The Government has announced that it expects to finalise very shortly the terms of reference for an independent review of statutory wage fixing mechanisms and agreements.

The precise terms of reference are still being finalised, with the involvement of the Labour Court in the process being the subject of some debate. Employer organisations are not entirely comfortable with the prospect of the Labour Court being involved in the review.

The background to the review is the proposed amendment to the Industrial Relations (Amendment) Bill 2009 whereby the Government is proposing to introduce an inability to pay mechanism for both Registered Employment Agreements and Employment Regulation Orders.

The mechanics of how the inability to pay clause would operate became the subject of considerable debate. Initially it was thought that it would be along the lines of the National Minimum Wage model. The inability to pay mechanism in the National Minimum Wage Act requires the consent of the workers and a ruling from the Labour Court. Earlier this year the Minister indicated that he may deviate from this model and allow some employers to claim inability to pay without workers' consent.

In light of the above issues the Government decided on an independent review of statutory wage setting mechanisms, Employment Regulation Orders and Registered Employment Agreements. The recent proposal to reduce the national minimum wage by €1 to €7.65 per hour will no doubt compound the difficulties faced by the various interested parties in reviewing REAs and EROs as historically they have been regarded as a more complex model as the agreements include provisions for Sunday premiums and other additional benefits.