After enduring a rocky road through the legislative process, the Employment (Miscellaneous Provisions) Act 2018 was signed into law by the President on Christmas Day 2018 and is scheduled to commence in the first week of March 2019. In our July bulletin, we noted that the Bill's proposed changes could be a game changer for employers, particularly in sectors where the use of flexible working arrangements is widespread, such as retail, tourism and hospitality. This was echoed by the Minister for Employment Affairs and Social Protection who described the Bill as containing "the most significant changes for working conditions in a generation".
This new Act contains significant measures designed to improve the security and predictability of working hours for employees on insecure contracts or who work variable hours. Given the possibility of criminal sanctions, including fines, and the strong anti-penalisation provisions within the Act, all employers should be fully aware of the new statutory obligations and ensure they are well prepared in advance of 1 March 2019.
The new Act will amend the Organisation of Working Time Act 1997 and the Terms of Employment (Information) Acts 1994-2014. Briefly, the new employer obligations bestowed by the Act can be summarised in five key points:
1. Written statement of terms
Employers will be required to provide employees with a written statement (the Written Statement) setting out five core terms within five actual days (not business days) of starting employment.
2. Prohibition of "zero hours" contracts
Employers will no longer be able to require employees to be available for work without specific set hours within a contract except in very limited circumstances.
3. Introduction of a "minimum payment"
If an employer fails to require an employee to work 25% of their contracted hours, the employee is entitled to a minimum payment (equivalent to 25% of the contract hours or 15 hours, whichever is lesser, and calculated at 3 times the national minimum wage). This entitlement does not apply to employees who are required to make themselves available on an "on-call" basis.
4. Introduction of "banded hours"
The Act enables employees, where their contract does not reflect the hours they have actually worked in the previous 12 months, to request to be placed in a specified "band" of weekly hours.
The obligation to place the employee on a new "band" will not arise where: (i) no evidence supports the claim; (ii) there have been significant adverse changes to the business; (iii) due to exceptional circumstances or an emergency it would not be practicable for the employer to comply; or (iii) where the hours worked by the employee in the previous 12 months were skewed by a temporary situation which no longer exists.
5. Anti-penalisation measures
The Act introduces much stronger anti-penalisation provisions within the Organisation of Working Time Act and the Terms of Employment (Information) Acts in order to protect employees looking to exercise these new rights.
What are the sanctions?
If an employee is not provided with a written statement setting out their core terms within the five day period, or if they are provided with false or misleading information, the employee may bring a claim to the Workplace Relations Commission (the WRC). If the claim is successful, an adjudication officer may issue a fine of up to €5,000 or a term of imprisonment of up to 12 months. Separately, employees (with at least one month's service) may be awarded compensation (limited to a maximum of 4 weeks' remuneration).
Where an employer refuses an employee's request to be placed on a particular "band" of weekly hours, the employee may take a claim to the WRC. While the adjudication officer may direct that the employee be placed in the correct band, there is no scope for compensation to be awarded.
Where an employee makes a successful claim of penalisation to the WRC, the adjudication officer may award compensation as follows:
- up to 2 years' remuneration (under the amended Organisation of Working Time Act); or
- up to 4 weeks' remuneration (under the amended Terms of Employment (Information) Act).
What about "false" self-employment?
In our previous bulletin, we highlighted one of the most controversial aspects of the then Bill – the potential for criminal liability if an employer incorrectly designated an employee as "self-employed". This provocative provision did not survive pre-legislative scrutiny and was removed at Seanad stage. The decision to delete this provision means that the Act now makes no reference whatsoever to "bogus" self-employment.
What steps should employers take?
Although the Act will not become law for another couple of months, employers should take this opportunity to review their current practices in relation to employees on flexible working arrangements or current zero hours contracts. In particular, employers should:
- Ensure they have systems in place to provide new hires with the Written Statement within the tight 5 day timeframe;
- Audit existing contracts of employment and identify groups of employees who frequently work in excess of their contracted weekly hours to ensure employees' contractual hours match up to hours actually worked on a weekly basis;
- Review and regularise any employees currently engaged on a "zero hours" basis, discontinuing such arrangements (save if the above limited circumstances apply);
- Ensure that accurate records are maintained of weekly hours worked by each employee.