The recent passage and commencement of the Industrial Relations (Amendment) Act 2012 (the “2012 Act”) has established a new statutory mechanism for the establishment, registration and enforcement of Employment Regulation Orders (“EROs”) and Registered Employment Agreement (“REAs”). Given the ability of both EROs and REAs to set an effective minimum wage, as well as statutorily prescribed terms and conditions in certain areas, the importance of this new legislation for particular employers cannot be underestimated.

The 2012 Act was required principally because of the decision of the High Court in John Grace Fried Chicken Limited v The Catering JLC [2011] IEHC 277 (7 July 2011) where the Court struck down the catering ERO as unconstitutional. The wider implication of the judgment was the declaration of unconstitutionality of the mechanism for setting and enforcing EROs, which led to concern as to the constitutional validity of REAs.

The 2012 Act sets out policies and principles that must guide, inform and direct the exercise of the delegated power in the legislation, particularly in relation to Joint Labour Committees (JLC) (who set EROs). The 2012 Act attempts to deal with the issues raised by the John Grace Fried Chicken case through the review by the Executive Branch of Government of EROs and REAs and through scrutiny by the Oireachtas of these EROs and REAs.

Registered Employment Agreements

Part 2 of the 2012 Act deals with REAs. REAs come in two forms – those applicable to a particular employer and classes of worker working for that employer; or those broader REAs which encompass an entire sector (e.g. the construction industry).

The 2012 Act provides that for sectoral REAs the Labour Court may not register an agreement unless it has regard to a number of detailed factors set out in the 2012 Act, including the potential impact on employment levels, the desirability of maintaining competitiveness, the general level of wages in a sector, and the level of intra-EU competition in that sector.

After registration of an REA by the Labour Court, the REA must be forwarded to the Minister for Jobs, Enterprise and Innovation who must, before signing such an order, be satisfied that the Labour Court has had due regard to the principles set out in the 2012 Act, as well as the technical requirements for registration. Following such Ministerial approval, the Houses of the Oireachtas have an opportunity, within twenty-one days, to annul such registration and failing such an annulment the REA is legally binding. The Act provides for further detailed procedures in respect of variation, review, cancellation and indeed enforcement of REAs.

The 2012 Act also provides for a limited exemption for employers applying REAs in respect of a worker or a number of workers for a period of not less than three months, and not greater than 24 months. The Labour Court must have regard to multiple factors in deciding whether or not to grant such an exemption.

Employment Regulation Orders / Joint Labour Committees

Employment Regulation Orders required the most immediate attention in light of the John Grace Fried Chicken case. Part 3 of the 2012 Act gives greater guidance as to what can be provided for with regard to pay and conditions in the ERO and provides for a review of JLC themselves by the Labour Court.

JLCs must have regard to similar principles to the Labour Court in the case of REAs. JLCs’ powers to set certain aspects of remuneration have now been removed (such as pay/time in lieu of public holidays, Sunday working premium, redundancy matters). Once a proposed ERO is sent to the Labour Court, similar provisions apply in respect of registration of EROs (i.e. through Ministerial approval, with review by the Oireachtas).

Like REAs, the 2012 Act provides for certain exemptions from EROs (granted by the Labour Court) although these exemptions, like those for REAs, are strictly limited. The 2012 Act also provides for an enforcement mechanism involving complaints by workers to the Rights Commissioner Service (with the possibility of damages not exceeding two years remuneration) with further appeals to the Labour Court and then the High Court. Somewhat unusually, in certain circumstances, the Minister is entitled to make such a complaint to the Rights Commissioner Service and such complaint is treated as a complaint of the worker.

Conclusion

The 2012 Act will be of significant interest to employers in industries which are governed by REAs and EROs, such as the construction industry, the catering industry, electrical contracting and others. There are also a significant number of REAs entered into between particular employers and unions and such employers should bear in mind that the changes made by the 2012 Act give more straightforward remedies to employees and trade unions in relation to breaches of REAs and therefore care should be taken where there is a pre-existing REA in place.

The Electrical Contracting Industry REA is to be subject to a further challenge before the Supreme Court on 18 December next, with the Construction Industry REA set for a similar challenge before the High Court and this may give further clarity to the legal position of such REAs, and indeed whether the reforms of the 2012 Act will prove sufficient.