Seán Sherlock (Cork East, Labour)

I am pleased to present the Industrial Relations (Amendment) (No. 3) Bill 2011 for the consideration of the House.

The main purpose of the Bill is twofold. First, it implements the commitment in the programme for Government to reform the joint labour committee, JLC, system. Second, following the High Court ruling in the John Grace Fried Chicken case of July 2011, the Government has undertaken to prepare and deliver a comprehensive reform package, as the implications of the High Court judgment are not confined to the JLC system. What is required is a programme of reforms to deliver a robust legal framework for both registered employment agreements, REAs, and JLC sectoral wage-setting mechanisms under the Industrial Relations Acts 1946 to 2004.

The Irish system of REAs has been in force since 1946. REAs are collective agreements made between employers or their organisations and trade unions. They are freely negotiated between the parties thereto. Section 27 of the Industrial Relations Act 1946 allows the parties to a collective agreement to register their agreement with the Labour Court. If registered, the agreement is given legal effect and is binding not only on the parties to the agreement but on all workers and employers of a type or category to which the agreement is expressed to relate. It has been estimated that there were between 62,000 and 79,000 workers in the sectors covered by REAs in 2009.

JLCs are independent bodies composed of representatives of employers and workers in a particular sector, with a chairman who is appointed by the Minister. The purpose of JLCs is to discuss and agree rates of pay and conditions of employment to apply to workers in a particular sector. Prior to the 2011 High Court ruling in the John Grace Fried Chicken case, JLC proposals were given effect in employment regulation orders, EROs. The terms of an ERO were incorporated in the individual contract of employment of every worker to whom it related. JLCs have their origins in bodies empowered to set minimum wages first established in Britain and Ireland under the Trade Boards Act 1909. As part of a major reform of industrial relations in the Industrial Relations Act 1946, these bodies were given the new title of joint labour committees and their competence was expanded beyond the fixing of minimum wages to cover the regulation of conditions of employment as well. JLCs have operated in areas in which collective bargaining is not well established and wages tend to be low - for example, in the hospitality, retail grocery and contract cleaning sectors. It has been estimated that there were between 150,000 and 205,000 workers in sectors covered by JLCs in 2009.

As the House is aware, the process of making EROs has been found by the High Court to be unconstitutional. The High Court ruling underscores some of the main features of the recommendations for reform that were put forward by the independent review report on statutory wage setting mechanisms, the Duffy Walsh report, which was carried out prior to the High Court ruling. The commissioning of an independent review of the ERO and REA systems was one of the undertakings given by the last Government in the context of the EU- and IMF-supported financial assistance programme for Ireland.

The High Court action in the John Grace Fried Chicken case was only one of a continuing series of legal challenges to the system of statutory wage-setting mechanisms. A challenge to the electrical contracting REA was successfully defended in the High Court in 2010 by the State but is under appeal to the Supreme Court. In addition, there are a number of pending High Court challenges to the current electrical and construction REAs, all of which challenge the constitutionality of the legislation underpinning the REA system. Since publication of the Bill in December 2011 and during its passage in the Dáil the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, has taken the opportunity to bring forward a number of significant amendments to ensure additional constitutional safeguards for the legislation, strengthen its intent in certain aspects and provide greater legal certainty for all stakeholders affected by it. The more significant amendments have dealt with the principles and policies applying to the framing of registered employment agreements and employment regulation orders, the timeframe for the variation of registered employment agreements, provisions to protect the position of employers not party to the original sector level collective agreement, provisions governing the conduct of a review of the JLCs and provisions regarding the granting of temporary exemptions from the obligation to pay the terms prescribed under employment regulation orders and registered employment agreements. These amendments, and others, have advanced the Bill considerably in terms of setting out how the legislation will work in practice. I will outline in detail the provisions of the Bill.

The Bill is divided into three parts. Part 1 deals with general and preliminary matters such as the Short Title of the Bill. Section 1 is a standard provision in legislation providing for the Short Title, collective citation, construction and commencement provisions of the Bill. Section 2 defines the two industrial relations Acts referred to frequently in the rest of the Bill. Section 3 provides for the repeal of certain sections of the Industrial Relations Acts 1946-90 that are either anachronistic or being replaced in the Bill.

Part 2 of the Bill makes the necessary amendments to four sections in the Industrial Relations Act 1946 to provide for new procedures for registering, varying and cancelling registered employment agreements. Section 4 amends section 25 of the Act of 1946 by providing for a new definition of "registered employment agreement" so as to differentiate between those made before the commencement of the Bill - those registered by the Labour Court - and those made after its commencement - those confirmed by ministerial order.

Section 5 sets out more detailed principles and policies than under the 1946 Act. These are the principles and policies to which the Labour Court must have regard before registering an employment agreement. The 2011 High Court judgment confirmed that the Oireachtas may devolve certain law-making powers to other bodies such as Ministers, the Government or the Labour Court. However, it also made it clear that where the Oireachtas devolved a law-making power to some other body, it must give that body guidance on how the law-making power was to be used. That guidance should be set out in primary legislation by way of clear principles and policies.

A key element of the reforms provided for in the Bill is the introduction of provisions to ensure comprehensive Oireachtas and ministerial oversight of the REA and JLC systems. Accordingly, new registered employment agreeements will not come into force until they have been confirmed by the Minister. Sections 6 and 7 make necessary changes to the 1946 Act to ensure variations or cancellations of new or existing registered employment agreements must also be confirmed by the Minister before such variations or cancellations will have effect. Henceforth, the confirmation, variation or cancellation of an registered employment agreement may be annulled by either House of the Oireachtas within a specified period.

The 1946 Act does not provide a satisfactory definition of the phrase "substantially representative", nor does it provide any guidance on how it is to be measured. The Labour Court has drawn attention to the limitations of the original statutory definition. This issue was carefully considered in the Duffy-Walsh report. In this context, the Government accepted the recommendations made in the report for changes to be made to the provisions of section 27 of the Act of 1946 to provide that, in the case of trade unions, the degree to which trade unions were representative of workers to whom an agreement related should be measured by reference to the unions' membership in the employment or sector concerned and, in the case of employers or employer organisations, the extent to which they could be regarded as representative should be weighted by size, measured by the number of employees normally employed.

Accordingly, section 27 of the 1946 Act is being amended by section 5 of this Bill to provide guidance to the Labour Court on how the question of representativeness should be determined. Moreover, amendments introduced on Committee Stage in the Dáil have provided for a more explicit ordering of the priority ranking of the principles and policies to be taken into account by the Labour Court in considering an application for the registration of an employment agreement. Particular considerations that have been identified in this regard are the representativeness of the parties and the "common good" or public interest objectives of establishing harmonious industrial relations between workers and employers and the avoidance of industrial unrest.

Section 5 also amends the 1946 Act to provide that every application to register an employment agreement must be accompanied by confirmation provided by the parties to the agreement that they are substantially representative of the employers and workers to whom the agreement applies. A consequential provision at section 7 amends the 1946 Act so that the Labour Court may cancel an REA if either the worker or employer parties have ceased to be substantially representative of the workers or employers concerned.

Section 6 amends the 1946 Act to reflect the recommendation of the Duffy-Walsh report concerning the introduction of a time-bound process by which the terms of an REA may be varied by the Labour Court in exceptional circumstances without obtaining the consent of all parties to the agreement. The amendment is intended to facilitate more rapid adjustment to changing economic circumstances and the imperative of maintaining employment. Amendments were introduced to section 6 on Committee Stage to speed up the variation of REAs by setting specified time limits to each stage of the process, as agreed with the EU-IMF-ECB troika in the context of the memorandum of understanding.

Under the Industrial Relations Acts there is a legal requirement that employers within the sector covered by an REA, who may not belong to the employers' organisations that signed the original collective agreement, must nonetheless apply the minimum standards prescribed by the REA. In light of recent legal challenges to the statutory wage-fixing mechanisms, the Attorney General has advised that, in order to maintain their universal applicability, additional safeguards to those included in the published Bill should be introduced to protect the position of employers who were not party to the original sector-level collective agreement by enabling such parties to seek a variation of an REA in certain limited circumstances. Accordingly, a further amendment to section 6 of the Bill was introduced on Committee Stage to enable those who were not party to the original agreement to seek a variation of an REA in certain limited circumstances.

The new section 28(10), inserted by section 6 of the Bill, provides that an employer who is affected by an REA but who was not a party to the agreement may apply to the Labour Court to vary the agreement in certain circumstances. The applicant will have to satisfy the court that there has been a substantial adverse change in the economic circumstances of the sector to which an REA relates since it was registered or last varied before the court can consider any application to vary it. As a further protective measure, no such request may be made within 12 months of the initial registration or last variation of the REA or of the date on which a previous application for variation was refused.

Section 7 makes the necessary changes to the 1946 Act to enable the Labour Court to conduct a review of the circumstances of an industry to which an REA applies to establish whether there has been a substantial change in the circumstances of the relevant industry and whether the continued registration of a particular REA is desirable. Section 8 amends the Act of 1946 to provide a new straightforward enforcement mechanism to secure compliance with REAs instead of resorting to a criminal prosecution. A complaint about non-compliance by an employer with an order of the Labour Court for compliance with a registered employment agreement may be brought before the Circuit Court by or on behalf of the worker concerned or the Minister if he or she considers it appropriate to do so. The Circuit Court shall make an order directing the employer to comply with the terms of the Labour Court order.

Section 9 amends the 1946 Act introducing new inability to pay provisions in respect of registered employment agreements. These provisions are substantially the same as those proposed in regard to employment regulation orders which I will outline when we come to deal with such orders. However, for registered employment agreements, the inability to pay mechanism would only apply where the registered employment agreement permitted it to apply. Accordingly, where an registered employment agreement so provides, an employer in financial difficulty may apply to the Labour Court seeking a temporary exemption from the requirement to pay the rates of remuneration in the agreement.

Part 3 of the Bill deals with the joint labour committee system and the making of employment regulation orders. Section 10 provides for a new definition of "employment regulation order" to relate exclusively to those orders made after the commencement of this Part of the Bill when enacted, that is, by ministerial order.

The Duffy Walsh report had recommended that reviews of the establishment orders of existing JLCs be undertaken periodically to ensure the range of establishments to which they applied remained appropriate and that any necessary amendment might be made to the establishment orders by which they were created. Accordingly, section 11 amends the Act of 1946 to provide that the Labour Court will, following commencement of the Bill and at regular five year intervals thereafter, conduct such reviews. Following a review, the Labour Court may recommend that a JLC be abolished, amalgamated with another JLC or that the establishment order for a JLC be amended. An amendment to the Bill, as published, provides that the procedures for the conduct of a review of the establishment order for an existing JLC should be analogous to the public inquiry procedure for an application for a new establishment order setting up a JLC as provided under section 38 of 1946 Act.

Section 12 inserts new provisions in the Act of 1946 to provide for the regulation of the decision making procedures with regard to the formulation of proposals for employment regulation orders by a JLC, the reception of representations by a JLC and also a requirement that the committee's chairman shall have regard to a relevant Labour Court recommendation in the event of a casting vote being exercised. The High Court, in the John Grace Fried Chicken case, declared section 42 of the 1946 Act to be unconstitutional because it was invalid having regard to the provisions of Article 15.2.1o of the Constitution which provides that the sole and exclusive power of making laws for the State vests in the Oireachtas. In this context, the High Court judgment found that section 42 of the Act of 1946 failed to prescribe sufficient principles and policies to govern the exercise of the powers conferred on JLCs under the Act. Accordingly, section 12 introduces the necessary amendments to the Act of 1946 to establish the principles and policies to which a JLC must have regard from now on when formulating proposals for employment regulation orders. The new provisions will guide the formulation by JLCs of proposals on the fixing of remuneration and conditions of employment and also provide for the regulation of the JLCs' own decision-making process. As with registered employment agreements, REAs, amendments to the published Bill provide for a more explicit ordering of the priority ranking of the principles and policies to be taken into account by a JLC in considering proposals for the making or variation of an ERO in addition to more explicit ordering of the priority ranking of the principles and policies to be taken into account by the Labour Court in making a recommendation to a deadlocked JLC. In this context, the public interest objectives of establishing harmonious industrial relations between workers and employers and the avoidance of industrial unrest are the key considerations. The constitutionality of the restored JLC system should be strengthened as the Bill not only provides for a direct role by the Minister in making employment regulation orders in future, but also ensures that, with regard to all such orders, including orders for the establishment, variation or abolition of JLCs, the Minister may refuse to make any order that he or she considers inappropriate. If the Minister is not satisfied that it is appropriate to make an order he or she may refuse to do so and notify the Labour Court of the reasons for the decision. These measures are also complemented by the standard scrutiny procedure for the laying of orders before both Houses of the Oireachtas.

Whereas previously an employment regulation order could provide for any number of different rates of pay for different categories of workers, the Bill provides that a JLC may make proposals for a basic rate and will have discretion to take account of recognised standards or skills in the relevant sector as well as length of service in fixing up to two higher hourly rates under employment regulation orders.

Are the Senators still with me?