Following the recent High Court Case new proposals in relation to JLC/REA's have been made by the government:
24-Nov-10 at 18.17 | Resolve HR Admin
Following today's decision to reduce the Minimum Wage rate to €7.65. The Government has signalled that the ERO and REA rates should be reviewed. In particular the Catering,...

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26-Jun-09 at 16.37

Is the end nigh for the JLC and REA system?

By Enda Mc Guane

Here at Resolve HR we provide support and advice to businesses in various business sectors, which are effected by the decisions of Joint Labour Committee's (JLC'S). So in this weeks Blog we decided to look at this area.

 

Current Situation

Many economic commentators highlight the fact that since Ireland adopted the Euro we have lost the ability to devalue our currency, in previous economic downturns this was used as a tool to help maintain the competitiveness of Irish business. Lacking this option greater focus has been placed on other competitiveness issues, one of these being rates of pay. The National Minimum Wage Act 2000 lays down the legal minimum hourly rates of pay within Ireland which currently stand at €8.65 (The second highest in Europe). However businesses in certain industries such as Hospitality, Retail Grocery and Construction also have to comply with Employment Regulation Orders (ERO) and Registered Employment Agreements (REA). Many of these stipulate hourly rates of pay in excess of the National Minimum Wage. Given recent calls by the SFA for a reduction in the National Minimum Wage it is no surprise that the ERO's and REA's are coming under increased scrutiny. Before looking at the current challenges to these rates we will briefly review their history. 

 

Employment Regulation Orders (ERO)

An ERO gives legal status to rates of pay and conditions of employment set by statutory bodies called Joint Labour Committees (JLC), which were established under the Industrial Relations Act 1946. At the time they were established there was no National Minimum Wage and the amount of Employment Law on the statute books was a fraction of that in existence today. Each JLC is composed of representatives of workers and employers in the sector concerned and a chairperson appointed by the Minister for Enterprise Trade and Employment. ERO's are enforced by NERA and the Labour Court under the Industrial Relations Act. There are 17 Joint Labour Committees covering the following industries:


Aerated Waters and Wholesale Bottling                           Agricultural Workers
Catering (excl Dublin City and Dun Laoghaire)                 Brush and Broom

Catering (Dublin City and Dun Laoghaire)                         Security

Contract Cleaning (Dublin City and County)                      Tailoring
Hairdressing (Dublin City, Dun Laoghaire and Bray)        Hairdressing (Cork City)
Handkerchief and Household Piece Goods                      Hotels (excl Cork City,Dublin City and Dun Laoghaire)                           Law Clerks                                                                       Provender Milling                                                 

Retail, Grocery and Allied Trades                                     Shirtmaking                                                                                                   Women's Clothing and Millinery.

Registered Employment Agreements (REA)
An REA is a collective agreement made between trade unions and employer bodies, which have been approved and registered by the Labour Court. An REA is legally binding on all businesses within the sector regardless of whether they have signed up to the agreement or not. In total there are 67 REA's however many of these are quite dated and the four most relevant agreements are those applying to the:

 

Construction Industry                                                Drapery, Footwear and Allied Trades

Electrical Contracting Industry                                   Printing Industry

 

Challenges to ERO System

In 2007 the IHF launched a legal challenge to the increases in pay proposed by the Hotels JLC in its ERO due to have come into effect in November 2007. The case was based on two issues, firstly the IHF claimed that the procedures were unfair as their submission on wages and conditions had not been taken into account by the JLC when reaching their decision. Secondly and more importantly the IHF challenged the constitutionality of the JLC system. The case went before the commercial court division of the High Court in February 08 and the state conceded on the procedural issue. The IHF dropped the constitutional aspect of the claim and resubmitted their proposals to the JLC for review (Its worth noting that after hearing the IHF submission the JLC implemented the same pay increases it had originally proposed). While the IHF's claim against the constitutionality of the JLC system wasn't heard it did put the idea in the public domain that the JLC system was open to challenge. As previously outlined the deepening recession has lead to a greater focus on the JLC system. The main issue most employers have with the system is that while Ireland has National Minimum Wage of €8.65 per hour the JLC imposed minimum rates tend to be higher. The Hotel industry hourly rate currently stands at €9.08 per hour, the Catering Industry rate is €9.31 per hour and the Retail Grocery rate was due to increase from €9.13 to €9.36 in April (in the midst of the biggest world recession since the great depression!!!).

 

In December 08 there was some rumblings in the Security industry against proposed pay increases imposed by the Security JLC which were due to come into effect in Jan 09, however the industry decided not to challenge the changes. The Catering JLC have recently amended their ERO's to address the anomaly which saw different rates of Sunday pay for businesses operating inside the Dublin County and Dun Laoghaire boundaries and those in operation in the rest of the country (This will come into effect at the end of June). While the Hotels JLC, is currently reviewing its Sunday rates of pay. For the last number of weeks RGDATA and CSNA have been seeking a deferral of the pay increases due in April 09 to the Retail Grocery JLC. IBEC who remained very silent during the IHF challenge to the JLC have now got involved in this process. They have recently issued a statement calling for "reform" of the JLC system and have criticised the proposed April increases as a "denial of the new economic and business realities". The irony in all this of course is that the April increase of 2.5% was imposed as a result of the terms of Towards 2016 agreement, which was negotiated on behalf of employers by IBEC!!

 

Where to Next?

However as was previously the case in Ryanairs challenge to the Labour Courts interpretation of aspects of the Industrial Relations Amendment Act 2001 and the Industrial Relations (Miscellaneous Provisions) Act 2004, IBEC's neutered response has led to employers taking matters into their own hands. An umbrella body called the Quickservice Food Alliance (which includes Mc Donalds, Supermacs and Subway) has instigated a High Court Challenge to the right of JLC's to set pay and conditions. Taking up where the IHF left off, the challenge is likely to focus on the right of the JLC and the Labour Court to decree pay and conditions, which amount to law. Under the constitution only the Oireachtas has the right to make laws and this cannot be delegated. The current situation allows JLC's to set minimum pay and conditions in excess of the National Minimum Wage Act. A date has yet to be set for this hearing, but here at Resolve HR we will watch any developments with interest.