Organisations may choose to outsource activities for a number of different reasons. In the recently published Ireland’s Competitiveness Challenge 2023 Report, the National Competitiveness and Productivity Council found that the Irish jobs market remains particularly strong. For employers, the challenge to attract and retain the right people is growing in a digitally transforming world. However, while the decision to outsource may be related to costs, there are other factors, such as skills and technology, which may equally contribute to that decision. Ireland is part of a global economy, and the Government has, and continues to, work to encourage and support business to set up and remain here.
Sector-specific regulations are in place to regulate the outsourcing of certain activities. For example, the Central Bank of Ireland (CBI) is responsible for oversight of regulated financial services providers. Outsourcing can be subject to specific rules, depending on the type of licence held, and scrutiny by the CBI and European regulators. In December 2021, the CBI published new guidance in relation to outsourcing in the financial services sector, the Cross-Industry Guidance on Outsourcing (CIGO). This aims to provide regulated firms with the knowledge to assess outsourcing risks and to have effective oversight of outsourcing. The European Banking Authority (EBA) has also published regulatory requirements for outsourcings for specific regulated financial service providers.
National and EU law regulates certain general elements of outsourcing in areas such as transfer of employees as well as data protection and intellectual property rights.
The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (S.I. No. 131 of 2003) safeguards the rights of employees in the event of any transfer of an undertaking, business or part of a business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger.
The main provisions of the Regulations provide that all the rights and obligations of an employer under a contract of employment (including terms inserted by collective agreements), other than pension rights, are transferred to the new employer on the transfer of the business or part thereof. The new employer must also continue to observe the terms and conditions of any collective agreements until they expire or are replaced. Both the outgoing and incoming employers are obliged to inform their respective employees’ representatives of the reasons for the transfer and the legal, social and economic implications of the transfer.
Where an employee considers that a breach of the Regulations has occurred, they have the right to refer a complaint to the Workplace Relations Commission (WRC). The WRC are also responsible for adjudication in disputes as to applicability of TUPE.
The Protection of Employees (Temporary Agency Work) Act 2015 provides for equal treatment in terms of basic working and employment conditions for agency workers in the same way as applies to employees recruited directly by the hirer to do the same or a similar job. This includes basic pay, working time, rest periods, annual leave and access to facilities. An employment agency supplying agency workers should ensure, in consultation with the hirer, that the appropriate pay and basic working conditions are applied so that agency workers are afforded equal treatment. A hirer who hires agency workers through an employment agency should provide the agency with sufficient up-to-date information on basic pay and employment conditions.
An agency worker is an individual employed by an employment agency under a contract of employment by virtue of which the individual may be assigned to work for, and under the direction and supervision of, a person other than the employment agency.
Where an employee considers that a breach of the Act has occurred, they have the right to refer a complaint to the Workplace Relations Commission (WRC). The Act does not apply to managed service contracts, where a company provides a specific service to a customer which is based on a contract for the provision of services. The Managed Service Contractor has responsibility for managing and delivering the particular service and employs, rather than supplies, the workers.
