I move: "That the Bill be now read a Second Time."
The legislation before the House is forward-looking in its approach. The Bill establishes for the first time a range of rights for all employees in relation to the payment of wages. The Bill enshrines three basic rights, the right of every employee to a readily negotiable mode of wage payment; the right of every employee to a written statement of wages and deductions; and protection for every employee against unlawful deductions from wages.
The Bill originates in a discussion document I published in November 1987. The document examined, among other things, the options for repeal of the Truck Acts and for new legislation governing the payment of wages. The views of all the interests concerned were sought in the related consultative process. More recently, arising from the Programme for Economic and Social Progress, I undertook to finalise legislation which would facilitate the move towards non-cash wage payment. The programme committed me to the introduction of a wages Bill during the spring of 1991. The Bill was initiated in the Seanad on 23 May — having overshot its deadline by just a few weeks.
The motivation for this Bill stems from a variety of inter-related concerns. For one thing, we in Ireland are much behind our European competitors in changing over to non-cash modes of wage payment. A comparison of statistics available from a number of EC countries shows that Ireland has a very high percentage of employees paid wages in cash. Denmark has probably the lowest percentage, with only about 5 per cent of employees receiving cash wages. Other countries, such as the former West Germany, Belgium and Spain, report figures in the range 10 per cent to 25 per cent. A survey published by the FIE in 1987 indicated that as many as 45 per cent of all employees and 51 per cent of blue collar employees in this country were in receipt of wages in cash. Happily, more recent research suggests that there has been some movement in the direction of non-cash wages since that date, but much remains to be done.
The statistics strongly suggest that many firms have yet to exploit the advantages offered by new technology in the area of wage payment. With computers now a feature of even the smallest business concern, there is every reason for optimism that cost-effective modes of wages payment will be utilised increasingly to the benefit of both employers and employees. Often existing computer capacity can be adapted to handle the payroll. Present technology even allows employers to transmit wage payment information from their own computer records on tape or disk to compatible systems in banks and other financial institutions. I understand that the resulting savings in security costs and payroll staff can be significant.
My concern about the incidence of cash wages in Ireland is conditioned by a number of other factors. Clearly, such a high level of cash wages cannot but affect the cost competitiveness of business both here in Ireland and abroad. Important, too, are the unquantifiable benefits associated with an increase in non-cash modes of wage payment. I am thinking here of the number of armed robberies of payroll cash which have taken place in recent decades and the ongoing security costs related to their prevention. Anything that can be done to reduce or eliminate this problem will not only improve the quality of life all round but will also stamp out a serious and ever present threat to life and limb.
For the future, there is an emerging trend away from the use of cash and more and more towards a non-cash economy. Even today almost everyone utilises plastic money, whether it is a card that gives access to a 24 hour automatic teller machine, a cheque book and cheque card or one of the wide variety of credit cards available. Exploratory initiatives such as the POSVAN Project give pointers to the possible shape of financial transactions in the future. One option examined by the project, which is backed by Telecom Éireann among others, is the debiting of bank accounts at the point of sale. So, for example, computer links placed at supermarket check-outs might in the future allow a customer, then and there, to debit his own account by the amount of the grocery bill and to credit that of the supermarket.
By the turn of the century, developments of this kind and others may well have revolutionised the way we regulate our financial affairs. It is no more than common sense that the legislation governing wage payment should be sufficiently flexible to allow for the payment of wages by new and emerging facilities for money transfer.
In recent years, the Truck Acts have been seen as a major barrier to the more widespread use of non-cash methods of wage payment. The Payment of Wages Act, 1979, sought to address this issue and was in some measure successful. However, that Act stopped short of a fundamental review of the Truck Acts. The Bill proposes repeal of the Truck Acts, 1743 to 1896, together with the Payment of Wages Act, 1979.
My Second Stage speech in the Seanad outlined for Senators some of the historical background to those Acts. Indeed, The Cork Examiner reporting the previous day's debate said: “you could almost smell the dust yesterday as Minister Bertie Ahern brushed the cobwebs off legislation dating back more than 200 years”. I do not intend to dwell on the historical perspective today.
Suffice to say that the Truck Acts take their name from an old English word meaning to "trade" or "barter". Under the truck system, workers were often required to accept domestic goods and provisions in lieu of cash wages or to take credit at the company shop which often stocked inferior goods at inflated prices. Daniel O'Connell contributed to the debate in the House of Commons on the Truck Act, 1831. He described a variation of the system on the following lines "a manufacturer who sets up a shop might pay his men in money at one counter and compel them, by threats of turning them out of employ, to spend it at the other counter".
The Truck Acts, contrary to the impression that might be conveyed by their name, far from favouring "truck", outlawed the practice of paying manual workers their wages in kind. They required, instead, that manual workers should be paid in "current coin of the realm". The Acts also addressed abuses such as unlawful deductions from wages and the practice of some employers of charging interest on advances of pay.
A significant feature of this Bill is that it provides for the first time a range of protections for all workers in connection with the payment of wages. Deputies will note that I have imposed no qualifying periods of service or minimum hours thresholds for eligibility under the Act. I have also taken on board in the Bill issues raised in this House during March in the context of the Worker Protection (Regular Part-time Employees) Act, 1991. During the passage of that Act, concern was expressed by a number of contributors to the debate about workers employed through employment agencies and on short term contracts. I was unable, for reasons explained in replying to that debate, to allay the fears of Deputies in so far as they related to the part-time workers' legislation. Happily, the difficulties encountered in the case of other legislation are of no relevance to the Bill now before the House. Accordingly, the provisions of this Bill extend both to workers employed through employment agencies and workers on short term contracts of employment.
The legislation provides a framework which will facilitate the move to non-cash wages. The will and the action necessary to effect this move must come from the interests themselves. Unlike some other desirable objectives, arrangements for non-cash wages are likely to prove financially sound for all those involved. For employers, there are the benefits of efficiency, security and cost competitiveness which I have already outlined; for financial institutions, there are advantages associated with the electronic transfer of data and the opportunity to reach a wider base of likely customers. Employers for their part will share with employers the security that goes with non-cash wages.
One criticism of the move to non-cash wages is that it delivers employees, who would not otherwise be their clients, into the hands of the banks. There is a sense in which this argument cannot be rebutted. Any of the readily negotiable modes of wage payment, other than cash, necessarily involves the mediation of a reliable financial institution. If employees are to avoid contact with financial institutions at all costs, there is no option but for the payment of their wages in cash.
However, this argument is also concerned with two other issues. There is the concern that the legislation may secure unwittingly for the banks a monopoly in the matter of wage payment and the concern that low paid employees will not be as welcome customers in the bank as their high income counterparts.
To take the first issue, the list of acceptable modes of wage payment in the Bill includes all the widely accepted and readily negotiable modes of money transfer. Clearly, the services of the main commercial banks are among them — cheques, bank drafts and credit transfer facilities. However, they are by no means the only options. The financial services of An Post are also acceptable for wage payment purposes as are those of the Trustee Savings Bank.
The Trustee Savings Bank was set up under statute by the Minister for Finance and has somewhat longer hours of business than the main commercial banks. Building societies are also competing nowadays in the provision of personal financial services. The terms of the Bill would allow, for example, the credit transfer of wages to a building society account. Again, the business hours of building societies are more likely to suit employees who find normal banking hours inconvenient. I should add, also, that cash remains an acceptable mode of wages payment.
Clearly, many employers and employees may choose to have wages paid through one of the commercial banks. On the other hand, the alternative options provided in the Bill will, no doubt, appeal to some employees and their employers. There is provision in the Bill to add to the list of acceptable modes of wage payment, if and when new modes of money transfer become available and prove their worth.
The notion that low paid employees have little to gain from the banking system touches some deep preconceptions about banks and about the capability of low paid employees to look out for themselves. Understandably, banks, like all commercial enterprises, may have a preference for the customer that is likely to profit them most though, no doubt, like other businesses, they will deal with the less profitable customer too. Indeed, banking is one business in which the modest client with a good track record is appreciated.
Turning to the low paid employee, it would be a mistake to legislate on the basis that he or she has not the wisdom to order his or her own affairs. The low paid employee will know, better than anyone else, both the limits and the extent of the benefits to him or her of opening a bank account, and the nature of the account, if any, whether current or deposit, that best suits his or her needs. In any event, not all modes of non-cash wage payment require an employee to have a bank account. An employee may arrange with his or her employer to be paid by bank draft or through An Post or by some other mode of payment where encashment is straightforward on presentation at the appropriate institution.
There are, of course, important issues to be resolved by employers and employees in the move to non-cash wages. Some employees retain rights to particular modes of wage payment, either contractually, as a result of custom and practice, or pursuant to this Bill. The timing and other details of the change to new modes of wage payment are, in these cases, matters for negotiation at the level of the firm.
There may be, in some cases, a question of a financial inducement to encourage workers to make the transition to non-cash wages. One rationale for such an inducement would be to cushion employees against banking costs which they might not otherwise incur. Many employees, though now paid in cash, will already maintain bank accounts. A minority of employees will have operated solely in the cash economy until the changeover to non-cash wages. A survey conducted in 1986 estimated that 65 per cent of employees who were paid wages in cash also operated bank accounts. Another way of regarding such a financial inducement would be as a profit sharing exercise. The savings arising from the changeover to non-cash wages might be shared by the employer with the employees, either as a one-off lump sum payment or in the form of a small but permanent increase in wages. Individual circumstances will dictate, also, whether the convenience of the parties warrants the giving of paid time off for banking purposes.
I have provided in the Bill for transitional arrangements in the case of certain employees. The arrangements are intended to allow an employee currently paid in cash to continue to be so paid until such time as an alternative method of wage payment is agreed with the employer. The arrangements will also allow manual workers, formerly paid in cash, who have entered into an agreement to non-cash wages under the Payment of Wages Act, 1979, to revert to cash wages in accordance with the terms of the agreement.
The transitional arrangements have been criticised on the grounds that the legislation does not go far enough in pushing the move to cashless pay. Critics of the arrangements appear to envisage that the legislation would facilitate a move to non-cash methods of wage payment based on some level of compulsion. There are, of course, serious industrial relations and other difficulties inherent in such an approach. Equally important, perhaps, are the reasonable expectations of the categories of worker involved that they should be treated fairly in the context of the Bill. It is my experience also that undue haste may be counter-productive, particularly where a fundamental legislative change is envisaged. An incremental approach to change will often achieve its purpose more fully and more satisfactorily than any plans to accomplish an overnight solution, however well intentioned.
There are good economic and financial reasons for encouraging the move to non-cash wage payment, for the economy, for employers and, perhaps to a lesser extent, for employees. Like the critics of the transitional arrangements, it is my aim to help to effect a move to non-cash wages as speedily and effectively as possible. I have, therefore, looked in some detail at the case against the transitional arrangements but have been disinclined to accept it, for the reasons already stated, among others. The Bill, accordingly, reflects my considered position on this matter and seeks the House's approval for it.
Let me now bring Deputies briefly through the main provisions of the Bill. The Bill requires every employer to pay wages by one of the modes of payment listed in section 2. As I have already mentioned, the list covers all the widely recognised means of paying money — from cheques and money orders to bank drafts, credit transfers and cash. Rapid future change in this area is to be anticipated because of advances in electronic data processing and other developments. I propose, therefore, to take power so that additional modes of wage payment can be added to the list in section 2 if and when new methods of money transfer are developed and gain public acceptance.
Section 3 of the Bill repeals the Truck Acts. The section also provides for the transitional arrangements which I have just described. Section 4 of the Bill imposes on employers an obligation to give to each of their employees a written statement of wages and deductions. The statement must be given to the employee at the time of wage payment, except in the case of payment by credit transfer, when the statement should be given as soon as possible thereafter.
Section 5 of the Bill is concerned with deductions from the wages of an employee. The section prohibits an employer from making a deduction from wages unless it falls within one of three categories — a deduction which is required by Statute, such as PAYE or PRSI; a deduction which is provided for in the contract of employment, say, pension contributions or a disciplinary fine, and a deduction to which the employee has consented in writing, such as trade union subscriptions, VHI premia or payments to a savings scheme. All other deductions are outlawed.
This section also contains further special restrictions which apply to two categories of deductions. One such category is where deductions are made in respect of either goods or services supplied by the employer and necessary to the employment. Included here, for example, would be the employees' contribution towards the purchase or cleaning of work clothes or the supply of transport to work by the employer. The other category involves deductions arising from the actions of the employee, such as disciplinary fines or bad workmanship.
Sections 6 and 7 of the Bill provide a complaints and appeals procedure for employees who have been subject to unlawful deductions. The right of complaint for an employee against an unlawful deduction is to a rights commissioner in the first instance. There is a subsequent right of appeal for either the employer or the employee to the Employment Appeals Tribunal. Section 8 provides for the enforcement of a decision of a rights commissioner or a determination of the tribunal.
Section 9 empowers the Minister for Labour to appoint "authorised officers" for the purpose of ensuring compliance with the terms of the Bill. The powers conferred on "authorised officers" are similar to those provided in other protective legislation. Section 10 allows the Minister for Labour to prosecute offences arising under the Bill. Section 11 renders void any agreement which is out of keeping with the provisions of the Bill. Sections 1, 12, 13 and 14 are standard provisions relating to definitions, regulations, expenses and short title respectively. The Schedule lists all the Acts which it is proposed to repeal.
As Deputies will know, this Bill was introduced in the Seanad. An advantage of initiating a Bill there is that one benefits at an early stage from the characteristically informal and incisive scrutiny of that House. As ever, I was struck by some of the detailed contributions offered by Senators in a spirit somewhat removed from the cut and thrust of adversarial politics. In the course of the debate, Senator Ó Cuív indicated his concern to ensure that pay statements should be easily understood by employees. He instanced one or two pay statements he had come across which has proved virtually unintelligible because of the nature and extent to which abbreviations were used to describe deductions. Senator Seán Fallon raised with me by letter a fairly precise technical point relating to deductions from wages pursuant to the Bill.
I am grateful to all the Senators and to their colleagues for their stimulating contributions. The two proposals mentioned above are being considered with guidance from the office of the Parliamentary Draftsman. Depending on the outcome of that consideration, I may bring forward Government amendments on Committee Stage to encompass either one or both of the suggestions outlined.
To sum up, this Bill proposes the repeal of centuries old legislation which in its day provided significant rights for workers in the matter of payment of wages. That legislation, developed in the context of an emerging cash economy, has outlived its usefulness. Indeed, the emphasis on cash wages, so central to the Truck Acts, has proved counter-productive to progress and efficiency for some decades. For the future, legislation must take cognisance of the trend towards non-cash modes of money transfer in the economy generally and their necessary consequences for the manner of wage payment.
Despite advances in technology, the need remains, as it did when the Truck Acts were framed, to guard the wage payment rights of employees. Then, as now, the legitimate concerns of employers for cost effective and secure modes of wage payment must also be addressed. I am reasonably certain that the Bill meets the immediate requirements of each of the interests in these regards. As to the future, I am sufficiently confident, or foolish, to hope that the Bill may prove as relevant to the needs of the next century as the Truck Acts did to the needs of the last.
I commend the Bill to the House.
