This article first appeared in Industrial Relations News on 7 July 2016.

BACKGROUND

The Industrial Relations (Amendment) Act 2001 created a regime which enables the Labour Court to make non legally binding Recommendations, and thereafter legally binding Determinations, with regard to trade disputes relating to terms and conditions of employment and dispute resolution and disciplinary procedures affecting workers for whom the employer does not engage in collective bargaining negotiations, ie non-union employers. The Labour Court cannot thereby impose collective bargaining on such an employer.

The Industrial Relations (Amendment) Act 2015 amended the regime created by the 2001 Act (as previously amended by the Industrial Relations (Miscellaneous Provisions) Act 2004). The 2015 amendments were, in large measure, designed to address, and indeed reverse, the interpretation given to the 2001 Act, and particularly the interpretation given to the term "collective bargaining", by the Supreme Court in Ryanair Limited v the Labour Court [2007] IESC6. In summary, in Ryanair, the Supreme Court concluded that in a non-union company, collective bargaining did not have to take the same form and adopt the provisions that would apply to collective bargaining with a trade union. Following the Ryanair decision, the 2001 Act fell into disuse.

The Labour Court Recommendation in Freshways Food Company and SIPTU (LCR 21242) of 3 June 2016 is the first such Recommendation of the Labour Court since the 2015 amendments came into effect.

JURISDICTION ISSUES

The Labour Court's jurisdiction under the 2001 Act (as amended) arises where (all of) six conditions are satisfied. In virtually every case thus far, the employer has contended that one or more of those conditions has not been satisfied. Those conditions are the following:

  1. There must be a trade dispute with regard to terms and conditions of employment and/or dispute resolution and/or disciplinary procedures in the employment concerned. This condition will be satisfied in virtually all cases.
  2. It must not be the practice of the employer to engage in collective bargaining in respect of the category of workers who are party to the trade dispute and the internal dispute resolution procedures (if any) normally used by the parties concerned have failed to resolve the dispute. The first limb of this condition is the condition most often challenged by employers and is central to the Freshways case.
  3. The employer must have failed to observe a provision of the Code of Practice on Voluntary Dispute Resolution and this failure must not have been because of the actions of the trade union or the employees. Alternatively, the dispute having been referred to the Workplace Relations Commission for resolution in accordance with the provisions of the Code, no further efforts on the part of the WRC, in the opinion of the WRC, would advance resolution of the dispute and the Labour Court has received a report from the WRC to that effect. The second limb of this condition is satisfied in all cases because the WRC's report to the Court is what triggers the listing of the case.
  4. The trade union or the workers have not acted in a manner which, in the opinion of the Labour Court, has frustrated the employer in observing a provision of the Code of Practice. Unions are careful to avoid any such actions. Therefore this condition is normally satisfied.
  5. The trade union or the workers have not had recourse to industrial action after the dispute in question was referred to the WRC in accordance with the provisions of the Code of Practice. Unions are careful to ensure that industrial action does not take place, thereby satisfying this condition.
  6. The number of workers who are party to the trade dispute concerned must not be insignificant having regard to the total number of workers, employed by the employer, in the category to which the trade dispute refers. The Court is entitled to disregard this jurisdictional condition if it is satisfied that exceptional and compelling circumstances exist which justify an investigation on its part of the trade dispute concerned. This condition was also considered in the Freshways case.

COLLECTIVE BARGAINING

The jurisdictional point that has been most often raised in practice by employers is the collective bargaining point. Indeed this jurisdictional point (ie point 2 above) is central to the Recommendation of the Labour Court in Freshways.

The 2015 Act defined collective bargaining, for the purposes of the 2001 Act, as follows:

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

Accordingly, assuming that the other five jurisdictional conditions are satisfied (and they are satisfied in virtually all cases), the employer, if it is to avoid the application of the regime, must be able to demonstrate that it is "the practice" of the employer to engage in collective bargaining in respect of the category of workers who are party to the dispute.

In practical terms, the employer must be able to demonstrate that it is the practice of the employer to engage in collective bargaining with an "excepted body to which this Act applies", bearing in mind that, by definition, the employer will not be engaging in collective bargaining with a trade union.

The 2015 Act also inserted a definition of an "excepted body to which this Act applies", namely:

"a body that is independent and not under the domination and control of an employer or trade union of employers, all the members of which body are employed by the same employer and which carries on engagements or negotiations with the object of reaching agreement regarding the wages or other conditions of employment of its own members (but of no other employees)".

In Freshways, the employer contended that it engages in collective bargaining through a staff representative group (SRG) and had negotiated pay increases with the SRG. The SRG, a group comprising representatives of management and representatives of its employees, was established internally to deal with employment related issues arising within the employment. The employer contended that the SRG was an "excepted body to which this Act applies" and accordingly that the collective bargaining jurisdictional requirement was not satisfied. SRG type arrangements are common in nonunionised companies

The Labour Court rejected this submission on three grounds as follows:

  1. The Court concluded that the use of the word "practice" as a noun in the relevant statutory provision "suggests something that is customary or expected. Consequently, before declining jurisdiction, the Court should be satisfied that collective bargaining is the customary or expected mode of determining pay and conditions within the employment concerned. A once off or ad hoc occurrence of collective bargaining could not amount to a "practice" and would be insufficient to oust the Court's jurisdiction". The Court noted that no documentary or other evidence was proffered in support of the employer's submission that it had negotiated a pay increase with the SRG and no evidence was proffered of any prior incident of what the employer regarded as collective bargaining. The Court noted that "a one off occurrence cannot amount to a practice". In most non-union employments, the employer does not negotiate with the employee body.
  2. The Court concluded that the SRG was not "an excepted body to which this Act applies". The Court noted that the onus of proving that collective bargaining is carried out with an excepted body rests with the employer. It is first necessary to determine if an "excepted body to which this Act applies" in fact exists within the employment. If it does not, any process engaged in with the entity concerned could not be collective bargaining. The Court noted that the definition of an "excepted body to which this Act applies" "connotes an independent association or body of workers having many of the characteristics of a trade union without being such an organisation within the meaning of the Trade Union Acts ... There are a number of requirements that must be met before the body can be an excepted body to which the Act applies. It must be independent and not under the control of the employer. It must have members and all of those members must be employed by the same employer. Crucially, for the present purposes, the body must carry on negotiations with a view to reaching agreement on the wages and conditions of employment of the members of the body and for no other person". The Court noted that, in response to a question from the Court, the representative of the employer stated that the members of the excepted body contended for were the members of the SRG. The Court noted that the membership of the SRG comprised only representatives of management and representatives of workers. Accordingly, if the SRG did in fact conduct negotiations, "it plainly does not do so in respect of its own members alone since the employer readily accepted that it purports to do so in respect of the generality of those employed by the employer. On that account alone, the SRG could not be an excepted body to which the Act applies". It follows from the foregoing that any employee forum, the members of which are confined to those elected or appointed by the workers concerned (and possibly representatives of management), cannot be "an excepted body to which this Act applies" because it purports to act on behalf of the employees generally, thereby extending its remit beyond that of its own members. This means that in a great many cases the internal body or forum cannot meet the test.
  3. The Court noted that collective bargaining comprises "voluntary engagements or negotiations ... with the object of reaching agreement regarding working conditions or terms of employment, or non-employment of workers". Furthermore, an "excepted body to which this Act applies" is a body "which carries on engagements or negotiations with the object of reaching agreement regarding the wages or other conditions of employment of its own members". The union submitted that the process engaged in by the SRG did not involve negotiations but mere consultation. The union submitted that the SRG, being a consultation body, did not have the objective of reaching agreement. The union relied on the staff handbook which described the purpose of the SRG as being engagement in "information and consultation". The Court noted that the employer did not adduce any hard or reliable evidence that the SRG "in fact engages in negotiations as that term is generally understood". Accordingly, the SRG could not, for that reason, also meet the test. This too is likely to be the case in most non-union employments.

NUMBER OF WORKERS

On the extent to which SIPTU represented relevant employees, the Court disposed of the matter by noting that SIPTU had filed an affidavit confirming that it had in membership 63 of the 170 general operatives in an employer of 250 workers in total. The Court simply noted that the number of workers who were party to the dispute was not insignificant relative to the total number of general operatives employed by the employer.

COMPARABLE WORKERS IN SIMILAR EMPLOYMENTS

Once the jurisdictional issues have been determined in favour of the union, it is then for the Labour Court to investigate the trade dispute and to make such recommendation as it considers appropriate, giving its opinion on the matter and its view as to the action that should be taken having regard to the terms and conditions of employment and to dispute resolution and disciplinary procedures in the employment concerned.

The Court must not make a recommendation providing for an improvement in the remuneration and conditions of employment of a category of worker unless it is satisfied that the totality of the remuneration and the conditions of employment of the workers concerned provides a lesser benefit to the workers concerned having regard to the totality of remuneration and conditions of employment of comparable workers employed in similar employments. This specific requirement was also introduced in the 2015 Act.

In considering this question, the Court must have regard to the totality of the remuneration and conditions of employment of comparable workers employed in similar employments (whether unionised or otherwise) and the comparability of skills, responsibilities, physical and mental effort required to perform the work in which the workers are engaged.

In Freshways, having decided the jurisdictional question against the employer, the Court considered the specific matters raised by the union, namely rates of pay, rostered overtime, overtime rates, pension, sick pay, pay increases, annual leave and dispute and grievance procedures. The union contended that the terms of employment of its members in respect of those matters was less favourable than those applicable to comparable workers in similar employments and it submitted information on the conditions of employment of general operatives employed in other (unnamed) employments in what was described as the Prepared Consumer Foods Economic Sector. The employer maintained that its business was characterised by low profit margins, that cost control was essential for the continued viability of the business and the employer took issue with the appropriateness of the comparator employments relied on by the union, in terms of their size and profitability and similarity to its business.

The Court was furnished with detailed information on the terms and employment applicable in other employments in the Prepared Food Sector and detailed financial information in relation to the employer. The financial information was furnished in confidence to the union and was examined by the union's financial advisors in conjunction with the Company's financial advisors. There was a jointly agreed analysis of that information which was furnished to the Court.

The Court noted its obligation to consider whether the workers party to the dispute and those with whom comparison was drawn were comparable and noted that it was required to consider whether those other workers were in similar employment.

The Court was satisfied that the range of duties carried out by the workers who were party to the dispute was similar to those of the comparators, in terms of skills, responsibilities, physical and mental effort etc. The Court also concluded that the comparator employees were in fact in similar employment and in so doing the Court had regard to the general line of business of those other employers, the size of those other employers relative to the size of the employer in this case, and whether those other employers were in competition with each other in a broad sense. Although the employer in Freshways produces sandwiches, and the other employers produce different kinds of prepared and convenience food, the Court noted that they served broadly the same market and that they could reasonably be regarded as in the same line of business, although they were differences in size and scale.

The Court was satisfied that the totality of the remuneration and conditions of employment of those who were party to the dispute provided a lesser benefit to the workers than the totality of remuneration and conditions of employment of the comparable workers in similar employments, taking into account the financial and commercial circumstances of the employer.

The Court however did not simply recommend that the pay and conditions should be increased to the levels in the comparator employers. The Court recorded that it has sought "to provide reasonable improvements in the totality of remuneration and conditions of employment in respect of the workers who are party to the dispute which do not undermine the viability of the employers business and the sustainability of the employment that it maintains". Accordingly, and in respect of pay, the Court recommended that the hourly rate of pay be increased from 9.38, (not to 13.34 per hour which apparently is received elsewhere by comparable workers in similar employments) but instead recommended three increases of 0.70 an hour from 1 September 2016, 1 June 2017 and 1 January 2018. The Court did not recommend any adjustment to the pension scheme; recommended that there be ten days sick leave on full pay less social welfare after the first three days of certified absence in any twelve month period; and that there should be one additional days annual leave for those who have completed five years' service.

With reference to grievance and disciplinary procedures, the Court recommended that the employer should put in place a disciplinary and grievance procedure which conforms to the general provisions of the Code of Practice on Grievance and Disciplinary Procedures (SI 146 of 2000) and recommended that the employer should provide for trade union representation and processing individual grievances and disciplinary matters where an employee wishes to avail of such representation. It also recommended that the procedure should provide for the full utilisation of the dispute resolution machinery of the State, including the reference of disputes to the appropriate service of the WRC and the Labour Court. The disciplinary and grievance procedure should be put in place within one month from the date of the recommendation. The Court noted that if there is any dispute in relation to the compatibility of the proposed procedures with the Code of Practice, that separate question can be investigated by the Court under section 43 of the Industrial Relations Act 1990. The Court, in this part of its Recommendation, went beyond the requirements of the Code of Practice because the Code does not make trade union representation in grievance and disciplinary procedures mandatory and it does not make recourse to the WRC and the Labour Court mandatory.

IMPLICATIONS OF FRESHWAYS

The Labour Court, in Freshways, has revitalised the jurisdiction given to it under the 2001 Act. Specifically, it is now clear that in very few cases will an employer's internal employee engagement structures operate in a manner that would deprive the Labour Court of jurisdiction. In a great many cases where engagement arrangements of that type exist, the requirement that the body engage in negotiation with a view to reaching agreement will be absent. Very few, if any, non-union employers will be able to point to a practice of bargaining (i.e. negotiation) with a body of that type. Furthermore, in many cases the members of that body will be stated to be the persons elected or appointed to it and not all of the workers in the category concerned.

It is clear that the 2015 Act has now set at naught the decision of the Supreme Court in Ryanair on the collective bargaining condition. It follows that one can expect that unions, in their engagement with non-union employers, will again have recourse to the 2001 Act.

It is also evident that the ability of a union to persuade the Labour Court that there should be an enhancement of pay and conditions will be dependent upon the availability to the union of information with regard to pay and conditions of comparable workers in similar employments. This might not be difficult in circumstances where the similar employments are themselves unionised. However, access to that data may well be exceedingly difficult in circumstances where similar employments are not unionised.

The Recommendation, in so far as it seeks to make trade union involvement in grievance and disciplinary procedures mandatory and in so far as it seeks to make recourse to the WRC and the Labour Court mandatory in that context, is surprising. The Code of Practice on Grievance and Disciplinary Procedures is carefully nuanced on each of these issues, providing as it does for the possibility of representation by a colleague and the possibility of recourse outside of the employment to a third party other than the WRC and/or the Labour Court.

A number of matters must await consideration by the Labour Court, and possibly the High Court on a point of law appeal, in future cases. They include an elucidation of the circumstances in which the Court might conclude that the number of workers who are party to the trade dispute is indeed insignificant and an elucidation of the circumstances in which the Court might conclude that an insignificant number of workers might yet result in a Court investigation because of exceptional and compelling circumstances. Also of interest will be the extent to which the Labour Court will be willing to expand the "similar employments" test in appropriate cases. Finally, it will be important to obtain further elaboration of the circumstances in which the Court will refrain from simply recommending (and thereafter determining) that the more beneficial pay and conditions of comparable workers in similar employments should be adopted by the employer concerned.

We can expect many Freshways type cases in the near term.