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Industrial Relations (Amendment) Act 2015 and Collective Bargaining

18/08/2015

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Ireland

The Industrial Relations (Amendment) Act 2015 (the “Act”) is a major development for Irish employers and significantly changes the industrial relations dynamic for employers and particularly non-unionised employers. Yet, the legislation has been introduced quickly and without much fanfare. Barry Walsh, Head of Employment Law has prepared this brief Q&A document for employers.   Q. What are the key features of this legislation? The Act has three main features:
  • it reintroduces a mechanism for the registration of employment agreements (“REA’s”);
  • it provides a new statutory framework for the Labour Court to examine and establish rates of pay and conditions of employment in certain sectors;
  • most significantly for employers (and particularly non-unionised employers), it amends the law in relation to collective bargaining and the power of the Labour Court to make legally binding orders regarding terms of employment against employers who do not have collective bargaining arrangements.
Q. When does this start? It is already in force. The Act was commenced in a low key fashion on 1 August 2015. Q. What is the background to the change to the law on collective bargaining? For a number of years prior to 2007, the Industrial Relations Acts were sometimes used as a means for trade unions to obtain a legally binding order regarding terms of employment from the Labour Court against non-unionised employers, where that employer did not engage in collective bargaining. This was a major concern at the time for some non-unionised employers who chose not to engage in collective bargaining and yet could have employment terms imposed on them by a third party (the Labour Court). That stopped, almost completely, after the Supreme Court decision in Ryanair v the Labour Court in 2007 where the Supreme Court found that an employer that engaged in negotiations with staff groups (rather than traditional collective bargaining) should also be exempt from the provisions of the Industrial Relations Acts. The Ryanair case led to a very substantial drop in such referrals to the Labour Court, to such an extent that this particular threat to non-unionised employers effectively disappeared (although technically the law remained in place). However, the trade union movement continued its campaign for mandatory collective bargaining in Ireland. The Act is a major development in that regard. While it stops short of imposing mandatory collective bargaining, some have argued that it introduces the next best thing by providing a statutory definition of collective bargaining and clarifying the parameters of when a trade dispute can be referred to the Labour Court for a legally binding order. Q. How will this legislation change the collective bargaining laws in Ireland? The government states that this is not forced collective bargaining. However, it is anticipated that the Act will result in a substantial increase in the referral of trade disputes to the Labour Court and non-unionised employers therefore face the risk of orders imposing employment terms. Q. When can such a referral be made? The power of the Labour Court to investigate such a referral under the Act exists where it is not the practice of the employer to engage in collective bargaining negotiations. The Act introduces a new definition of collective bargaining, which comprises voluntary engagements or negotiations by an employer with either (1) a trade union of workers; or (2) an “excepted body”. In addition, any engagements or negotiations must have the object of reaching an agreement on wages or other conditions of employment. Such a referral cannot be substantively examined by the Labour Court where an employer engages in collective bargaining. A de minimus type threshold rule also exists. The Labour Court cannot usually conduct an investigation where there is an insignificant number of employees involved in the trade dispute, taking into account the total number of workers employed by the employer in that particular category. Q. What is an “excepted body”? The burden of proof is on an employer. The body must be independent and not under the control or domination of the employer. The Labour Court must consider the establishment, functioning and administration of the excepted body and must take into account:
  1. the manner and frequency of elections of employees;
  2. financing or resourcing of the excepted body; and
  3. the length of time the body has been in existence and any prior collective bargaining.
Q. If there is no collective bargaining, what can the Labour Court do? The Labour Court can examine the totality of remuneration and conditions of employment of the employees involved in the dispute. Significantly, the Court must now consider comparators in both unionised and non-unionised employment and it can make a recommendation where it believes that the affected employees are on lesser pay and conditions that the comparators. The Act also provides that, in making a recommendation, the Labour Court must have regard to the maintenance of employment and the long term sustainability of the employer’s business. This latter part could be of significant importance for struggling employers. Q. So, do employers now have to engage in collective bargaining and recognise trade unions? The Act does not require an employer to recognise or to negotiate with trade unions. The government has also stated that the “voluntarist” tradition of industrial relations in Ireland has been respected. However, in reality, the Act is a major development for non-unionised employers and restricts their ability to disregard trade unions pressure. Trade unions can refer a valid trade dispute with non-unionised employers to the Labour Court for adjudication. Trade union leverage against non-unionised employers is increased and, in this way, any employer can potentially be pressurised to deal with a trade union. However, where an employer already engages in collective bargaining, either with a trade union or an excepted body, the employer will be exempt from these provisions. Q. What can non-unionised employers do to reduce the risk of Labour Court interference with terms of employment? As with any new legislation, the overall impact and the Labour Court’s general approach will become clearer in due course, particularly after recommendations are published. In the meantime, non-unionised employers can limit the risk of interference with their terms of employment by examining internal consultation arrangements (existing or new) to explore if they might satisfy the collective bargaining definition in the Act. Of course, employers with no collective bargaining but whose pay and conditions compare well to comparable employees will be well placed to resist an adverse recommendation, but may not be able to necessarily prevent a referral in the first place. Q. What does this legislation mean for specific sectors, such as hotels or building trade? In addition to the collective bargaining issues, the Act also provides for the introduction of sectoral employment orders which replaces the previous system of sectoral REA’s (which were struck down in May 2013). This statutory framework envisages that a trade union of workers (and/or an organisation of employers) which is substantially representative of workers, or employers of a particular group in an economic sector, can request the Labour Court to examine the applicable pay, pension and sick pay entitlements. The trade union must be substantially representative of workers in that particular sector in order for the Labour Court to undertake any examination. The Labour Court can make a recommendation to the Minister on pay, pension and sick pay matters and the Minister in turn can then make an order, after a draft has been approved by each House of the Oireachtas. Significantly, the Act provides guidance in relation to the principles which must be considered by the Labour Court in making any recommendation to the Minister. Q. Any other notable features? To reduce risks of victimisation of referring employees, the Act contains a number of protections such as
  1. individual employees do not have to be identified in order to initiate a claim and the chief officer of the trade union can make a statutory declaration identifying the number of employees involved and other relevant details;
  2. employees can seek interim relief from the Circuit Court where an employee is claiming unfair dismissal connected with the existence of the trade dispute; and
  3. protection from victimisation through dismissal for being involved in a trade dispute.
Remember that this article is for information purposes only and does not constitute legal advice. Case law is fact specific and readers should understand that similar outcomes cannot be assumed. Specific advice should always be taken in given situations.