I am taking this matter on behalf of the Minister of State, Deputy English, who cannot be here today but sends his apologies. I am joined today by Tara Coogan, principal officer in the Department of Enterprise, Trade and Employment.
I am pleased to present to the committee a draft sectoral employment order for the construction sector. The draft order before the committee today proposes to amend the sectoral employment order made in 2019 by confirming new minimum rates of pay, pension and sick pay entitlements for workers in the construction sector. This order, if approved, is the third of this kind to be made. The first sectoral employment order for the construction sector was issued in 2017 and the second in 2019.
Before I introduce the specific draft order before you, I wish to say a few words to ensure that all committee members are fully cognisant of our respective roles - that of the Minister and that of Members of the Houses of Oireachtas - in this process.
A sectoral employment order is a statutory minimum wage-setting mechanism in a given economic sector. Essentially, an SEO is a collective bargaining mechanism which, once the statutory thresholds have been met, gives the Labour Court as a neutral decision maker, the power to examine an application for an SEO in a given economic sector. As part of this examination, the Labour Court must explore all the policy considerations set out in the Industrial Relations Act 2015 by affording all interested parties an opportunity to engage with the proposals and have an opportunity to be heard.
Once the Labour Court has complied with this statutory process set out in the 2015 Act, it has the power to make a recommendation for an SEO to the Minister. This recommendation must be accompanied by a report which sets out the process and matters that the Labour Court considered in reaching its recommendation. The purpose of this report is to assist the Minister in ensuring that the Labour Court has complied with its statutory functions as required by the Act.
The role of the Minister in this process is limited. Pursuant to the 2015 Act, the Minister has the power to either accept or reject the recommendation as presented. In this regard, the Minister is compelled to accept the recommendation if he or she agrees, based on the statutory report the Labour Court has prepared, that the court has complied with the statutory process. If the Minister is not satisfied that the Labour Court has complied with its duties as set out in the Act, he or she must return the proposal to the court setting out his or her reasons for not accepting the recommendation. The Minister does not have any power to engage with the substantive recommendation itself.
Accordingly, I can confirm to the committee that the Minister of State, Deputy English, has considered this draft recommendation in line with the terms of the 2015 Act, relying on the statutory report outlining the Labour Courts deliberative process. Having done so, he is satisfied that the Labour Court has complied with its statutory role. I understand that the Minister of State, Deputy English, notified the Labour Court on 20 October 2021 that he has accepted the recommendation; and that he would be referring the matter to the Houses of Oireachtas for their consideration, as required by the Act. Furthermore, as required, the Minister laid a draft order before the Houses on 20 October 2021.
The 2015 Act also sets out that the Houses of the Oireachtas may only accept or reject the draft order as it is. The Act does not permit any alterations or amendments from the committee to the draft order. If the Houses accept the recommendation, the Minister of State, Deputy English, will sign a statutory instrument giving effect to this decision. Should the Houses reject or fail to approve the draft order, the proposal for the SEO falls.
I will now outline some details of the proposal before the committee. The application for an examination came before the Labour Court by way of application by the Building and Allied Trades Union, Connect Trade Union, OPATSI trade union, SIPTU trade union and UNITE the union pursuant to section 14 of Chapter 3 of Part 2 of the Industrial Relations (Amendment) Act 2015. The five unions requested that the Labour Court examine the terms and conditions relating to the remuneration and any sick pay scheme or pension scheme, of all persons employed in the construction sector as craftspersons, construction operatives and apprentices.
Having examined the submissions and the accompanying supporting materials, the Labour Court reports that it was satisfied that the applicants were substantially representative of the workers of the particular class, type or group in the economic sector in respect of which the request is expressed to apply. This gave the court the jurisdiction to proceed with the examination.
The court then, as it is required to do, published its intention to undertake an examination of the unions’ request and invited submissions from interested persons. Written submissions were received from three interested parties, the construction industry committee of the Irish Congress of Trade Unions, the Construction Industry Federation and the Construction Workers Pension Scheme. No parties objected to the making of a SEO although there were different opinions on the issue of increases in remuneration, travel time and so on. These submissions are available for anyone to examine on the Labour Court’s website. A public hearing was held on 2 September 2021. All interested parties were given an opportunity to be heard and to engage with the various policy considerations that the process requires.
Having considered the matter fully within the statutory time limits, the Labour Court made this recommendation to the Minister. According to its report, the Labour Court has considered the factors set out in section 16(2) of the Act.
This includes the potential impact of the making of an order on levels of employment and unemployment in the identified economic sector, the potential impact on competitiveness in the economic sector concerned and that the SEO would be binding on all workers and employers in the sector. I understand that the Minister of State, Deputy English, has shared the Labour Court’s report with the members of this committee so they have had the opportunity to examine it in greater detail.
I anticipate that the committee will recognise the importance of ensuring industrial relations stability in the construction sector and I hope it will accept the draft order. I trust that the committee recognises that Ireland needs a competitive, productive, and sustainable construction sector for the delivery of high-quality and affordable residential and commercial properties alongside its national physical infrastructure.
I believe this SEO will play a significant role in supporting this sector by maintaining harmonious industrial relations. The terms of the SEO refer merely to the minimum rates of pay and terms and conditions. At times, when the sector is buoyant, it is to be expected that some employers will exceed these minimum rates. The importance of an SEO is to ensure that in times of downturns, workers are properly protected and the sector maintains its attractiveness as a profession for apprentices.
It has been a long-standing practice of the trade unions and the employers in the construction sector to enter into collective agreements that govern the terms and conditions of employment. These arrangements have been in place for many decades and have provided the industry with cost certainty and stability. The SEO provides for a dispute resolution mechanism, which does help in preventing industrial unrest.
Should this SEO be approved by the committee, the Minister of State, Deputy English, will sign an order giving it legal effect. Its terms will be binding across the entire economic sector. The new order will become effective on 1 February 2022. It will remain in place for two years and includes a second minimum remuneration increase in 2023. It is now in the committee's hands for consideration.