Review of legislative developments

01 December 2015

Updated December 2015

Reviews legislative developments during 2015, one of the busiest years in employment law history. Covers the coming into force of the new Workplace Relations Act 2015, the Industrial Relations (Amendment) Act 2015, the National Minimum Wage (Low Pay Commission) Act 2015 and the Companies Act 2014. Also looks forward to the family friendly initiatives expected in 2016.

It's been one of the busiest years in employment law history with a number of key pieces of legislation being enacted. Below we recap on the main developments.

The bulk of the Workplace Relations Act came into effect on 1 October 2015. It's a game changer for every employer and worker in Ireland and should make it less complicated for employees to bring claims and for employers to respond to them. It is designed to provide swifter access to justice and quicker resolutions of disputes for everyone.

The Act forms part of the Government's stated aim to make Ireland the best small country in the world in which to do business. The idea is to simplify and streamline workplace disputes procedures and bodies.

The key features are as follows:

Dispute resolution

In harmonising and de-cluttering the current system, the Act provides a single gateway for employment disputes in Ireland and replaces the current maze of tribunals and courts. From now on all employment disputes - everything from unfair dismissals and discrimination claims to working time issues, pay claims and any industrial relations issues - will be referred to the newly established Workplace Relations Commission (WRC) in the first instance. There is now one appeal body and that is the Labour Court.

Time limits to bring claims

Limitation periods for the referral of a dispute under any employment or equality legislation will be standardised to six months. This can be extended to 12 months where 'reasonable cause' can be shown.

Early resolution

The Act encourages mediation and the early resolution of disputes as close to the workplace as possible and without the need for parties to have to resort to formal adjudication where possible.

An early resolution process is currently being trialled. When a complaint arrives at the WRC, it may be referred to a mediation officer if it is deemed suitable for early resolution. If so, and if both parties agree to it, then a mediation conference (potentially held over the phone) will be convened. Any resolution arising from this will be binding on the parties and enforceable in the Courts.

Adjudication of disputes

If early resolution is not deemed appropriate, is refused by the parties or if an attempted mediation is unsuccessful, a dispute will be referred to a single Adjudicator at the WRC.

This process is envisaged as being more inquisitorial than adversarial - the hearing will be held in private and evidence will not be on oath.

All decisions of Adjudicators will be published on the internet on an anonymised basis.

Discovery/witnesses

An Adjudication Officer can require the attendance of a witness and/or the production of documents relevant to the proceedings. It is envisaged that this will be enforced more vigorously than in the Employment Appeals Tribunal (EAT).

Appeals

From now on, any appeal from a decision of an Adjudicator will simply go to the Labour Court in all instances. The Labour Court hearings will be public and decisions will be published in full, unless special circumstances arise.

Decisions of the Labour Court can then be appealed to the High Court on a point of law only (rather than rehearing the entire case).

The Act also allows for the determination of disputes (at adjudication and/or appeal stage) based on written submissions alone, rather than by way of a full oral hearing. However, either side can object to this.

New procedures are to be implemented for the enforcement of awards of an Adjudication Officer or the Labour Court through the District Court.

Compliance provisions

The Act goes far beyond simply reforming processes and procedures. In order to promote higher levels of compliance with employment and equality law, employers can now be penalised with 'on the spot fines' (with the possibility of imprisonment) for breaches of employment law:

  1. Compliance Notices

    Where a WRC inspector is satisfied that an employer has contravened specified sections of employment legislation in the Unfair Dismissals Act, Payment of Wages Act, Maternity Protection Act, Terms of Employment (Information) Act, Organisation of Working Time Act, Carer's Leave Act or Protection of Employees (Temporary Agency Work) Act they may issue the employer with a Compliance Notice.

    The Compliance Notice is essentially a direction from an inspector to an employer to do, or refrain from doing, certain things. If an employer believes they are compliant with the relevant legislation, they may appeal the Compliance Notice to the Labour Court.

    Failure to comply with a Compliance Notice will be an offence and on indictment may result in a fine of up to €50,000 or imprisonment for up to 3 years for the employer concerned.

  2. Fixed Payment Notice

    Where a WRC inspector has reasonable grounds for believing that an employer has committed an offence under the Protection of Employment Act, Payment of Wages Act or National Minimum Wage Act, they may issue the employer with a fine or 'Fixed Payment Notice' which may not exceed €2,000.

    There is no option to appeal a Fixed Payment Notice. If an employer disputes it, they would simply not pay it and defend the resulting prosecution.

Fees

For the first time, the Act gives the Minister for Jobs the power to charge fees to employees wishing to bring claims against their employer. No decision has been taken yet as to whether this will be implemented, but a relatively broad power has been granted to the Minister.

The commencement of the Industrial Relations (Amendment) Act 2015 on 1 August 2015 is noteworthy not only for the changes it introduces, which are outlined below, but also for the following key industrial relations principles that remain untouched:

  1. There is still no legal obligation for Irish employers to recognise trade unions.
  2. There is still no legal requirement for Irish employers to collectively bargain (except in specific collective consultation scenarios).

So, notwithstanding the interest associated with the passing into law of the Act, it is important to note that it continues to respect the voluntarist tradition of industrial relations in Ireland.

Main changes

The main changes to the industrial relations landscape can be summarised as follows:

  1. Greater clarity around the mechanism for Labour Court investigations of trade disputes.
  2. The recasting of the Registered Employment Agreement (REA) legislative framework.
  3. The introduction of universally applicable Sectoral Employment Orders (SEOs).

The Act is likely to reinvigorate an avenue of redress for trade unions that has been dormant since the 2007 Ryanair decision. One of the practical outcomes from that decision was that it appeared to preclude the Labour Court from investigating a trade dispute in circumstances where the employer had a suitable mechanism in place for negotiating with employee representatives and that process had not yet been exhausted by those workers. The new Act refines the conditions precedent which must be in place before workers in non-unionised workplaces can seek a Labour Court mandated improvement to their terms and conditions of employment.

Employers who continue to offer remuneration terms which, in their totality, are not out of line with their peers in their sector are unlikely to be substantially affected about the changes being introduced by the Act.

New definitions to be aware of: 'collective bargaining' and 'excepted body'

The Supreme Court, in Ryanair, noted that there was no definition of 'collective bargaining' in the Industrial Relations Acts 2001 to 2004. To address this deficiency, the Act sets out a new definition:

Voluntary engagements or negotiations between any employer or employers' organisation on the one hand and a trade union of workers or excepted body to which this Act applies on the other, with the object to reaching agreement regarding working conditions or terms of employment, or non-employment, of workers.

If negotiations between an employer and a trade union (or excepted body) do not meet the threshold of the above definition, an employer cannot avoid a Labour Court investigation of a trade dispute by suggesting it is engaging in collective bargaining.

The Act also sets out a new definition of 'excepted body' requiring it to be independent and not under the domination and control of an employer. Excepted bodies will no longer have a right of access to the Labour Court under the Act.

What's new for trade disputes before the Labour Court?

The new law places the onus on the employer to satisfy the Labour Court that it is the practice of that employer to engage in collective bargaining. It is not the trade union that bears this burden of proof.

The Act also provides useful guidance on what the Labour Court now needs to take into account when deciding whether to impose changes to terms and conditions of employment including:

  • Assessing the totality of the remuneration and conditions of employment
  • Reviewing available comparators which can comprise both unionised and non-unionised employers
  • Having regard to the terms of any collective agreements in force
  • Having regard to the sustainability of the employer’s business in the long term

The broadening of the comparator net is a new development for employers and may, in some instances, weaken a challenge.

Balanced protections for employers and employees

The Act provides an additional layer of protection for employers by amending the Industrial Relations (Amendment) Act 2001 to expressly exclude the investigation of trade disputes where it is satisfied that the dispute is not being brought by a significant section of the employer's workforce. In addition, trade disputes in respect of which the Labour Court has made a recommendation cannot be referred to the Labour Court again for a period of 18 months, subject to certain conditions.

From an employee perspective, the Act provides enhanced protections against penalisation by employers of workers who invoke their rights under the Act. Such workers can now seek a Circuit Court order to restrain any dismissal related to a trade dispute.

Developments in relation to REAs and SEOs

Following a Supreme Court decision which resulted in existing REAs being invalidated, the Act aims to fix the issues surrounding REAs (including SEOs) once and for all.

The Act provides for the reintroduction of the registration of REAs governing terms and conditions of employment in individual enterprises. While REAs are legally binding between the employer and its workers, REAs will not have sector wide application, for example, in the construction industry. To address this gap, the Act introduced the concept of agreements that apply to all members of a particular economic sector (as defined in the Act) to be regarded as SEOs.

The Act provides for existing employment contracts to have effect as if the REA (or SEO) remuneration rate or conditions of employment were substituted for that contract rate and/or conditions. In line with other provisions in the Act to afford employers additional protection, the Labour Court will require confirmation that the relevant trade union of workers is 'substantially representative' of the workers in the class, type or group.

Tips for employers

Any non-unionised employer seeking to show that a staff association falls within the definition of 'excepted body', should ensure appropriate paperwork is in place (including evidence of independent election and so forth).

  • Be aware of the meaning of 'collective bargaining' so that your business is clear as to whether it does or does not engage in 'collective bargaining'.
  • Be aware that in a non-unionised environment, not having a sufficient process in place may result in a trade union applying for a legally binding Labour Court determination in respect of terms and conditions of employment.
  • To manage this risk, consider benchmarking your terms and conditions of employment (in their totality) against your peers in your sector to check whether your terms and conditions may be vulnerable to an investigation by the Labour Court.

The Low Pay Commission was established under this Act to advise the Government annually on the appropriate rate of the National Minimum Wage. The objective is to ensure that any increases are on an incremental basis rather than sporadic larger increases.

In its first report which issued in July 2015, the Low Pay Commission recommended an increase in the National Minimum Wage of 50 cents per hour. This increases the wage from the current rate of €8.65 to €9.15 per hour (a 5.8% increase). The increase will come into effect in January 2016.

There have also been calls for the Government to introduce a living wage - this is the level of income deemed necessary to meet basic needs such as housing, food, clothing and healthcare costs. Campaigners are arguing that this should be set at €11.50 per hour. Employer groups are opposed to the concept of a living wage claiming that it is the wrong way to address the cost of living pressures.

The Companies Act 2014 came into effect on 1 June 2015 consolidating and reforming Irish company law. Directors' duties, which have long been the product of ad hoc decisions by the Irish Courts, will now have a legislative basis.

For the first time in Irish law a concise statement of the key fiduciary duties of directors, whether executive or non-executive directors of an Irish company, whether in public or private companies, will exist. These duties are put in a one-stop statutory box, namely Part 5 of the Act and include:

  • The duty to act in good faith.
  • The duty to act honestly and responsibly.
  • The duty not to use the company’s property, information, or opportunities for the directors own (or anyone else’s benefit).
  • The duty to avoid any conflict of interest and the duty to exercise reasonable care, skill and diligence.

In addition to fiduciary duties, directors have many other statutory duties and responsibilities. Existing legislation in relation to employment law, data protection, and health and safety remains relevant and unchanged by the 2014 Act.

It is hoped that the Act will generate an increase in corporate compliance activities and make it easier for directors to clearly ascertain what duties are expected of them in their capacity as directors (this applies to directors, shadow directors and de facto directors).

A Family Leave Bill consolidating all existing family leave legislation is expected in 2016. The consolidation will include the Maternity Protection Acts, the Parental Leave Acts and the Adoptive Leave Acts.

There have been calls for a number of family friendly initiatives to be included in this proposed legislation.

Two weeks’ paid paternity leave was announced in Budget 2016 and will take effect in September 2016. Currently there is only a very limited form of statutory paternity leave available in Ireland (in the circumstances where a mother dies while on maternity leave a father is able to take the balance of the leave).

There has also been some discussion around allowing the sharing of maternity leave between a mother and father (similar to an initiative that was recently introduced in the UK). However whether this makes its way into the final legislation remains to be seen.

This factsheet was written by A&L Goodbody, Solicitors, IFSC, North Wall Quay, Dublin 1.

© A&L Goodbody Solicitors. The material is not intended to provide, and does not constitute, legal or any other advice on any particular matter, and is provided for general information purposes only.