting under which workers on these public capital contracts have been forced into bogus self-employment with no PRSI, holiday, pension or other entitlements. These workers are effectively earning less than €5 an hour. They have been locked out since 1 September. I know there are obvious limits in what the Minister of State can say and I am not asking him to stray beyond that. However, I ask him to respond as he can to this situation and to make it very clear for those workers and anybody else being exploited in this way that he is aware of the phenomenon and is determined, as I hope we all are, to stamp out these practices. I hope that workers enjoy the Minister of State's support as they try to deal with these exploitative situations.

Photo of Simon HarrisSimon Harris (Wicklow, Fine Gael)
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The Deputy correctly notes the limitations on what I can say about specific cases. However, I am very happy to say that we have quite a robust suite of labour law. In the procurement area, I want to ensure that in transposing these directives we deal adequately with all of these issues.

Obviously the Minister for Jobs, Enterprise and Innovation has overall responsibility for employment rights. The National Employment Rights Authority, NERA, is responsible for enforcing minimum statutory employment rights and entitlements in the State.

While we are discussing the issue of subcontractors, the Government has made a decision, led by the Minister, Deputy Howlin, that the Minister of State, Deputy Nash, will work on the implementation of the Construction Contracts Act, which is of serious concern to many subcontractors. I am very proud that this Oireachtas passed the Act, and we expect it to be implemented next year.