Surprisingly little fanfare has surrounded the publication of the Industrial Relations (Amendment) Bill, 2011 (“the Bill”) on 22 December 2011.
When will an employer’s inability to pay be considered?
For the first time since the National Minimum Wage Act, 2000, the Bill creates a statutory right for employers to apply to the Labour Court for a derogation from its obligation to pay JLC rates if the employer can prove an inability to pay. An application for a derogation can only be given by the court to an employer once every five years.
Employer unions have welcomed the development while cautioning that the Bill does not go far enough and IBEC in particular has been lobbying for an abolition of the JLC system on the basis that wages set by the system are uncompetitive and are on average 25 – 30% higher than in the UK and Northern Ireland. IBEC have also pointed out significant unrest within the employer community regarding the fact that commercially sensitive employer financial information must be disclosed in the public domain during the process of applying for a derogation from the Labour Court. Employee Unions have fiercely criticised the move, arguing for the Bill to be amended to include strict tests to be applied by the Labour Court when assessing an employer’s ability to pay.
Impact of the High Court decision regarding JLCs in the Catering industry
The catalyst for the new legislation was the decision of Mr Justice Feeney in the High Court on 7 July 2011 in the matter of John Grace Fried Chicken. The High Court held that the manner in which JLCs and the Labour Court fixed rates of remuneration, annual leave, Sunday work, overtime and rates of pay in respect of overtime were unconstitutional. The Bill is emergency legislation introduced by Minister Willie O’Dea to address the sections of the Industrial Relations Acts 1946 and 1990 deemed unconstitutional by the High Court.
There is no doubt that the Bill seeks to addresses the very significant shortcomings outlined by the High Court in July 2011. A welcome development is that the Bill decriminalises any failure on the part of an employer to comply with an ERO and replaces it with a civil enforcement mechanism.
The Bill provides, for the first time, that a Minister has the power to supervise the operation of JLCs and vary or revoke EROs. Serious questions remain unanswered in relation to the level of employer and employee consultation regarding the decision making process engaged in by JLCs.
Assessors Appointed by the Labour Court to quantify inability to pay
The Labour Court has made findings in relation to the reliability or otherwise of various assessors reports.
If a case such as Cuain Chaitriona Nursing Home (recommendation no. LCR19730) is considered, one is left wondering how an employer, who in this case was operating a not for profit organisation, could be found by the Labour Court to be in a position to pay increments in circumstances where the Nursing Home was run by an order of sisters who historically supported the financial operation of the Nursing Home by way of subvention. Notwithstanding the fact that the employer contended that the subvention could not continue, the Labour Court said that it was not convinced of the position and concluded that the employer’s claim of inability to pay had not been made out.
There have been other cases such as Dawn Meats (Exports) Limited v Unite (ATGWU) (Recommendation No. LCR19826) where the Labour Court once again upheld an assessor’s findings to the effect that the employer was in a position to pay increments and remuneration notwithstanding the fact that the company had lost money in the two years leading up to the Labour Court hearing. In that case, the Labour Court said that the employer had failed to satisfy the Union of its plea of inability to pay and had not provided the appropriate information which the Court could use to assess its situation.
The 2011 Bill goes no further in providing clarity or transparency for employers seeking to make an argument before a Labour Court that “exceptional circumstances” exist to underpin an employer’s presentation of facts to the effect that they are unable to pay particular increments.
Commentary
Officials in the Department of Jobs Enterprise and Innovation have stated that they do not expect enactment of the Bill until sometime in March or even April 2012. Once the Bill is enacted, it will take some time (yet to be clarified) before new EROs are put in place.
Until such time as the Bill is enacted, employers in affected industries are obliged to pay the minimum wage of €8.65 per hour in relation to new employees engaged since the decision of the High Court on 11 July 2011. In relation to existing employees whose rates have been applied in accordance with the previous ERO system, employers can only lawfully vary an employee’s terms of employment on consent and given the complexity of this area, advice should be sought in this regard.
Significantly, the extent to which employer and employee consultation at JLC level is truly representative of all affected sectors and employers remains unclear.
This article is a general summary on the subject and is not intended to be a thorough review or as a complete statement of the proposed reform taking place. Specific legal advice should be sought on a case by case basis.
For further employment law advice cork and information, contact Crowley Solicitors Cork, Deirdre Crowley at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or on +353 21 4289 560.
