Sinead Likely
Solicitor
A Time for Change
The ongoing debate surrounding the system of Employment Regulation Orders (EROs) and Registered Employment Agreements (REAs) has been brought back into the limelight following the recent publication of the “Duffy Walsh Report”.
The independent report, prepared following a review of existing EROs and REAs by Labour Court Chairman, Kevin Duffy, and UCD Professor of Economics, Frank Walsh, was published at the end of April 2011 and makes a number of recommendations for reform of the existing system. On foot of those recommendations, the Minister for Enterprise, Jobs and Innovation, Richard Bruton, has put forward a number of initial proposals as part of the Government's plan to overhaul the system and has committed to setting out a final action plan implementing key recommendations of the report before the end of June 2011.
However, the Minister's proposals are being met with very mixed views from interested parties with those from the employer side criticising both the report and the Minister for not going far enough to reform (or to abolish altogether) a system which has long been described by many as archaic, unconstitutional and anti-competitive, while those on the employee side concerned that it has gone too far insofar as the recommendations and proposals will adversely affect those employed in what are already relatively low paid sectors.
EROs and REAs are mechanisms which govern pay and conditions for approximately 200,000 workers in in Ireland. EROs are agreements made by bodies called Joint Labour Committees (JLCs) which set minimum wage rates and other employment conditions for workers in the particular sector covered by it. REAs, on the other hand, are collective agreements made between trade unions and employers in respect of certain industries which are then registered with the Labour Court. Both only apply to particular sectors or groups and some only in specific geographical areas. Both are legally binding on the employers and employees to whom they apply.
There have long been calls for reform of the system from employer groups. Opponents to the system have highlighted how the system dates back to a time when there was inadequateprotection for employees and that now, with the introduction of the National Minimum Wage Act 2000 which sets a statutory minimum wage for all employees, and with the development of a body of employment legislation protecting the rights of employees, the need to provide additional protection for select sectors or groups is no longer necessary or justified.
Another difficulty highlighted by many with the REA and ERO system is that there is no provision made for employers who cannot afford to pay employees the rates of pay set out in the REAs and EROs, yet employers run the risk of criminal sanction in the event that they do not make such payments.
The current economic downturn has brought into further focus the arbitrary nature of a system that requires employers in certain industries (and sometimes only in certain geographical areas) to pay wages to their employees that are higher than other employers are required to pay, putting them at an obvious competitive disadvantage. The difference has become even more stark since the reduction of the national minimum wage from €8.65 per hour to €7.65 per hour, when compared, for example, with rates of approximately €9.32 per hour provided to employees pursuant to the ERO for hotel workers.
As a result, there have been many high profile challenges to constitutionality of the ERO/REA system in recent years, the most recent of which was the High Court challenge by the fast food operators to the Catering JLC, the decision of which is expected this week.
The Duffy Walsh report, although concluding that the basic framework of the current ERO/REA system should be retained, does identify certain JLCs, which either relate to such small sectors or in respect of sectors which have effectively ceased to function, that should be abolished. The report goes on to recognise that there is no longer any justification for maintaining geographically based JLCs and recommends the amalgamation of some existing JLCs. It also recommends that overtime rates and Sunday premium should be standardised across all JLCs.
Proposals put forward by the Minister go a step further and suggest the reduction or elimination altogether of Sunday premiums and overtime entitlements, with it being proposed that employees in these sectors can instead rely on existing legislation (such as the Organisation of Working Time Act 1997) which applies to all employees in any event. The Minister has also proposed that existing EROs be effectively reconstituted using new criteria and that in making such orders in the future, consideration would have to be given to competiveness factors, pay rates in comparable sectors in other countries with which Ireland trades and unemployment levels.
Certainly, the debate is not over yet. What follows from the above proposals is a period of consultation with the Minister and the interested employer and employee groups before he brings back a final plan to the Government at the end of June.
With such large numbers of workers on the one hand affected by the existing EROs and REAs who will fight to maintain whatever protections they can, and with so many employers on the other hand already struggling in difficult economic times to remain competitive and meet the costs associated with the EROs/REAs, finding a happy ground between both sides will be no easy task.
In the meantime, the High Court ruling in the recent challenge to the Catering JLC, which is expected on Thursday of this week, could result in the entire ERO/REA system being called into question and, as has been reported in the newspapers recently, many legal and political commentators suspect could result in the system being struck down entirely.....
Sinead Likely, Solicitor
Employment Law Unit
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