Terence Flanagan (Dublin North East, Independent)
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132. To ask the Minister for Jobs, Enterprise and Innovation the background and content of the framework document he has issued which is aimed at reinstating the registered employment agreement and wage-setting mechanisms in the lower-paid sector of the workforce; and if he will make a statement on the matter. [7415/14]

Richard Bruton (Dublin North Central, Fine Gael)
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In the judgment delivered on 9 May 2013 in McGowan and others v The Labour Court, Ireland and the Attorney General, the Supreme Court 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 were instruments having the status of laws made by private individuals. 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 was to invalidate the registration of employment agreements previously registered under Part III of the 1946 Act. 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 Registered Employment Agreements were unaffected by the ruling. Contractual rights can be altered only by agreement between the parties involved.

The striking down of the REAs means that new employees in these sectors can be hired at a rate agreeable between workers and their employers. This is subject only to the provisions of the National Minimum Wage Act, 2000.

From the parties’ perspective, the primary objective of REAs was to provide them with a sense of certainty around terms and conditions that would apply when the employer is tendering for and working through contracts and to have in place agreed grievance and industrial peace provisions. The agreements also had the effect of ensuring that the industry terms and conditions were recognised and maintained. In addition, the existence of these legally backed agreements was recognised under European Union law and ensured, in accordance with the Posted Workers Directive, 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.

Having considered the legal advice from the Attorney General on the implications of the Supreme Court ruling, and given the importance of the issue for employers and their employees, particularly in relation to rates of pay and tendering for contracts, I undertook to bring forward legislation to address the ruling and to provide for a revised legislative framework that would be fully informed by the Supreme Court judgment and be expected to withstand constitutional challenge in the future.

To this end, on 7 February last, a draft framework document was circulated to relevant stakeholders for consideration. The new framework proposes a mechanism whereby, in contrast with the previous REA system which provided for employment agreements made between trade unions and employer representatives being given general application by means of a statutory order, groups substantially representative of workers and employers may jointly or separately request the Labour Court to undertake a review of the pay and/or pension and sick pay entitlements of workers in a particular sector and make a recommendation to the Minister on the matter.

It is proposed that a trade union and/or employer body that is substantially representative of workers or employers of such workers in a sector may make the application to the Labour Court to initiate the process. Interested parties will be given an opportunity to make submissions to the Labour Court in the context of a review.

The new legislation will provide the Labour Court with specific principles and policies that it will be obliged to take into account when considering whether to make and, if so, what recommendation to make to the Minister in relation to pay and/or pension/sick pay terms in a particular sector. If satisfied, the Minister will give effect to the recommendation by Order. The Order must then be laid before the Oireachtas.

In addition to the proposed new sectoral framework, it is proposed to reintroduce the facility for the registration of employment agreements to which there are only two parties i.e. individual employer and trade unions. As such agreements are not legally binding beyond the subscribing parties, it is not considered necessary to provide for the same level of principles and policies that would apply in the case of agreements that would have sector-wide application. Neither, for the same reasons, is it considered necessary for the registration of such agreements to be confirmed by Ministerial order.

It is proposed to have discussions on the draft framework with relevant stakeholders shortly with a view to bringing proposals to Government as soon as possible.