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,...


Jan 3, 2012

New JLC/REA Proposals

We have discussed the area of JLC's and REA's on a number of occasions. Following on from the recent High Court ruling the Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, recently published the Industrial Relations (Amendment) (No. 3) Bill 2011 in an effort to reform to the Joint Labour Committee and Registered Employment Agreement wage setting mechanisms. Some of the principal measures in the legislation include:

  • JLCs will have the power to set a basic adult rate and two additional higher rates, based on length of service in the sector or enterprise concerned as well as the standards and skills recognised for the sector concerned
  • JLCs will no longer set Sunday premium rates. In order to recognise the special status of Sunday working a statutory Code of Practice will be prepared by the LRC following submissions from employers and trade unions. This Code will provide guidance to both parties in the sectors covering EROs on the compensatory arrangements, including such additional amounts as are reasonable, for Sunday working and on the procedure to apply in the event of disputes concerning the varying entitlements to Sunday working.
  • Companies will be able to derogate from EROs and REAs in cases of financial difficulty. For this to occur, the Labour Court must satisfy itself that specified criteria have been met. Such derogation will be granted, for a limited period, in cases of proven economic difficulty, following consultation with the employees.
  • In setting rates, JLCs will have to take into account a series of economic and industrial relations factors.

The main provisions of the proposed legislation are as follows.

1. Allow companies to derogate from the terms of EROs and REAs in cases of financial difficulty, while ensuring the protection of employees and avoiding distortion of competition. (Section 14, Section 9)

2. Permit JLCs to set a basic adult rate and two supplementary minimum rates (Section 12). This will substantially reduce the number of rates while acknowledging the freedom of JLCs to establish two higher rates based on length of service in the sector or enterprise concerned as well as the standards and skills recognised for the sector concerned. Sub-minimum rates expressed as fixed percentages of the adult basic rate will apply, as in the case of the National Minimum Wage, to employees aged under 18 years, first time job entrants, and employees undergoing training. All other rates of pay will be agreed at firm level.

3. A comprehensive review of the scope of each individual JLC will be undertaken after the commencement of the Act to ensure that the range of establishments to which they apply remains appropriate, with consequent changes to their Establishment Orders if necessary. These reviews will be undertaken every five years in the future (Section 11)

4. New criteria to be observed in the making of EROs. These will take the form of principles and policies (having regard to the decision of the High Court in John Grace Fried Chicken Ltd and others .v. The Catering Joint Labour Committee, The Labour Court, Ireland and the Attorney General, delivered on 7th July). Whenever proposals for a variation of the ERO are made, these criteria will be used in determining the validity of any variation. They will include (section 12):

  • the legitimate interests of employers and workers likely to be affected by the proposals, including:
    • the legitimate financial and commercial interests of the employers in the sector in question
    • the desirability of agreeing and maintaining efficient and sustainable work practices appropriate to the sector in question
    • the desirability of agreeing and maintaining fair and sustainable minimum rates of remuneration appropriate to the sector in question
    • the desirability of maintaining harmonious industrial relations
    • the desirability of maintaining competitiveness, and
    • the levels of employment and unemployment in the sector in question
  • the general level of wages in comparable sectors, including, where appropriate, a fair and reasonable assessment of wages in such comparable sectors in other relevant jurisdictions
  • the current national minimum hourly rate of pay, under the National Minimum Wage Act 2000 and the appropriateness of fixing a higher statutory minimum hourly rate of pay
  • the terms of any relevant national agreement in force

5. Changes in the decision-making process of JLCs, including obliging the Chairman to have regard to a relevant Labour Court recommendation in the event of a casting vote being exercised (Section 12)

6. Remove provision for a Sunday Premium from the scope of EROs while preserving workers entitlements under Section 14 of the Organisation of Working Time Act, 1997 (Section 12). (The Minister will request the Labour Relations Commission to devise a Code of Practice on Sunday Working - see below)

7. In the light of the decision of the High Court in John Grace Fried Chicken Ltd and others .v. The Catering Joint Labour Committee, The Labour Court, Ireland and the Attorney General, new proposals for ERO must be submitted by JLCs in accordance with the principles and policies to be set out in the new legislation. In the event that there is no agreement by both parties within the JLC on the content and rates proposed in a revised ERO, new adjudication procedures will be applied by legislation whereby the matter can be referred to the Labour Court for a recommendation and the casting vote of the Chair of the JLC can only be exercised having regard to that recommendation (Section 12)

And specifically in relation to Registered Employment Agreements (REAs)

8. Establishing a time-bound process by which the terms of an Agreement may be varied by the Labour Court in certain circumstances without necessarily obtaining the consent of all parties to the Agreemen. More flexible mechanisms have been introduced to enable REAs to be reviewed, challenged and cancelled, as appropriate. (Section 6)

9. Defining more clearly what "substantially representative parties" means in the context of being entitled to make and to maintain such Agreements (Sections 5 and 7)

10. Clarifying circumstances when a Registered Employment Agreement may be cancelled where either the trade union(s) or employer parties have ceased to be substantially representative of workers or employers in the sector concerned and/or for other reasons related to substantial change in the sector concerned such that the continued registration of an Agreement would be undesirable (Section 6)

Outside of the legislation, the following additional reforms are proposed:

1. Taking steps to reduce the number of JLCs currently in place from 13 to 6, through a process of abolition or amalgamation, using the Minister's powers under section 40 of the Industrial Relations Act, 1946.

2. Standardising benefits in the nature of pay - including overtime and the conditions under which it becomes payable - across sectors covered by JLCs either by means of a nationally-agreed Social Partnership Protocol or a statutory Code of Practice, through a request to be made to the Labour Relations Commission to initiate social partner consultations to this end.

3. The LRC will prepare a new statutory Code of Practice on Sunday Working to provide guidance to employers, employees and their representatives in sectors covered by Employment Regulation Orders, on arrangements that may be put in place to comply with the options specified at section 14 of the Organisation of Working Time Act, 1997. The Rights Commissioner/Labour Court will have regard to this Code in making a decision, and implementation and enforcement will be as per the OWT Act 1997.

However it must be born in mind that the details outlined above are only proposals it will be interesting to see the final text and more importantly how the new legislation actually impacts on business.