EMPLOYMENT The Industrial Relations (Amendment) Act 2015 1 | ARTHUR COX Group Briefing October 2015 The Industrial Relations (Amendment) Act 2015 was enacted on 22 July 2015 and came into force on 1 August 2015. The Act makes provision for three main areas, namely: » it creates a new regime for registered employment agreements (“REAs”); » it makes provision for sectoral employment orders (“SEOs”); and » it adjusts the Labour Court’s jurisdiction, created by the Industrial Relations (Amendment) Act 2001, to make legally binding determinations affecting employers who do not engage in collective bargaining with trade unions. 1. REGISTERED EMPLOYMENT AGREEMENTS Why was it necessary to legislate for REAs? The previous statutory regime governing REAs (Part III of the Industrial Relations Act 1946) was declared to be unconstitutional by the Supreme Court in 20131 and the 2015 Act accordingly creates an entirely new regime for REAs. What are REAs? An employment agreement (“EA”) is an agreement made between a trade union(s) of workers and an employer(s) (or a trade union(s) of employers), relating to the remuneration or conditions of employment of workers of any class, type or group, that is binding only on the parties to the agreement. An EA becomes an REA when it is registered in the Labour Court’s Register of Employment Agreements.2 In what circumstances can an EA be registered? Any party to an EA may apply to the Labour Court to have the EA registered, and the Labour Court must register the EA it if the statutory conditions are satisfied. Those conditions3 are: » all the union(s) and the employer(s) party to the EA must agree that the EA should be registered; » the EA must be expressed to apply to all the workers of a particular class, type or group and their employers party to the EA; » the trade union(s) party to the EA must be substantially representative of the workers in the class, type or group to which the EA is expressed to apply; » it must be normal and desirable practice or expedient to have a separate REA for these workers in that class, type or group; » registration of the EA must be likely to promote harmonious relations between the workers and their employer(s) and the avoidance of industrial unrest; » the EA must provide that, if a trade dispute occurs between the workers and the employer(s) party to the EA, industrial action or a lock-out shall not take place until the dispute has been submitted for settlement by negotiation in the manner specified in the EA; » the EA must specify the circumstances in which a party or parties may terminate the EA; and » the EA must be in a form suitable for registration. Once registered, is an REA permanent? The REA itself must specify the circumstances in which a party may terminate it. In addition, a party to an REA may apply to the Labour Court to have it cancelled or have its terms varied, either by agreement of all parties or, failing agreement, following a dispute resolution process and the involvement of the WRC.4 How is an REA to be interpreted? A party to an REA may apply to the Labour Court for an interpretation of This document contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate. 2 | ARTHUR COX EMPLOYMENT THE INDUSTRIAL RELATIONS (AMENDMENT) ACT 2015 the REA or its application to any person and the civil courts must have regard to any such interpretation. If a dispute regarding an REA comes before a civil court, it may refer an REA to the Labour Court for interpretation.5 What is the effect of REAs on employers or workers who are not party to them? In 2013, the previous REA regime (contained in Part III of the Industrial Relations Act 1946) was struck down by the Supreme Court in McGowan & Ors v Labour Court & Anor6 because an REA under the 1946 Act could bind employers who were not party to it. Accordingly, the REA regime represented an impermissible exercise of the legislative power of the State which is reserved to the Oireachtas. Under the 2015 Act, REAs will be legally binding only on employers and unions who are party to them and on relevant employees of those employers. If there is a desire to bind non-party employers the persons concerned will need to seek an SEO. What is the effect of REAs on those who are party to them? Any REA will apply to every employer of the class, type or group to which it is expressed to apply and to their workers party to the REA. If the contract of employment of an employee to whom an REA relates provides for a lower rate of remuneration, or less favourable conditions than those set out in that REA, the more favourable REA provisions will be substituted for the equivalent provisions in the contract of employment.7 How are REA’s enforced? The Act requires employers to whom an REA applies, to keep employment records at the place of work to show compliance with the REA. These records must be kept for at least 3 years from the date of their making and an employer who fails to comply with this provision shall be guilty of an offence. A worker in respect of whom a claimed infringement took place may present a complaint to a WRC Adjudication Officer, from whose decision there is an appeal to the Labour Court. The Adjudication Officer may direct compliance and award compensation of up to two year’s remuneration.8 2. SECTORAL EMPLOYMENT ORDERS (SEOS) What are SEOs? SEOs are orders made by the Minister for Jobs, Enterprise and Innovation, on the recommendation of the Labour Court and approved by resolution of both Houses of the Oireachtas, which set out the minimum rates of remuneration and the minimum pension and sick pay entitlements of workers of a particular class, type or group within a specified economic sector. They are similar to REAs but their application is not confined to employees of the employer(s) party to them and their scope is confined to pay, sick pay and pensions. Why was it necessary to legislate for SEOs? The SEO regime partially replaces the previous REA regime that was declared unconstitutional. SEOs will apply to all workers and employers within the relevant sector but the crucial difference is that they will be contained in a Ministerial order approved by both Houses of the Oireachtas, as opposed to an agreement between private parties registered by the Labour Court. How can an SEO be obtained? A trade union of workers substantially representative of workers of a particular class, type or group in an economic sector or a trade union of employers may apply to the Labour Court to have the Court review the remuneration and sick pay and pension entitlements of workers of that class, type or group within that sector.9 A number of statutory conditions must be satisfied before the Court will engage in such a review. If the Labour Court deems it appropriate after carrying out its review, the Court can make a recommendation to the Minister with regard to rates of pay, sick pay and pension schemes in that sector, and in so doing it must have regard to certain matters 10 and it must be satisfied with regard to certain matters.11 If the Minister is satisfied that the Labour Court has complied with the Act, the Minister must then make the SEO.12 The SEO regime has a number of safeguards for employers as follows: » before the Labour Court can examine an economic sector, it must publish notice of the intended examination and hear representations from any interested parties from that sector; » prior to making a recommendation for an SEO, the Labour Court must consider its effect on employment and competitiveness levels within the sector; and » an employer may apply for an exemption from a specified SEO, although such exemptions are subject to onerous statutory controls. 13 What is the effect of an SEO? An SEO will apply to every worker of the class, type or group in the economic sector to which it is expressed to apply and to their employers. If the contract of employment of a worker to whom an SEO relates provides for a lower rate of remuneration or less beneficial sick pay or pension entitlements than those set out in that SEO, the more favourable SEO provisions will be substituted for the equivalent provisions in the contract of employment.14 In addition, an employer must not penalise an employee for relying on their rights in relation to the SEO system.15 How are SEOs enforced? The Act requires employers to whom an SEO applies, to keep employment records at the place of work to show compliance with the SEO. These records must be kept for at least 3 years from the date of their making and an employer who fails to do so shall be guilty of an offence.16 A failure on the part of an employer to comply with the terms 3 | ARTHUR COX EMPLOYMENT THE INDUSTRIAL RELATIONS (AMENDMENT) ACT 2015 of an SEO can be the subject of a complaint to an Adjudication Officer (and an appeal to the Labour Court) and result in an award of up to 2 years remuneration together with an order directing the employer to comply with its obligations thereunder.17 3. THE LABOUR COURT AND NON-UNION EMPLOYEES What is the background to the new provisions? The Industrial Relations (Amendment) Act 2001 created a regime enabling the Labour Court to make non-legally binding recommendations, and thereafter legally binding determinations, with regard to disputes regarding terms and conditions of employment and dispute resolution and disciplinary procedures affecting employees for whom their employer does not engage in collective bargaining negotiations, but the Labour Court could not thereby impose collective bargaining on such an employer. The 2015 Act amends the regime created by the 2001 Act (as previously amended by the 2004 Act). Why was it necessary to legislate to amend the existing regime? In Ryanair Ltd v The Labour Court18 the Supreme Court considered the meaning to be given to the term “collective bargaining” in the 2001 Act and concluded that in a non-union company, collective bargaining did not have to take the same form and adopt the same procedures as would apply in collective bargaining with a trade union, and that the term should be given its “ordinary dictionary meaning”. The Court held that “If there is a machinery in [the employer] whereby the [relevant employees] may have their own independent representatives who sit across the table with representatives of [the employer] with a view to reaching agreement if possible, that would seem to be “collective bargaining” within the ordinary dictionary meaning. It would seem strange if definitions peculiar to trade union negotiations were to be imposed on non-unionised companies.” Following the Ryanair decision, the 2001 Act fell into disuse and the 2015 Act includes amendments designed to make the 2001 Act regime more attractive to trade unions such that it might again be used by unions to intervene in support of their members in nonunion employments. There are also provisions which compel the Labour Court to adopt a wider perspective in considering whether to make such a recommendation or determination. How does the 2015 Act change the 2001 Act regime? It does so by: » defining the term “collective bargaining”, with particular reference to non-union companies/employees;19 » providing for a wider range of factors that the Labour Court must take into account in making its recommendations and determinations;20 » possibly dis-applying the regime where the number of union members party to the dispute is insignificant;21 » restricting the making of multiple applications to the Court in respect of the same categories of employees;22 and » extending the jurisdiction of the Circuit Court to grant injunctions to protect employees who may have been dismissed by reason of an application made to the Labour Court under the 2001 Act.23 What is Collective Bargaining? The Act defines collective bargaining as voluntary engagements or negotiations between any employer or employer’s organisation on the one hand and a trade union of workers or an excepted body on the other hand, with the objective of seeking agreement regarding the working conditions or terms of employment or non-employment of workers. 24 The definition requires that there be more than consultation or the exchange of information. The purpose of the exercise must be to seek agreement on working conditions and terms of employment or non-employment. What is an excepted body? An excepted body, for the purpose of the Act, is 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 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 employers.25 The 2015 Act seeks to restrict the circumstances in which an employee forum or works council can be considered to be an excepted body and thereby allow an employer to defeat an application to the Labour Court under the 2001 Act on jurisdictional grounds. There are a number of factors which the Labour Court must consider in deciding whether an arrangement should be considered to be an exempted body. An employer who asserts they have engaged in collective bargaining with an excepted body will bear the burden of proving this. The 2015 Act provides criteria which the Labour Court must take into account in making a decision on this jurisdictional issue, as follows: » how employees are elected to the elected body; » how often the elected body holds elections; » whether, and to what extent, the employer has funded or resourced the elected body beyond minimum logistical support; and » how long the elected body has existed and whether the employer had previously engaged in collective bargaining with that body.26 What does the Act mean for employers who choose not to participate in collective bargaining? The Act does not impose any obligation on employers to engage in collective bargaining. However the Act, by 4 | ARTHUR COX EMPLOYMENT THE INDUSTRIAL RELATIONS (AMENDMENT) ACT 2015 amending the 2001 Act, does broaden the circumstances in which workers, whose employers refuse to engage in collective bargaining, can have relevant disputes addressed. What conditions must be satisfied before the Labour Court can intervene? The conditions, with reference to a trade dispute relating to terms and conditions of employment and dispute resolution and disciplinary procedures, set out in the 2001 Act (as amended by the 2004 and 2015 Acts) are that: » The employer does not engage in collective bargaining in respect of the workers party to the dispute as a matter of practice and any internal dispute resolution procedures normally used have failed to resolve the dispute; » The employer has failed to observe a provision, either entirely or in good faith, of the Code of Practice on Voluntary Dispute Resolution or the WRC cannot advance the resolution of the dispute and reports same to the Labour Court. This failure must not have been because of the actions of the trade union or the employees; and » The trade union or employees did not have recourse to industrial action after the dispute in question was referred to the Workplace Relations Commission in accordance with the provisions of the Code.27 How are disputes involving insignificant numbers of workers dealt with? The number of workers party to the dispute must not be insignificant unless exceptional and compelling circumstances for investigating the dispute exist. In determining this, the Court must have regard to the total numbers employed by the employer in the grade, group or category to which the trade dispute relates and, if it establishes the numbers are not insignificant, the Court will then consider the total numbers of employees employed by the employer and involved in any related group, grade or category. The Act provides that a trade union may establish the numbers by way of a statutory declaration but an employer can then ask the Labour Court to examine the accuracy of the contents of this statutory declaration but the Labour Court may not disclose the identity of the union members.28 What factors must the Labour Court take into account where the jurisdictional issues are satisfied? Any review of the remuneration or terms or conditions of employment of workers must relate to same in their totality. This will involve the Labour Court comparing the situations of the workers involved with similar workers employed in similar employments. This may include workers of an associated company outside the State. Regard may be had to the comparability of skills, responsibilities, physical and mental effort required to perform the work involved. The Labour Court must consider the effect of any determination it might make on the maintenance of employment and the long term sustainability of the business involved.29 How are multiple claims dealt with? In general, the Labour Court will not embark on an investigation where one was carried out within the previous 18 months.30 What protections are there for a worker who participates in such an investigation by the Labour Court? The Act provides that if a worker is dismissed by reason of their participation in the process this will constitute unfair dismissal and such a worker may apply to the Circuit Court for interim relief pending the determination of a claim for unfair dismissal.31 What are the overall implications of the collective bargaining reforms introduced by the Act? Employers who engage in collective bargaining with one or more trade unions in respect of workers with whom the dispute arises will not be affected. For non-union employers who engage with an employee forum/ staff representative group, it will be necessary to assess whether or not this employee forum/ staff representative group constitutes an excepted body for the purposes of the Act and whether an employer can prove that in accordance with the criteria given. Otherwise that employer will be vulnerable to a referral under the 2001 Act and a consequential Labour Court determination. 5 | ARTHUR COX EMPLOYMENT THE INDUSTRIAL RELATIONS (AMENDMENT) ACT 2015 ENDNOTES 1. McGowan and Others v The Labour Court and Anor  IESC 21 2. Section 6 3. Section 8 4. Sections 9 and 10 5. Section 12 6.  IESC 21 7. Section 11 8. Sections 22 and 23 9. Section 14 10. Those conditions, which are set out in section 14(2), in summary are: (i) where the request is made by a trade union of workers or jointly with a trade union of workers, the trade union of workers must be substantially representative of the workers of the particular class, type or group in the economic sector concerned; and (ii) where the request is made by a trade union or an organisation of employers or jointly with a trade union or an organisation of employers, the trade union or organisation concerned must be substantially representative of the employers of the workers concerned. 11. Those matters, which are set out in section 16(2), in summary are: (a) the potential impact on levels of employment and unemployment in the identified economic sector concerned; (b) the terms of any relevant national agreement relating to pay and conditions for the time being in existence; (c) the potential impact on competitiveness in the economic sector concerned; (d) the general level of remuneration in other economic sectors in which workers of the same class, type or group are employed; (e) that the sectoral employment order shall be binding on all workers and employers in the economic sector concerned. 12. Those matters, which are set out in sections 15 and 16(4), in summary are: (i) the trade union of workers must be substantially representative of the workers of the particular class, type or group in the economic sector concerned, and in satisfying itself in that regard, the Court must take into consideration the number of workers in that class, type or group represented by the trade union of workers; (ii) where the request is made by a trade union or organisation of employers (or jointly with a trade union or organisation of employers), the trade union or organisation concerned must be substantially representative of the employers in the particular class, type or group in the economic sector concerned, and in satisfying itself in that regard, the Court must take into consideration the number of workers employed in the particular class, type or group in the economic sector concerned by employers represented by the trade union or organisation of employers concerned; (iii) the request must be expressed to apply to all workers of the particular class, type or group and their employers in the economic sector concerned; (iv) it must be a normal and desirable practice, or expedient, to have separate terms and conditions relating to remuneration, sick pay schemes or pension schemes in respect of workers of the particular class, type or group in the economic sector concerned; (v) any recommendation must be likely to promote harmonious relations between workers of the particular class, type or group and their employers in the economic sector concerned; (vi) the making of the recommendation must promote harmonious relations between workers and employers and assist in the avoidance of industrial unrest in the economic sector concerned; (vii) the making of the recommendation must be reasonably necessary to: (i) promote and preserve high standards of training and qualifications, and (ii) ensure fair and sustainable rates of remuneration, in the economic sector concerned. 13. Sections 15, 16 and 17 14. Section 19 15. Section 20 16. Section 22 17. Section 23 18.  4 I.R. 199 19. Section 27 20. Section 28(b) 21. Section 28(b) 22. Section 28(b) 23. Section 34 24. Section 27 25. Section 27 26. Section 28 27. Section 2 of the 2001 Act 28. Section 29 29. Section 30 30. Section 28 31. Section 34 Dublin +353 1 618 0000 email@example.com Belfast +44 28 9023 0007 firstname.lastname@example.org London +44 207 823 0200 email@example.com New York +1 212 782 3294 firstname.lastname@example.org Silicon Valley +1 650 943 2330 email@example.com arthurcox.com 6 | ARTHUR COX EMPLOYMENT THE INDUSTRIAL RELATIONS (AMENDMENT) ACT 2015 OUR TEAM For further details, please contact a member of the Arthur Cox Employment Law Group. 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