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23 October 2017

Ireland: First application to the reformed legal framework for sectoral bargaining

In recent years, Ireland’s Supreme Court has ruled that the traditional system of setting wages and working conditions for industries was unconstitutional. The government promised to address this issue and brought forward legislation to reform the system. A first pilot, in line with the reformed legislation is currently being heard. A sectoral agreement for the construction industry has been recommended by the Labour Court, to be applied generally.

Previously, the Irish system of industrial relations consisted of two mechanisms that could set industry-wide working conditions. Firstly, some industry-level agreements (for instance, in construction and electrical contracting) were extended to all employees, as so-called Registered Employment Agreements, following a request by the two parties, to the Labour Court. Secondly, the Joint Labour Committees could set minimum terms and conditions in low-paid industries.

However, in July 2011, the Irish High Court ruled that Joint Labour Committees, were exceeding their powers, and that orders setting out minimum rates were unenforceable. Then in May 2013, the Supreme Court declared the Registered Employment Agreements, which govern the pay rates and other conditions of employment for all employees in a given sector, unconstitutional. In this significant judgment, affecting several employment sectors, the court outlined that a section of the Industrial Relations Act of 1946 (the reference Act for the REAs) was incompatible with the Irish Constitution, as it delegated law-making powers beyond the Parliament (Oireachtas). The challenge to the REAs was taken up by electrical contractors, who welcomed the decision. In the slipstream of these judgments, all sectoral agreements came under threat and the system of wage determination was struck down.

The government then considered reforms that would permit Joint Labour Committees to fix pay rates, taking into account the interest of employers and the need to maintain competitiveness. The legislator aimed to introduce legislation restoring the Registered Employment Agreements as a mechanism for setting pay and conditions. In 2015, a draft law regulating collective bargaining received mixed reviews from trade unions. The law was praised for allowing workers and their unions to present wage demands, even in work places where the employer did not recognise the union. However, concerns were voiced that the law would promote company unions and thus effectively weaken the position of nationwide unions.

The most recent Industrial Relations (Amendment) Act 2015 provides a system of registered employment agreements and sectoral employment orders. Registered employment agreements (REAs) are collective agreements that relate to the pay or conditions of employment of specified workers and that are registered with the Labour Court. Following a request from a trade union or an employers’ organisation, the Labour Court may make a recommendation to the Minister for Jobs, Enterprise and Innovation to make a sectoral employment order (SEO).

Under the 2015 Act, an SEO may set out minimum pay rates as well as pension and sick pay schemes for an economic sector. Under this system, the minister considers the recommendation which must then get the Oireachtas approval before it can be applied. The Labour Court has recommended a series of new minimum pay rates for skilled and unskilled workers in construction to the minister. If the Oireachtas approves the Labour Court recommendation on pay in the industry, this first application of the sectoral employment order, could bring building workers a wage increase of up to 10%.

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