The Government has approved proposals for priority drafting of legislation which aims to improve the employment protections afforded to workers on zero-hour and low-hour contracts and strengthen the regulation of precarious work.
The proposals, which were put forward by the Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor TD, and the Minister for Employment and Small Business, Pat Breen TD, on 2 May 2017, are in response to the Government's criticism of Sinn Fein's Banded Hours Contract Bill.
The Banded Hours Contract Bill 2016 (the "2016 Bill")
The 2016 Bill was drafted due to concerns that many employees on low-hour contracts are being exploited and are actually working far in excess of their contracted hours, but without any guarantee of those increased hours. The 2016 Bill sought to address this issue through the use of banded-hour contracts i.e. contracts which guarantee a minimum number of hours per week by assigning hours to particular bands e.g. Band A is over 11.5 hours per week but less than 15, etc.
The 2016 Bill proposed placing an obligation on employers to grant a request by employees to be moved up to an increased weekly band of hours where the employee could show, over a 6-month reference period, that they had worked in excess of the hours in their existing band. An employer could only justify a refusal to such a request where it could demonstrate that the employer's business was experiencing "severe financial difficulties".
The primary focus of the criticism of the 2016 Bill related to the "severe financial difficulties" test which, according to commentators, is a disproportionate burden on employers and could, if enacted as drafted, lead to the legislation being struck down as unconstitutional. It also posed a risk that employers would be required to grant extra hours to employees until such time as when the business reached severe financial difficulties. Further criticism was attributed to the short reference period provided for in the 2016 Bill, which does not reflect the commercial realities faced by employers.
According to Pat Breen TD, the 2016 Bill "would place too onerous a burden on all employers" and "as drafted is flawed, lacks balance and does not achieve its stated aim." Significant concern was also expressed over the consequences of the legislation, with Chambers Ireland Chief Executive, Ian Talbot, describing the Bill as "using a sledgehammer to crack a nut".
The new legislative proposals, informed by a study by the University of Limerick, aim to find a balance between protecting the rights of employees and avoiding unintended consequences on business. In addition to altering the approach to banded hours contracts, the proposals address four other key issues which seek to afford further protection to low paid, vulnerable workers.
The New Draft Proposals Banded Hours Contracts
Banded Hours Contracts
The legislative proposals intend to retain the use of banded hour contracts and the corresponding right of an employee to seek to be placed in a band of hours that reflects the actual hours worked. However, it is intended to increase the reference period to 18 months. This is a change to the 6-month reference period provided for in the 2016 Bill, which did not allow for seasonal fluctuations or normal peaks and troughs of business.
The proposals also provide a number of defences for employers, enabling them to refuse an employee’s request in the following circumstances:-
- where the facts do not support the employee’s claim;
- where significant adverse changes have impacted on the business;
- in emergency circumstances (e,g, flooding); or
- where the hours worked by the employee were due to a genuinely temporary situation (e.g. maternity leave cover).
Core Employment Terms
The Ministers propose introducing a requirement for employers to inform employees in writing, within 5 days of commencing employment, of 5 core terms of employment:-
- the full name of the employer and employee;
- the address of the employer; the expected duration of the contract (where the contract is temporary or fixed-term);
- the rate of method of calculating pay; and
- what the employer reasonably expects the normal length of the employee's working day and week will be.
A remaining 10 terms of employment will be required to be provided within a 2 month period, consistent with existing legal requirements.
This proposal aims to ensure employees are aware of the nature of their employment arrangements at a very early stage of employment. The Ministers’ proposals also provide for the creation of a new offence where an employer does not provide the proposed statement of the five core terms of employment within one month of commencement of employment.
Minimum Floor Payment
To prevent the practice of calling employees in to work but not providing them with that work or compensation in respect of that work, the proposals seek to introduce a minimum floor payment of 3 times the National Minimum Wage or 3 times the minimum rate set down in an Employment Regulation Order (ERO). The proposals include reasonable defences for calling an employee into work unnecessarily, for example, in the event of emergency situations.
Prohibition of Zero-Hour Contracts
Pursuant to the proposals, the Organisation of Working Time Act, 1997 will be amended with the effect that employers will no longer be able to engage employees on a zero-hour contract, other than in the case of genuinely casual work, emergency cover or short-term relief work for the employer.
It is intended to protect employees from penalisation or threatened penalisation by an employer as a result of the employee exercising any right under the proposed legislation.
The legislative proposals have been placed on the Attorney General's priority list for drafting. Pat Breen TD has indicated that the Bill will likely be ready in the "next few months".
Once completed, the Bill reflecting the proposals will begin the legislative process. It will be initiated on behalf of the Government by the Minister for Jobs, Enterprise and Innovation and from there it will pass through the legislative stages, before finally coming before the Dáil.
These employee-friendly proposals aim to provide certainty in respect of weekly income so that employees can plan their finances. As such, they are admirable and should be facilitated insofar as possible. However, there remain concerns that such proposals may affect Ireland's flexibility in terms of employment and jobs growth by imposing excessive obligations upon employers as well as raising potential workplace unrest and possible industrial relations implications.
This article originally appeared in Checkout magazine, 20 June, 2017.