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Dáil Éireann debate -
Thursday, 12 Mar 2009

Vol. 678 No. 1

Employment Law Compliance Bill 2008: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

We are having this debate in changed circumstances to those that were in place when the framework for this legislation was drawn up under the social partnership agreement Towards 2016 in 2006. In that time the employment situation has changed considerably. The Government and the social partners could not have predicted such a haemorrhaging of jobs as has been seen recently. There was a record increase in the number of people on the live register in January and February, with twice the number joining the dole as did in November 2008. Over 340,000 people are now unemployed with the Taoiseach admitting unemployment could reach 400,000 by the end of the year. If the rise continues at the current rate, the final figure will be much higher. There is general agreement that unemployment could reach 11% by December.

The National Employment Rights Authority, NERA, was established to support employees' rights at a time when the citizens of new accession EU member states could seek employment in Ireland. The economy needed them to fill vacant positions. Since then, we have had a harsh dose of reality. The Bill must now be considered in the context of rising unemployment and ensuring employers are kept in business and can continue to offer employment.

Employees need protection and support from the State from unscrupulous employers. We all know of the high profile cases such as the Gama workers. There are other reports of abuse across all employment sectors. I am not singling out or giving absolution to any one but there is a need to protect employees. There is also, however, a need for balance and a fair approach. In 2006, NERA carried out over 2,000 inspections for minimum wage compliance with breaches in only 104 cases. In 2007, there was a similar detection rate with one prosecution. The minimum wage legislation is only one measure to protect workers with a raft of other measures in place such as health and safety, work time, maternity leave, etc.

Mr. Pat Crotty, chairman of the Small Firms Association, recently informed the enterprise committee that a small firm employer will need knowledge of 40 items of employment law to ensure compliance with employment regulations. We must keep in mind the current pressures on businesses. This Bill should not view employers and businesses as being out to exploit workers. Many hard-working employers are committed to growing their businesses and offering employment. This Bill will only add to the increasing bureaucratic burden on employers.

The House has debated the difficulties faced by small businesses in the current economic environment. We must recognise that they need to be protected and supported rather than having onerous legislation imposed on them. According to representatives from small businesses, the Bill, as drafted, will stifle the employment creation potential of many small firms. As they informed the enterprise committee, would they risk being the subject of 23 new criminal offences as contained in the Bill to employ someone in order to grow their business? The safer bet, they claim, is to stay as is by not increasing employment, but actually reducing it where possible.

The legislation will change the existing relationship between employers and employees. It will potentially criminalise employers, giving NERA the power to impose on-the-spot fines without giving an employer a chance to rectify a problem. Provision for fines of up to €250,000 and prison sentences for non-compliance is also made.

Employers will be obliged to register employees and obtain passport identification in respect of them in certain circumstances. They will be also obliged to provide employees with statements of service when they leave their positions. That is fine for companies with 100 or more employees which would have the human resources personnel in place to deal with such tasks. However, the provisions of the legislation will also apply to businesses that employ only one person. The Government must recognise that small businesses are being overburdened. Like previous speakers, I wish to ask the Minister of State whether a regulatory impact statement, RIA, might be completed in respect of the legislation to identify the effect it will have on employers and the costs to which it will give rise.

Small businesses are the backbone of the economy and we are becoming increasingly reliant on them. Such businesses must be protected. We must acknowledge the risks taken by those who establish a business and employ, for example, two to six people. These individuals are obliged to pay rent and high local authority charges. Representatives of the Vintners Federation of Ireland came before the Joint Committee on Enterprise, Trade and Employment yesterday and indicated that water charges have increased threefold in the past two years. That is a major burden on any small business.

It is becoming increasingly difficult for businesses to operate in this country. The banks are not facilitating them because they are not releasing funds. When the recapitalisation scheme was implemented, the Minister imposed a condition in this regard. However, representations have been made to Members on all sides with regard to how difficult it has become for businesses to access funds. These businesses are viable, are a strong presence in their communities and have a future. It does not make sense, therefore, that they are not being supported during this difficult period. There is no doubt they will get their affairs in order. However, the banks are not making funding available to them.

The Minister of State indicated recently that the question of the minimum wage must be addressed. I do not believe we can afford to reduce the minimum wage but I am of the view that it should be frozen for a number of years. As the Minister of State is aware, the minimum wage is set at €8.65 and everything is relative to it. I accept that employing people has become expensive but I do not believe those at the lower end of the income scale should be targeted. Ours is a high-cost economy and it is becoming difficult to do business here. In that context, I would support a freeze being imposed in respect of the minimum wage.

The Bill will impose an additional burden on employers which they cannot afford during this difficult period. Is it really necessary to establish the National Employment Rights Agency, NERA, as an autonomous body? Would it not be possible to have NERA inspectors operate under the aegis of the Department of Enterprise, Trade and Employment? There are now so many inspectors in NERA that it recently turned its attention to the restaurant and hospitality sector outside Dublin. Many establishments which serve food on Sundays have been obliged to stop doing so because the employment regulation order that is in place — to which a blind eye was previously turned — is being enforced. Increasing numbers of these establishments cannot trade on Sundays because it is impossible for them to pay their employees double time. The latter is unnecessary in this day and age.

I have spoken to many people who were let go because their employers could not afford to pay double time. The individuals in question are students or young mothers — who would be covered from a child care perspective — who want to earn money by working on Sundays. The situation is ludicrous. Some progress has been made in respect of premium rates for Sunday work but we will be obliged to see how matters develop. It does not make sense that, in respect of this matter, there is one rule for Dublin and another for Cork and other places. In an era when people expect to be able to shop on a 24-hour basis, one would certainly expect to be able to order soup and a sandwich in one's local pub on a Sunday. Pubs should not be obliged to shut down their kitchen operations on Sundays as a result of a restrictive regulation that makes no sense. It is bureaucracy gone mad.

The Bill is over-burdensome and unnecessary and should be reconsidered in light of the changing economic situation. It will be responsible for jobs being lost rather than being protected. I will be particularly interested in discussing on Committee Stage section 45, which relates to electrical contractors and which is particularly over-burdensome. Many members have been contacted by such contractors in respect of this section. I look forward to the debate on Committee Stage and to highlighting the difficulties being experienced by employers.

I am delighted to have the opportunity to contribute to the debate on the Employment Law Compliance Bill. For some time, I have expressed, both publicly and at meetings of the Fianna Fáil Parliamentary Party, major reservations with regard to aspects of this Bill. However, I take this opportunity to commend the Minister of State, Deputy Kelleher, on his efforts on our behalf, particularly in the context of the recent statement with regard to paying employees double time on Sundays. I acknowledge that the Minister of State has been extremely attentive in respect of this matter and is doing his best on our behalf. He has been, however, somewhat hindered by some of the mechanisms that were put in place in recent years. I hope action will be taken in respect of those mechanisms in the coming months.

The most significant element of the Employment Law Compliance Bill is that it will place the National Employment Rights Agency, NERA, and its powers and responsibilities, on a statutory footing. NERA was established on an interim basis in 2007 and from what I have seen of its operations since then and from what I have heard from employers and employees about the methods it has employed to date, I would be extremely concerned with regard to it being placed on a statutory footing. The approach NERA has taken towards many local businesses in my constituency has been, to put it mildly, heavy handed. Alarm bells started ringing approximately one year ago about NERA's activities when groups, not just employers but also employees, contacted my constituency office, either by telephone or in writing, and outlined the difficulties they were experiencing.

There is no doubt Members do not want to see workers being taken advantage of. The shameful treatment of workers in Irish Ferries in my constituency a number of years ago showed that a small number of employers will put their profits before the rights and entitlements of employees. It is, therefore, correct that we should put in place procedures to combat the abuse of workers. However, in light of NERA's actions in recent years, I cannot but think that our response to companies such as Irish Ferries has been similar to the approach of using a sledgehammer to crack a walnut. In trying to stop these blatant abuses of workers' rights, we are primarily targeting small companies that are struggling to survive in the current economic climate. NERA is putting these companies under pressure to such an extent that jobs are being lost in County Wexford and elsewhere throughout the country.

I have been a Member of the Dáil for 20 months. I come from a self-employed background and one of the most frustrating things for me is the lack of speed with which we deal with issues relating to government and Government policy. Business and what I refer to as the real world move at a rapid pace, but Departments and the House operate at a different speed level when dealing with issues of huge concern to the private sector.

Small businesses have huge difficulties at present. Most people who are self-employed consider their businesses and the work they are trying to do completely over-regulated. There is probably a huge lack of knowledge of employment law in the private sector. Most people who open small businesses concentrate on getting the rent down, the shop fitted out and the stock in place before taking on two or three people to work for them. A month or two later when things settle down they discover there is a raft of employment law of which they were not aware and with which they will have to deal as they try to run their businesses. The NERA has a role to play in that area in terms of its information campaign. A number of efforts have been made by the NERA over the last number of years to try to promote the importance of its work and role, but it has a huge role to play in ensuring that the information gets to all small businesses.

I understand 19 joint labour committees have been set up. They are the result of employment regulation orders with which, again, I have no difficulty. They have existed for a long time. However, the priority of the joint labour committees is to protect workers' rights. I believe they have failed in this, particularly with regard to the catering sector. They have failed to protect the most important item, which is jobs in the sector. Thousands of jobs have been lost because of a decision by joint labour committees, who purport to represent all the organisations representing hotels, restaurants and other sectors. I have found that most small businesses are not members of these organisations and they do not feel that the organisations broadly represent them. They are faced with a situation where a labour charge for Sunday work has been imposed on them.

I recall from when I was self-employed that while the rates collectors were nice people and I knew them very well, one was never happy to see them arrive with the bill because it was seen as another tax. This was particularly so if they arrived on a day when one had received a difficult bank statement or a machine had broken or one was faced with other costs. To have a NERA inspector arrive on one's doorstep is also very worrying for the employer, particularly if he feels he has been doing the right thing by paying his workers a fair rate and not over-working them. Despite that, he is now facing very stiff penalties, in view of some of the rules and regulations coming on stream.

The representative bodies of the JLCs must be much more flexible in their approach and more proactive in dealing with the issue. For over a year I have been raising the double time on Sunday issue, where we had the ridiculous situation of Dublin charging one and a third while it was double time in all the rural areas. This has cost us a huge amount of jobs throughout the country.

We brought this to the attention of the Minister of State and I am aware he has been in touch with the joint labour committees. However, I first raised the matter last July. Why has the joint labour committee not met, if it is the representative body of all these groups who are lobbying Deputies on all sides of the House? Why has it not been able to deal with this issue? It is clear to everybody that this is causing huge concern and is costing jobs. I call on the joint labour committee to meet immediately about this sector and to deal with the issue as quickly and efficiently as possible.

I have a number of letters — I will not give the names of the individuals concerned — that give a flavour of what we are facing in terms of the reaction of small businesses to NERA and this Bill. The first letter is from a landlord whose tenant is an Indian restaurant. He states:

As I am sure you are aware, the Employment Compliance Bill (Or Anti Employment Bill) shall be coming before the Dail for enactment within the coming months. I hereby plead with you not to support this Bill in order to save thousands of jobs and business's throughout Ireland. The hospitality and catering sector can simply not afford to have anymore anti business legislation enforced upon it. I should add that I have no problem with employment laws in general and that I would never tolerate any abuse of an employee in any shape or manner. However, the pendulum has swung severely to the left in this country now and the results of this can be seen at the many lengthening dole queues throughout the nation as I write.

I also received a letter from the representative of one of the major hotels in the county. He says:

The hotel industry is a seven day week operation more so than any other industry in the country. Any employee joining the industry is fully aware of the business and what it entails and accepts that weekend and Sunday work is the norm. I would note that Sunday opening for retail outlets has only been widespread over the last 10 years due to consumer demand but yet they are only obliged to pay a third premium.

The payment of double time for Sunday means that for the most basic job within the hotel we are required to pay €20.13 per hour. This is before the imposition of holiday pay and Employer PRSI which brings the ultimate hotel cost to in excess of €24. This is uneconomical and while the hotel industry is a seven day week operation, the rest of the week is in effect subsidising the Sunday. This has already seen hotels curtailing their services and hence the number of staff they require on a Sunday While we have not yet taken this course of action, it is certainly one that we are considering.

Within the JLC, there is no clause to claim inability to pay, and as a result we are legally obliged to pay all entitlements under the JLC even though it could lead to the closure of our business. [This business employes over 400 staff].

2008 has been a very difficult year for our hotel group, with sales decreasing on average 15-20% since June on the comparable months from last year. As a result we are now running a wage percentage of 41% to 30th September 2008, which when you consider that we have 2 of the quietest months of the year (October and November) still to feed into this figure, it will ultimately mean a likely wage percentage of in excess of 42% for the year. This is certainly not sustainable.

One can see the difficulties people are encountering in the industry. For that reason I am hugely concerned about what we are about to do with the NERA. The NERA has been particularly vigorous over the last year in targeting small businesses. The previous speaker alluded to the fact that it has targeted the hotel and catering sectors. Wexford is no different. I have met a large number of employers and employees who have told me about the problems that these NERA inspections are causing them. Hotels, pubs and restaurants are curtailing their services on Sundays. Many of them no longer serve food on Sundays and jobs are being lost as a result. How is our local tourism industry going to survive if visitors to Wexford and other counties have difficulty getting a meal on a Sunday? It is crazy.

Many of the businesses being affected by these inspections are struggling to survive at present. They are facing the uncertainty of whether they can pay their bills and wages each week. Instead of recognising the difficulties they are facing and offering them some sort of assistance, we are inflicting NERA inspections on them. A number of employees of one business came to my office after a NERA inspection and presented me with a petition asking the Government to stop NERA from ensuring that they are paid the Sunday premium. They did not want the money, even though NERA insisted that they take it, because they saw Sunday as part of their normal working week. They were afraid the business they worked for would have to close on Sundays because it would not be able to afford the extra wage costs.

This particular business was also caught for lump sum payments, which is very difficult for a small business to take on board. I have heard that some lump sums are a minimum of €15,000 and sometimes more. In fairness to the employers, I believe they genuinely did not know that they were supposed to pay the particular rate at the time. This relates to my earlier point about ensuring the information gets out to the businesses concerned. Government agencies should not make people fear for the security of their jobs. People are already fearful in the current climate. Unfortunately, that is exactly the result of NERA's operation.

Another reservation I have about the Bill is the level of powers being given to NERA and the free hand it is being given in carrying out inspections. Under the Bill, NERA is given the legal right to carry out unannounced inspections on any business premises in the country, even when there is no suspicion of any wrongdoing. The civilian equivalent of this would be to give the Garda the power to enter and search a private home without any cause. In my view, all inspections should be by prior appointment only. If one is due for a tax audit, the Revenue will write to inform one of the date. NERA should not be any different in that regard.

We have also been told that one of the instructions given for NERA inspections is that they be carried out at a reasonable hour. I know of a case in my constituency where NERA inspectors entered a restaurant at 8 p.m. on a Saturday night — the busiest time in the restaurant's week, and the only time it was anywhere close to making a profit — and insisted that the restaurant owner sit down with them and go through all the employment records. The owner had to debate whether to shut down the restaurant to deal with the inspectors. Is 8 p.m. on a Saturday night NERA's interpretation of a reasonable hour? That is absolutely ridiculous and should not be tolerated by business owners or this House.

I am very concerned about the lack of accountability for this State agency that we are about to put on a statutory footing. I have raised many issues in that regard in recent months but I was told that nothing could be done because NERA is an independent body. There is no mechanism in place where Members of this House, or people affected by the inspections, can raise legitimate concerns about the activities of NERA and have them addressed. I understand an advisory board is being established and the director of NERA is required to have regard to the advice of the board. However, he merely "has to have regard" to the advice. Does having regard to advice mean that the issues raised will be acted upon? I am worried by NERA's lack of accountability and I urge the Minister to consider the matter.

One of the sanctions specified in the Bill is that a business owner who has been found guilty of malpractice will bear the cost of the investigation, but there is no reference to NERA bearing any costs for the loss of business to a company that was investigated and found not to be involved in any malpractice. A measure of that nature would be an interesting option to consider and could make NERA inspectors more accountable for their actions. It would make them more understanding of the huge pressures businesses face in today's market and I hope it would bring an end to the practice of inspecting busy restaurants not only on Saturday night, but on any night. There is plenty of time during the day to carry out their work.

I am also concerned about the criminal charges that are envisaged as sanctions under the Bill. We will make it a criminal offence for an employer not to display a notice telling employees how to contact NERA. Surely that is going a step too far? Most businesses now have a wall full of certificates, notifications and paperwork on them already. Perhaps the matter could be addressed by the dissemination of information by NERA. There are no less than 23 new criminal offences under the Bill. We have already seen the difficulties caused by criminal offences to fishermen, yet we are treating another area of small business in the same manner. What self-employed person would be given any incentive to try to grow a business by hiring employees when it would be much safer to continue working at his or her current level? Many of the criminal charges are a further obstacle to job creation and I am extremely concerned by them. As the fines range from €5,000 to €250,000, I can foresee a scenario where the key will be handed to the NERA inspector or a court because businesses will not be able to cope.

All speakers have alluded to the fact that we are in difficult economic circumstances at present. The first concern for anyone with an interest in the economy, be it Government, State agencies, workers, employers, the joint labour committees and the social partners, must be to create conditions that will promote the retention of the maximum number of people in employment. We must be aware of the current circumstances and the impact the terms and conditions of the Bill will have on the ability of businesses to provide employment. Everyone has a duty in this regard. However, I am concerned about the role of NERA as it currently operates and as it is proposed to operate under the Bill. Perhaps a two-year sabbatical could be introduced to allow businesses to get back on their feet. That time could be well spent on the education of employers and employees regarding their rights and of the role NERA will have in the future. I urge the Minister of State, Deputy Kelleher, and the Tánaiste and Minister for Enterprise, Trade and Employment to take on board the serious concerns that exist about this Bill and to consider the various measures proposed in it and whether they will help or hinder the process of maintaining employment in the small business sector.

Flexibility is key in small businesses. I have a very good friend in the grocery business. He told me he employs a number of girls to work on his deli counter. Under employment law they must have a break between 11.30 a.m. and 2.30 p.m., which is the busiest time for the deli counter. He cannot afford to give his staff a break during that period but under employment law he cannot afford not to allow them to take an hour's break. He is in a difficult situation. In the real world people have to show flexibility in terms of working time and working hours. The reality is that those workers work during that four-hour period and take their break before or after it. NERA must be watched very carefully and encouraged to be pro-jobs, especially with a view to job retention, in addition to its current role of protecting workers' rights.

I am delighted to have an opportunity to discuss the Employment Law Compliance Bill 2008. I congratulate the Minister on introducing the Bill and having such a comprehensive debate on it.

Having listened to a considerable amount of debate on the Bill in recent weeks, I am somewhat disconcerted to find many speakers on the Government and the Fine Gael benches make a virtual concerted attack on the legislation with scarcely a mention of workers. Approximately 98% of the time those speakers considered the Bill from the perspective of employers. Obviously, it is extremely important to ensure that we maximise the amount of employment in this country, but we do not wish to do so at the expense of undermining workers rights.

Much legislation has been put in place on the minimum wage, working time and other employment legislation. We must take a principled position, and if we put in place legislation to provide for certain rights for workers, we must uphold it and put in place a mechanism to ensure it is upheld. I understand that is the context in which the legislation is being introduced, so that the enforcement of the law is on a statutory basis.

I can outline some horrendous cases of human exploitation. For example, SIPTU held a conference for hotel workers on 18 February. In many ways catering is the area that is most vulnerable currently. Some of the issues raised by hotel workers who attended the SIPTU open day in Dublin on hotel workers rights included long working hours, payment below the minimum wage and no rest breaks.

Hotel staff are among the most exploited and lowest paid workers in the State. NERA found that approximately 80% of hotels were breaking employment laws. The branch organiser, Mr. Paul Henry, said that at least 60% to 70% of hotel workers were non-Irish and that this increased their vulnerability. They are particularly vulnerable at present. He said the union had encountered a substantial increase in requests for help from workers in non-union hotels in recent weeks. He also said: "There has been a steady increase from early December and since Christmas it has been relentless."

He outlined that housekeeping staff had to fight for vacuum cleaners, no porters were available for heavy lifting and the supervisor always screamed at staff that they were working too slowly. Within a month of starting work, one lady's wages were cut twice but if anybody complained to the boss, he or she was told to find another job. She was very afraid as she was in the country on a work permit. SIPTU took up that case, among others, and outlined the details of how matters had improved as a result.

Down the road in the Gresham Hotel many of the most senior staff have been put on short-term work and told there is no work even though we are coming into the busy holiday season from St. Patrick's Day on when tourist numbers increase. People have been recruited in their place and they have been told they must leave for a month. When that month is up, they will be told they must go for another month because of the lack of work, but other staff will be recruited at or below the minimum wage. This is the human side of the coin.

These people are trying to earn a living. They provide a good service, but they are being discriminated against. We must get the balance right in this area. While flexibility is important in the catering area, we cannot, as legislators, allow the situation return to the old days of William Martin Murphy where workers have no rights. We cannot return to the days of Dickens and the Mr. Gradgrind syndrome. That era is over. We must get the balance right and that is what this legislation attempts to do.

We need this legislation because we have not got the balance right to date. The 2007 and 2008 reports of the National Employment Rights Authority, NERA, are a litany of exploitation in this country. The trade union movement has been pressing for ages, as has the Opposition, for inspectors in the workplace, but these have been as scarce as hens' teeth. People in the construction industry were dying because there were no inspectors and due to the lack of enforcement.

In other areas of the industry there was huge exploitation with regard to the minimum wage and working hours. This was happening under the watch of the Minister, Deputy Mary Harney, who was the Minister for Enterprise, Trade and Employment at the time. She would not allow inspectors to come in. Thankfully, in 2007, we got 50 inspectors and now in 2008 we have 80 inspectors, an adequate number to carry out the job. Inspectors must have a structure under which they will operate and clear statutory guidelines to follow. This is what we are talking about in this Bill.

Towards 2016, which was negotiated by the Government with the social partners, requires the Government to introduce legislation to secure better compliance with best employment practices and standards and with existing legislation. The NERA reports of 2007 and 2008 indicate how badly this legislation is needed. The reports identified a range of blatant abuses in the workplace during those years, which are the only years for which we have information, because there was no enforcement structure in place up to that time.

The appalling vista is that these wholesale abuses in the workplace were taking place the length and breadth of the country not only in 2008, but for the entire duration of the Celtic tiger. People made vast fortunes in that time but there were no serious inspection procedures to uncover exploitation. Unscrupulous employers have taken full advantage of the absence of adequate supervision and monitoring of the workplace.

However, the Government has been the real culprit. It stubbornly refused to appoint inspectors and failed to enforce compliance with employment legislation. The National Employment Rights Authority was not appointed until 2007, and then only on an interim, non-statutory basis. It was light regulation or none — we have seen the result of that in the area of the banks and financial institutions. It was Fianna Fáil-Progressive Democrats ideology to let it rip in the marketplace. They allowed their developer friends to run the show and established no obstacles to greed or profit.

In those years of plenty, many people were exploited. Irish workers were underpaid in many industries and many worked on dangerous building sites. Injuries and deaths occurred in the mad rush to build properties, many of which cannot now be sold. This could and should have been avoided. I am not saying the Minister of State, Deputy Kelleher, was in charge at the time, but Ministers must accept some responsibility for the colossal number of accidents on building sites.

Non-national workers were particularly prone to exploitation. The stubborn refusal of the Government, in collaboration with the British Government, to allow the EU Temporary (Agency) Workers Directive 2002 to be enacted in member states facilitated unscrupulous employers in denying the rights of thousands of workers to proper pay and conditions of employment in Ireland and elsewhere.

The current scandal in the banking system, where the pillars of the financial establishment bent every law in the book to aggrandise themselves and in so doing destroyed the economy, has ruined people's lives and livelihoods. The lack of regulation in the financial sector has destroyed the economy and caused unemployment to rise to 354,000. This is the result of the greed of people in positions of authority in the private sector who were not subjected to any regulation. The banking scandal stems from the same principle of greed and exploitation that ravaged the workplace over a decade. Exploitation and greed did not just happen in the banking sector, but right across the board.

I would like to mention some of the more serious breaches and problems encountered by NERA in 2008. These include employers not keeping any records on employees or failing to produce records for inspection; falsifying records, including payslips and time sheets; requiring employees to work in excess of the legal limit; paying employees for significantly fewer hours than the hours actually worked; paying employees less than their legal entitlement; not providing employees with payslips; and making unlawful deductions from employees' wages.

In 2008, NERA's inspectors carried out a total of 27,900 calls, interviews and inspections. This was an increase of 96% on 2007, the year NERA was set up pending establishment on a statutory basis. NERA inspectors detected 4,629 breaches of employment law in 2008, compared to 2,344 in 2007. Arrears due, totalling €3,112,064, were recovered by NERA in 2008 and paid back to defrauded workers. The amount recovered over the two years came to over €5 million. Clearly, the sharp increase from 50 inspectors in 2007 to 80 in 2008 had a significant effect on the number of inspections and detections. NERA conducts its investigations in a fair and impartial fashion. Therefore, it is not a question of a thief arriving in the night and causing mayhem.

The main purpose of the Employment Law Compliance Bill is to put the National Employment Rights Authority on a statutory footing and give it enhanced powers and sanctions. Already, NERA has proved its worth. Statutory authority and increased powers of inspection and enforcement augur well for the protection of workers' rights and for redressing them where they are denied.

NERA also provides essential information services through its website which in the past 12 months received 1.8 million hits. This information service would not exist if the authority had not been set up. Hits are coming not just from employees making complaints, but are coming in increasing numbers from employers, who often are not aware of their obligations. It is important this information is available in a fair and balanced fashion. NERA received 115,000 calls in 2008 seeking information or making complaints, a 37% increase on 2007 and received 11,300 e-mail inquiries, compared to 5,700 in 2007.

The situation with regard to awareness of employment regulations is almost like the situation with regard to knowledge of the Lisbon treaty. There is a significant lack of information on employment rights on both sides, employers and employees. Now, at last, NERA has lanced that boil and brought into the open the fact that we have a significant sector where employers are not aware of their obligations and employees are unaware of their rights. This is particularly true in vulnerable areas of employment such as the hotel and catering industry. This will, hopefully, be addressed by both NERA and the advisory body. There is scope for a more balanced and co-operative approach in these areas.

I have heard calls for the legislation to be scrapped in its entirety. It was not only said that NERA should be put on the back burner or abolished entirely, but also that it is a quango. It would be a terrible shame to abolish it because NERA demonstrates that it is doing a great job and that there is considerable exploitation at present. Exploitation must be addressed. There is exploitation of legislation we have passed in this House and exploitation of human beings providing a service through work.

One of the major concerns of the electorate at the time of the referendum on the Lisbon treaty in June 2008 pertained to workers' rights. The Minister of State, Deputy Kelleher, will know from the Millward Brown survey that 40% of those who voted "No" did so because they had "significant concerns" over exploitation and the undermining of workers' rights. This comprised a significant issue and there was a significant campaign in this regard at the time.

There was much concern abroad over the failure of the Government to appoint workplace inspectors. This was quite a lively issue and was raised in the House continually. There was concern over the failure of the Government to protect temporary agency workers and also to protect against the threat posed in EU member states to hard-won workers' rights regarding the workers' directive. Members will all remember the Laval, Rüffert, Viking and Luxembourg cases. All these had an impact and were all related to the protection of workers in the workplace.

In December, the Taoiseach and the representatives of the EU member states put together a package of proposals to underpin a second referendum on the Lisbon treaty in the autumn. In it they promised collectively to attach "high importance" to workers' rights. This was part of the guarantees issued at the summit meeting in December.

This legislation is a significant measure towards ensuring domestic protection for Irish workers. It is important that it be passed into law and that the additional powers, including in respect of penalties, be granted to NERA without delay. A strong, well-funded and effective statutory authority will do much to reassure the trade union movement and the workforce that the Government has at last agreed to provide the necessary protection to prevent the exploitation of working men and women in Ireland.

The Labour Party has made it clear that its support for a second referendum cannot be taken for granted by the Government. Significant progress on the provision of protection for workers must be demonstrated by the Government. This legislation is a major step in the right direction.

I am delighted to have the opportunity to reply to the debate on this legislation. There was much interest in the Second Stage speeches inside and outside the House. They were followed closely not only by interested employer representative groups, but also by the trade union movement and Deputies who did not have an opportunity to contribute in the House.

There is no doubt but that there are varying views — to put it mildly — on whether this Bill will be of benefit to employees and employers. Having listened to the Second Stage debate, I learned of the concerns causing difficulties for some Deputies. It is certain there will be strong and robust debate on Committee Stage. While the basic tenets and principles of the Bill will stand, I am sure we will consider as favourably, sympathetically and flexibly as possible all amendments that might make the Bill more beneficial to employees or employers, or both.

I accept the bona fides of Deputies who have commented on numerous occasions on rates of pay. If this Bill became law by midnight, not one provision would change the lives of employers tomorrow morning. NERA has all its investigative powers only because it is enforcing the employment rights legislation on the Statute Book. It is important that this is said because there is an incorrect view that NERA is setting the rates. It is only enforcing the employment conditions agreed in the context of discussions involving joint industrial councils and joint labour committees. It is basically enforcing the de facto law of the land and does no more than that. I have read the Bill, including its explanatory memorandum, from start to finish on a couple of occasions and cannot find any statutory provision giving responsibility for the setting of rates to NERA. Rate of pay are set by joint industrial councils and they become registered employment agreements, which are enforced by labour inspectors and are to be enforced by NERA.

I hope this will be reflected in the statutory provisions when the Bill is passed, but there will be no change in the context of daily policing of breaches of employment law raised with labour inspectors by trade union officials, employees or employers. Cases have been raised by employers. If one has a hotel in one end of a town and is paying the de facto statutory pay rates but one's competitor at the other end of the town is not, one is put at a very serious commercial disadvantage. It is important to get the balance right. There are certain areas where the joint labour committees and joint industrial councils must become more responsive to needs that arise and to the commercial reality of a given sector or the workplace in general. This point was made by Deputy Connick.

I ran into hot water with an individual some time ago over the minimum wage. Deputy Clune raised this issue today. At no stage did I say the minimum wage should be reduced or increased. I was just making the point that the Labour Court adjudicates on the minimum wage and when it has made its final determination, it presents it to the Minister, who can either accept, reject or amend it. He or she can have it adjudicated upon by external consultants or expert bodies, such as the ESRI or NESC, to determine what would happen if the minimum wage were raised, lowered or amended in any way. That was the only point I was making.

I stated in respect of joint labour committees and joint industrial councils that there is a new reality. We know some companies and sectors are under enormous pressure, as highlighted frequently by Deputies on all sides, including today. The catering sector, for example, falls into this category. Deputy Connick is correct that it took a long time for the joint labour committee to acknowledge there was a discrepancy pertaining to rates of pay during Sunday trading in Dublin and elsewhere. Eventually, it discussed the issue under an independent chairman and reached an interim agreement. Such an agreement is subject to a statutory process and must be lodged before the Labour Court. Submissions are sought from interested parties and, ultimately, if the rate is agreed upon, it becomes the law of the land. NERA will have no hand, act or part in making such decisions and will only be involved in their enforcement.

I will probably read of cases of exploitation. Deputy Costello pointed out that there are genuine cases of exploitation of workers. There is not much point in deluding ourselves into believing every individual is the nicest person in town. There are cases of genuine exploitation and we must put in place some mechanism so the authorities of the State can say there is an inspectorate with statutory powers that can enforce the laws of the land.

We have already taken on board some Members' views on the criminalisation of employers and we will table amendments in this regard, which I hope will receive broad approval on all sides. We wanted to have legislation which would be supportive of, and supported by, employers and employees and which would have broad support in the House. This would send out a very strong message because not only do we want compliance through enforcement, we want to have compliance through education and encouragement. We want the employers, trade unions and employees to buy into this in order that we have a stream of information on people's rights, entitlements and obligations, which would be very welcome.

I spoke to NERA on numerous occasions. It has been brought to my attention, and I accept, that some labour inspectors are what I term "overenthusiastic" and what others might term "heavy-handed". We will bring forward an amendment on a code of practice for labour inspectors. This would be fair because we do not want people hounding employers by, for example, having labour inspectors arriving to do a full audit at unearthly hours or during difficult times when two or three weddings or functions are taking place on the premises. These can be done at normal times with notification.

If a labour inspector, however, has a genuine belief that there is exploitation, not only in the context of wages and conditions but also with regard the Employment Permits Act, he or she might have to arrive unannounced, as otherwise a second lot of books might come out as opposed to the first lot. As this can happen, we must provide for it. In general, the code of practice will be meritorious of support from all Deputies. We must have broad understanding that these are public sector workers going about their lawful duty to ensure there is compliance. They do no more nor no less.

However, if heavy-handed tactics, as were described by some Deputies, are being used, we must take this on board and this is why we will bring forward an amendment on the code of practice. At least the inspectors will know they have obligations just as we expect members of the Garda Síochána to behave in a courteous and professional manner when dealing with the public. We do not expect anything less of any other person dealing with the public on behalf of the State.

I hope the commentary on the legislation outside the House in the coming days will take account of the fact that nothing will change in the context of employers' obligations to keep records. There is already a corpus of legislation under which they are obliged to keep records and pay rates and conditions agreed under employment regulation orders and registered employment agreements. If this Bill were not passed employers would be still obliged to deal with these, and this information must be repeated on occasion.

We have had cases where labour inspectors went into hotels, requested the books for audit purposes and found people were not paid double-time for Sundays. It is a fact that many people were not paid double-time for Sundays in rural Ireland. Employers are legally obliged to pay double-time for Sundays but it was not enforced. Backdating these arrears put much pressure on people. The issue is that this money is not that of Deputies Billy Kelleher, Seán Connick, Joe Costello or Leo Varadkar, it is the employee's money and he or she is entitled to it. We cannot negotiate people's rights on a daily basis. They are entitled to these arrears and if they wish to seek redress we must uphold and vindicate their rights and entitlements. The concern was with regard to rates of pay and not enforcement of those rates.

This Bill was a key commitment of Towards 2016 and the social partners were insistent on this. It was broadly discussed with the social partners and the Bill has been in gestation for a long time. There were much toing and froing between the social partners in this area. The Bill was published last year and was slow to come to the Dáil simply because the social partners wanted clarification on issues. It is hoped the social partners will see as genuine our commitment to protect workers and to ensure their rights and obligations. Under the Bill, employees have obligations. If everybody adhered to the law of the land on rates of pay and conditions it would not give advantage to those who exploit or underpay workers and undermine businesses which lawfully pay workers. This issue has been raised with me by many hotels and restaurants which pay the rate but know a business down the road does not. We must ensure we have clarity on this issue.

This was a genuinely interesting debate. We can accept that nobody in Dáil Éireann wants to see workers exploited and, equally, they want tacit acceptance that businesses are under pressure. If a business is under pressure and it has cut its cost to the bare minimum in terms of overheads, commercial rates and costs to banks and Revenue and the only variable remaining is wages, at what stage does one state enough is enough? One cannot keep trading on the backs of workers. There comes a time when a business is just not profitable and one cannot expect workers to go to the nth degree and work for nothing to keep a business going.

This is a challenging time but the country should be proud of what we achieved with regard to the minimum wage which is €8.65, the second highest in Europe. We as a society, a Government and a Parliament have stated that we value fair remuneration for a fair day's work and that we accept this as a modern standard belief. We should be proud of this. I would have concerns about any undermining of this. How far does one go towards a worker effectively working for nothing? We can discuss this issue on Committee Stage.

Deputy Varadkar raised the issue of NERA costs and benefits in the context of the regulatory impact analysis which was carried out and has been available on the Department's website since the Bill was published. If the Deputy clicks into it he will have seen it before I am finished to see whether it is of benefit to him.

I did look at it but there are no figures in it.

We find that figures can be a very risky business. The provisions of the Bill arise directly from the process of consultation negotiation as referred to in the context of Towards 2016.

With regard to NERA being a quango, an advisory board was established and a former Member of the House, John Dennehy, was appointed chair of this board. I have known John Dennehy for a long time and he has a wealth of experience in that he was a member of a trade union for many years and was a shop steward. He was also involved in health and safety in Irish Steel. He is a former Lord Mayor of Cork, a former chair of the Southern Health Board and a former Member of this House.

There is no remuneration for people on the advisory board. They just give of their time. The idea was to get a cross-section of people from employer and employee groups to harness expertise, and to have a chair with experience on both sides to bring them together to advise NERA on an ongoing basis without getting involved in the day to day details. This advisory group does not constitute an onerous cost to the Exchequer. Views were being put about that its members are on large sums of money. I want to clarify that this is inaccurate. It will remain staffed by civil servants but at a sufficient arm's length from the Department for good operational reasons. The advisory board has drawn from a great wealth of experience, so the compliance message is put across to employers. No fees are paid to the advisory board.

The issue about quangos must be kept in context. The reason it was set up on a statutory basis is that we want to ensure it is slightly removed from the Department. The Minister will not be taking the prosecutions, but NERA itself will do so. The Bill puts NERA on the same statutory footing as other organisations. It allows the body to work in close co-operation with the Revenue Commissioners, the Department of Social and Family Affairs and the Garda Síochána. That is a positive aspect, as it allows those bodies to undertake joint operations and pool resources and information. It can then address concerns in a more effective manner, which most people will welcome.

Deputies Fleming and Penrose expressed concerns about the level of accountability to the Oireachtas of the director of NERA. Deputy Fleming also questioned whether the restrictions placed on the director for 12 months following the cessation of his appointment were appropriate. Section 25 ensures that the director is accountable to the Oireachtas by being required to appear before Oireachtas committees on request. The 12 month restriction placed on the director under section 9 of the Bill would arise only if he or she resigned or was removed from office. We might look at this on Committee Stage to make sure there is accountability. We do not want the director before us every day of the week, asking him or her to explain a prosecution before the court. However, we will have him or her before committees to explain policy and to bring accountability on broader issues. A code of practice for inspectors can allow for these issues to be raised in a discussion with the director before an Oireachtas committee.

If Deputies feel there is not enough accountability in NERA, we can re-examine the matter. However, the purpose of the Bill is to remove the authority from the Minister and the Department and to allow for a statutory set up of the authority in order that it can take prosecutions in its own name.

Deputy Varadkar and others raised issues about employers. We are seeking to remove some of the more severe sanctions where employers have ended up with criminal convictions for what we would consider lesser offences. We can have a detailed discussion about that on Committee Stage, and we are very open to examining that area. We need a strong Bill, but some offences may be dropped. I hope that satisfies those Deputies who expressed concern. We cannot water down a Bill to a stage where it is incapable of operating as a deterrent. There must be a deterrent and sanction at the end of the day. We have had a very beneficial debate. If there are any points people wish to make, we are open to listening to them on Committee Stage, but the broad thrust of the Bill is the same.

Different issues have been raised by many Deputies, such as on-the-spot fines, the accountability of NERA and section 45. In order that people can ask themselves whether this Bill is before us for the right reasons, I will outline a few recent cases. In the case of an employer and a domestic worker, the domestic worker was given a contract of employment setting out the minimum rate of pay and specifying a 39 hour week. The employee alleged that she was required to work in excess of 90 hours per week with no breaks, and that the minimum wage per hour was not paid. NERA investigated this complaint and arrears of €10,000 were paid to that employee. That is a substantial sum of money to a person on the minimum wage. It was gross exploitation and that is why we must be conscious that this is happening in our communities.

Another minimum wage case involves a tyre sales and puncture repair company. The employees alleged that they were being paid €5 per hour, even though the minimum wage is €8.65 per hour. The employer refused to co-operate with the inspection process or with any written requests. He stated that he did not know the names of his employees, that they received €50 per day, but he would not specify the hours worked. No records were provided despite repeated requests. The only avenue currently open to NERA is to take a prosecution against the employer for failure to produce records. The current maximum fine for such an offence is a little over €1,900. I have many other examples involving construction companies and registered employment agreements. This is what is happening, and we need to be conscious of that.

I have delayed the House long enough. I thank the Deputies and the officials in the Department who have worked long hours to bring this Bill before the Dáil. We are understanding of all views in the House, but the fundamental purpose of the Bill is to ensure we have compliance with all the existing employment rights legislation. The Bill does not put any extra employment law on the statute books. It only enforces that law. I look forward to Committee Stage. I thank the Acting Chairman for his indulgence. I probably went over my time, but I think there were important points that needed to be made. When we are discussing this on Committee Stage in the bowels of Leinster House, we can have a genuine debate. The social partners have agreed on this, and it is important that the Bill has got their support. It is being put forward for all the right reasons, and I look forward to debating it on Committee Stage.

Question put and agreed to.
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