Address by Minister for Labour Affairs, Dara Calleary T.D., on the Second Stage debate on the Industrial Relations (Amendment) Bill 2009

Check against delivery

I move: “That the Bill be now read a Second Time.”

I am pleased to introduce the Industrial Relations (Amendment) Bill 2009 for the consideration of the House.

The main purpose of the Bill is to strengthen the existing system for the making of both Employment Regulation Orders and Registered Employment Agreements and to provide for their continued effective operation.

Commitments being honoured

In the context of the Towards 2016 Review and Transitional Agreement, the Government and the social partners had agreed to the implementation of a series of measures on aspects of employment rights and compliance. These included, in particular, the introduction of legislation to strengthen the arrangements for the making of the Employment Regulation Orders and Registered Employment Agreements that have been features of our legal system for over 60 years and to provide for their continued effective operation. I am pleased to say that, notwithstanding the current difficulties regarding national level social dialogue, this commitment is being met within the framework of this Bill.

The Joint Labour Committee and Registered Employment Agreement systems have been the subject of a number of recent legal challenges that have come before the High Court. As well as raising issues specific to particular EROs or REAs, these challenges also related to the constitutional propriety of the legislative provisions under which they were made. This Bill will provide for a number of amendments to the existing legislative framework surrounding the JLC and REA systems, including improved procedures, and clear principles and policies to be taken into account by JLCs when formulating proposals for EROs. The Bill also provides that EROs and REAs will be given legal effect in future by Ministerial Order and that a perceived gap in the scope of parliamentary supervision will be filled by providing for Oireachtas scrutiny of these instruments.

Role of JLCs

Joint Labour Committees (JLCs) are independent bodies composed of representatives of employers and workers in a particular sector with a Chairman who is appointed by the Minister. There are currently 13 JLCs in existence. The Committees meet periodically to discuss and agree rates of pay and conditions of employment to apply to workers in a particular sector. JLCs operate in areas where collective bargaining is not well established and wages tend to be low, for example in the hospitality sector, in hairdressing, retail groceries and contract cleaning.

I am very conscious of the difficulties that many firms operating in sectors covered by EROs are experiencing at the moment. I appreciate that these issues, along with the impact of strengthened arrangements for inspection and enforcement, have also been of concern to members of this House. These difficulties have been to the fore throughout a series of meetings that I have had, since I took office as Minister of State for Labour Affairs, when I have met with representatives of employer organisations and of those employed in these sectors.

In my view the parties represented on a JLC are best placed to address the impact of the economic crisis on employment levels and the viability of services in their sectors. They are the ones who have to discuss and reflect on the new realities in the context of the downturn in the economy.

At national level the social partners co-operated in recent years in developing a range of improvements designed to modernise the JLC system as envisaged under previous social partnership agreements. These reforms have facilitated the amalgamation and abolition by agreement of a number of JLCs; the strengthening of their operational arrangements through the standardisation of the content of EROs; and have facilitated a closer alignment of the variation of EROs with the cycle of adjustments of the National Minimum Wage.

I am pleased to say that the representatives who comprise the membership of particular JLCs have also demonstrated this shared capacity for co-operation. This is reflected in the agreements reached on the adjustment of the Sunday premium rate from “double time” to “time plus one third” that have already taken effect in hotels and catering establishments over recent months. That same realism has informed the successful efforts made by both sides within the agriculture and retail sectors to reach agreement on the deferral of increases in minimum rates that would otherwise have fallen due.

The recent adjustments to the minimum pay and conditions in these key sectors were all jointly agreed between the employers’ and workers’ representatives within the respective Joint Labour Committees. In each instance, a consensus position supporting modifications to the statutory pay and conditions was reflected in the proposals presented by the Committee to the Labour Court. The submission of these proposals followed a process of open consultation in which any member of the public could make representations to the Joint Labour Committees concerning their published proposals. While the Labour Court considers these proposals and may refer them back to the Committee for further consideration, it has no power to impose provisions that are at variance with those submitted to it by a Joint Labour Committee. The significant variations in existing rates that were recently secured by agreement between the employers’ and workers’ representatives on the catering and retail Joint Labour Committees were all arrived at by consensus and without any need to rely on the exercise of a casting vote by the independent chairman appointed to facilitate the work of these Committees.

It is exactly one hundred years ago since bodies empowered to set minimum wages were first established in Britain and Ireland under the Trade Boards Act, 1909. As part of the major reform of the Irish industrial relations pioneered by Sean Lemass in 1946, these bodies were given the new title of Joint Labour Committees and their competence was expanded beyond the fixing of minimum wages only so as to cover the regulation of conditions of employment as well. Sean Lemass decided to amend the powers of the original trade boards and to transfer the supervisory and order making functions that had been exercised by the Minister for Industry and Commerce in the years after the foundation of the State to the new, independent Labour Court. Under the provisions of the 1946 Act, when a JLC agrees terms and conditions, it makes proposals to the Labour Court on foot of which the Court can make Employment Regulation Orders (ERO).

Strengthening Oireachtas Supervision

I am proposing a change that will restore the position whereby the Minister makes the order giving effect to these proposals. At the same time, I am proposing to strengthen the manner in which the functions delegated to JLCs are supervised by the Labour Court and to ensure that the statute sets out a clear set of procedures and principles within which these delegated functions are to be discharged. I am also proposing that the standard legislative provision dealing with the laying of statutory instruments before the Oireachtas will apply henceforth to these orders.

Registered Employment Agreements

The Irish system of Registered Employment Agreements has been in force since 1946 and reflects the European tradition of labour law support for autonomous collective bargaining. In most other EU countries similar provisions apply in employment law facilitating the general enforceability of certain collective agreements, either through legislation or other administrative measures.

Collective agreements can be presented to the Labour Court for registration. Where the Labour Court is satisfied that the agreement presented satisfies the statutory requirements, it registers the agreement. The effect of this is to make the provisions of the agreement legally enforceable in respect of every worker of the class, type or group to which it is expressed to apply and to his or her employer, even if such worker or employer is not a party to the agreement.

In line with the arrangements that I have already mentioned in the case of Employment Regulations Orders, I am proposing an amendment that will ensure that henceforth such orders confirming the terms of a new or varied agreement will be made by the Minister rather than simply under the authority of the Labour Court.

Definition of worker

The Bill also provides for the amendment of the definition of “worker” under Section 23 of the Industrial Relations Act 1990. Access to the dispute settling agencies - Labour Relations Commission, Labour Court and Rights Commissioner Service - is governed by the definition of “worker” in Section 23. At present, vocational education committee (VEC) officers do not have access to these agencies, as they are specifically excluded from the definition of “worker”. Up to now these officers have been served by a scheme of Conciliation and Arbitration, but they now wish to be able to access the dispute settling agencies like workers generally. This amendment would allow officers of VECs, other than teachers, access to the dispute settling agencies. Teachers in VECs would continue to be served by a scheme of Conciliation and Arbitration.

I also intend to follow the evolving best practice in parliamentary procedure with regard to the use of delegated powers by deleting the provision that had enabled the Government to amend the definition of worker simply by order. This will ensure that future changes in the definition of worker will be made only by means of primary legislation. To avoid any doubt in this regard, a Ministerial Order of 1998, giving local authority staff access to the dispute settling agencies, is also being confirmed by a proposed amendment of the statute.

Seanad debate

This Bill received a general welcome in the Seanad where most contributions emphasised the need to maintain protection for the most vulnerable workers and to ensure that the existing mechanisms for making Employment Regulation Orders and Registered Employment Agreements (REAs) are operating effectively and are generally “fit for purpose”. It was acknowledged that this Bill is part of a suite of measures intended to strengthen and uphold the protection of the rights of employees and to secure greatly increased public confidence in the system of compliance. The proposed arrangements for Oireachtas scrutiny of both Employment Regulation Orders and Registered Employment Agreements (REAs) were also generally welcomed.

Inability to Pay

The Government’s intention to introduce an “inability to pay” provision that could be adapted to the specific context of EROs and REAs respectively was also welcomed by most contributors to the debate in the Seanad as a means of introducing some flexibility into the existing mechanisms, while also helping to shore them up against the risk of legal challenge.

Deputies may recall that I had originally outlined my intentions in this regard when I addressed the McGill Summer School last year, around the time of publication of this Bill. Subsequently the issue has been pursued through direct discussions and in subsequent exchanges with the main employer and trade union organisations. It was also aired in general terms in the debate in the Seanad.

Inability to pay mechanisms, or “hardship clauses” as they are known in the context of sectoral collective agreements on the European continent, are not particularly new developments. When I spoke about this last year, I suggested that it may be timely to consider bringing the Joint Labour Committee and Registered Employment Agreements systems into line with the procedures already established here under the National Minimum Wage Act, 2000 that allow individual employers to submit “inability to pay” claims to the Labour Court for adjudication. Similarly, successive national pay agreements have included “inability to pay clauses” enabling firms experiencing difficult economic conditions to plead inability to pay the centrally agreed terms and to seek to have a dispute over the matter resolved through formal procedures. I want to provide that same flexibility and responsiveness within our sectoral-level wage setting mechanisms – and to ensure that necessary procedures and safeguards are in place to protect the rights of the workers affected.

The use of “inability to pay” or “hardship clauses” is already a feature of sectoral collective agreements within a number of continental European countries. Just as in the case of the evolution of the provisions under national agreements in Ireland, “inability to pay” clauses in these continental collective agreements can only be triggered by a real and measurable crisis of the firm and include procedures for a third party adjudication on the firm’s financial situation.

It makes no sense to dismiss such “inability to pay” mechanisms as symptomatic of a retrograde “race to the bottom”. On the contrary, they are a response to the situation of employers in temporary difficulty and incorporate built-in safeguards to ensure that the interests of employees are sufficiently protected. I intend to have the proposed measure ready for consideration by this House when we take this Bill in Committee.

Provisions of the Bill as published

I will now outline to the House the provisions of the Bill.

Section 1 provides for the short title, collective citation, construction and commencement provisions of the Bill.

Section 2 provides for the definitions associated with the Bill.

Section 3 provides for a new definition of “registered employment agreement” to differentiate those made before the commencement of this Act (i.e. registered by the Labour Court) and those made after the commencement of this Act (i.e. those registered agreements that have been confirmed by Ministerial order).

Section 4 provides for the confirmation by order of a registered employment agreement by the Minister. Following receipt of a copy of an agreement, the Minister shall make an order confirming the terms of the agreement. The standard legislative provision dealing with the laying of the order before the Oireachtas by the Minister will apply. Section 4 also provides that the introduction of the new procedure will not detract from the validity of an existing REA made before the commencement of this Act.

Sections 5 and 6 provide for the same procedure as under Section 4 in respect of an order to vary an agreement or to cancel an agreement respectively.

Section 7 provides for a new definition of “employment regulation order” to differentiate those made before the commencement of this Act (i.e. orders made by the Labour Court) and those made after the commencement of this Act (i.e. by Ministerial order).

Section 8 provides for the “principles and policies” to which a Joint Labour Committee must have regard when formulating proposals to submit to the Labour Court for Employment Regulation Orders.

In this context, a JLC must have regard to

the legitimate interests of the workers,

the legitimate interests of the employers,

the prevailing economic circumstances,

the prevailing employment circumstances of the workers,

the prevailing commercial circumstances of the employers,

the terms of any national agreement relating to pay and conditions, for the time being in force

Section 8 also provides that where an employment regulation order has been in force for less than 6 months, a joint labour committee may submit proposals for revoking or amending the order where it is satisfied that the order contains an error, or exceptional circumstances exist which warrant the revocation or amendment.

Section 9 provides for the making of an ERO by the Minister. Following adoption of a proposal for an ERO by the Labour Court, the proposals will be forwarded to the Minister who shall make an order giving effect to the proposals. The standard legislative provision dealing with the laying of the order before the Oireachtas by the Minister will apply. Section 9 also provides that the introduction of the new procedure will not detract from the validity of an existing ERO made before the commencement of this Act.

Section 10 provides for the amendment of the definition of “worker” under Section 23 of the Industrial Relations Act 1990 to allow officers of VECs, other than teachers, access to the dispute settling agencies

Section 10 also provides for the deletion of Sections 23 (2), (5) and (6) of the 1990 Act. Section 23(5) provides that the Government may by order amend the definition of “worker” in subsection (1) of Section 23 and may by order revoke or amend any such order. Section 23(6) deals with the laying of such orders before the Houses of the Oireachtas. The effect of these amendments is to remove the power to make changes in the definition of worker by Ministerial order and to ensure, in line with the decision in the case of Mulcreevy v the Minister for Environment and Local Government, that future changes in the definition of worker will be made by primary legislation

Moreover, the Industrial Relations Act of 1990 (Definition of "Worker") Order of 1998 (S.I. No.264 of 1998) amended the definition of "worker" in Section 23(1) of the Industrial Relations Act of 1990 in order to give officers of local authorities (including health boards) access to the Labour Relations Commission, Labour Court and Rights Commissioners. Since it is considered unsafe to rely on changes made to statute by secondary legislation, it is now proposed to make the amendment in primary legislation. The definition of “local authority” contained in Section 23(2) of the 1990 Act should be deleted in consequence.

Section 11 provides for improved procedures to be followed when formulating proposals for an ERO. The current legislation merely requires that, when proposals for the making of an ERO are being forwarded to the Labour Court, the JLC Chairman must submit a report to the Court on the circumstances surrounding their adoption by the JLC. The Bill provides that, in future, the chairman of the JLC shall forward to the Labour Court, in addition to a report on the circumstances surrounding their adoption, copies of all written submissions and any other documentation considered by the JLC in formulating its proposals. The Labour Court will consider the material forwarded to it in considering the JLC’s proposals and may hold a hearing where there are objections to the proposals.

Section 12 provides that the term of office of a chairman of a JLC shall not exceed 5 years and shall cease to hold office on attaining the age of 65. An existing JLC chairman shall hold office for no longer than 3 years following the enactment of the Act.

Section 13 provides for consequential amendments to the Employment Permits Act 2006 and the Organisation of Working Time Act 1997.

Proposed amendments

I would like to highlight at this stage several matters in respect of which I intend to bring forward particular amendments at Committee stage in this House.

As already mentioned, in addition to proceeding with legislative proposals to strengthen the existing JLC system and the operation of REAs as outlined in this Bill, I propose to bring forward amendments to provide for a mechanism to enable employers to seek a temporary exemption from the strict application of EROs and REAs under certain conditions. This should go some way to balancing the current demands of both trade unions and employers by continuing to modernise and streamline the JLC system and to strengthen the legal status of REAs, while also alleviating the pressures that employers in these sectors currently experience under both systems as a consequence of the absence of a mechanism for processing claims for “inability to pay”. In the course of the debate in Seanad Eireann, I gave an assurance that the proposed provision would not be a carte blanche for derogation from the minimum wages and conditions prescribed in an Employment Regulation Order. I can confirm that appropriate safeguards and procedures will be put in place to protect the rights of the workers affected.

Secondly, I propose to introduce a further amendment to give the Labour Court the power to decide any questions arising as to the interpretation of the provisions of any Employment Regulation Order or Registered Employment Agreement or the application of such instruments to any particular person or business.

This new provision will subsume some existing provisions of the Industrial Relations Acts, with coverage extended to enable the Labour Court to provide for the first time an authoritative interpretation of the scope of Employment Regulation Orders

The purpose of this provision will be to secure clarity as to the entitlements of the employees concerned under Employment Regulation Orders and Registered Employment Agreements. Such Orders and Agreements affect significant numbers of employees and a lack of clarity about the entitlements of employees and the responsibility of their employers can pose problems for businesses, for employee representative and for the authorities. The Labour Court has the necessary expertise to provide the required clarity.

Thirdly, concerns have been raised that workers, who have retired from employment, can find themselves excluded from access to the employment rights redress machinery in respect of matters that arose while they were in employment. When this matter was raised in the course of the Committee stage debate on this Bill in the Seanad debate, I indicated that I was sympathetic to the view that the requirements of good employment practice would dictate that retired people should have a facility whereby grievances arising from their former employment relationship might be examined on their merits. I have, accordingly, raised this matter with the Attorney General and I am exploring how such a proposal might best be facilitated. In my view it is only reasonable that there should be some practical limitation on the scope for bringing such claims in relation to past events/understandings in the form of a time limit on the bringing of such claims. I am hopeful that we can find a satisfactory solution to this problem in the course of the Bill’s passage through the Dáil.

Conclusion

The overall purpose of this Bill, together with the Employment Law Compliance Bill, which has completed its second stage in Dáil Éireann and is now awaiting further consideration at Dáil Committee stage, is to secure greatly increased public confidence in the system of compliance and to strengthen and uphold the established employment rights bodies against legal challenge.

With this Bill, the Government is continuing to meet its commitment to advance a range of employment rights measures and to update our Industrial Relations legislative code so as to ensure the responsiveness of our industrial relations machinery to changes in the labour market, and to the immediate challenges facing the economy.

I commend the Bill to the House.

ENDS/LA358