James Bannon (Longford-Westmeath, Fine Gael)
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To ask the Minister for Jobs, Enterprise and Innovation if he will account for the discrepancy which enables Northern Ireland contractors or builders who do not have to pay into the Construction Industry Federation pensions to compete for Republic of Ireland contracts at a more competitive level; and if he will make a statement on the matter. [42112/12]

Richard Bruton (Dublin North Central, Fine Gael)
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All construction related projects involving public expenditure must conform to Department of Finance Public Procurement Procedures. These procedures state that contracting firms including subcontractors must be compliant with all statutory legislation including Registered Employment Agreements when engaged on public works contract, thereby creating a level playing field for competing tenderers.

The standard Public Works Contract between a Contractor and procuring authority requires the Contractor to undertake to ensure that the wage rates and other terms and conditions for all workers (including employees of sub-contractors) comply with relevant REAs. There are two REAs in place for the construction industry; one of which deals specifically with pensions assurance and sick pay. The second REA deals with wages and other conditions of employment. Separately, there is also an REA in place for the electrical contracting industry covering all terms and conditions of employment in that sector, including pension and sick pay.

Article 49 of the Treaty establishing the European Community, limits the restrictions that Member States may impose on the freedom to provide services within the Community. Member States may only lawfully establish limitations on this fundamental freedom if such limitations fall within the acceptable principles set out by the established case law of the European Court of Justice. In recognition of the potential conflict between the exercise of the freedom to provide services throughout the Community and appropriate protection of the rights of workers temporarily posted abroad, a Directive protecting the rights of posted workers within the EU was introduced in 1996 (Directive 96/71/EC). This Directive was transposed into Irish law via Section 20 of the Protection of Employees [Part-Time Work] Act 2001.

Article 3 of this Directive requires a Member State to ensure that enterprises posting workers to its territory guarantee those workers the terms and conditions of employment which are universally applicable in that Member State (i.e. where the work is carried out). In this context, Article 3.1 (c), which covers the minimum rates of pay, including overtime rates expressly stipulates that it “does not apply to supplementary occupational retirement pension schemes”. Case law has determined that a national measure which obliges contractors in another Member State to apply to their employees terms and conditions which go beyond the mandatory rules in Directive 96/71/EC for minimum protection is incompatible with European law.

Ireland is therefore required to recognise and comply with posted workers pension rights established in another Member State during the period of posting in Ireland and may not impose any further obligation that would be incompatible with European law.

If an employer is aware of specific instances where public contracts have been awarded to firms that are not compliant with their legal entitlements under an REA, there are a number of ways in which the matter can be investigated:

- through the relevant public authority that awarded the contract in the first instance

- through the Labour Court, or

- directly with the National Employment Rights Authority (NERA).