Joint Committee on Jobs, Enterprise and Innovation díospóireacht -
Tuesday, 11 Nov 2014

General Scheme of Industrial Relations (Amendment) Bill 2014: Discussion

Chairman

I welcome the Minister of State at the Department of Jobs, Enterprise and Innovation with responsibility for business and employment, Deputy Gerald Nash, and his officials and thank them for coming before the joint committee to brief us on the general scheme of the Industrial Relations (Amendment) Bill 2014 and outline the rationale for the provisions contained therein.

Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I call on the Minister of State to make his opening statement. Members will then be called on to ask questions on each head. They are reminded, when asking questions, that they should state the number to which they are referring.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy Gerald Nash)

I appreciate the opportunity to come before the joint committee to present the general scheme of the Industrial Relations (Amendment) Bill 2014 for the purposes of pre-legislative scrutiny, an important stage of the process. As the committee knows, the general scheme of the Bill was approved by the Government last July. The scheme, together with the regulatory impact assessment, has been published on my Department's website and forwarded to the committee for pre-legislative scrutiny.

The main purpose of the proposed Bill is twofold: first, to provide for the reintroduction of a mechanism for the registration of employment agreements between an employer or employers and trade unions governing terms and conditions and individual enterprises; and, second, to provide for a new statutory framework to allow the setting of minimum rates of remuneration and other terms and conditions of employment for a specified type, class or group of workers. In effect, it is a framework designed to replace the former sectoral registered employment agreements struck down by the Supreme Court in the McGowan judgment. These agreements, prior to structural changes codified in the Industrial Relations (Amendment) Act 2012, were made between a trade union and an employer's organisation through a relevant joint industrial council and, subject to certain conditions, registered by the Labour Court. This registration meant that the agreement applied to every worker of a particular class, type or group and to his or her employer, regardless of whether the worker or employer was a party to the original agreement. Their utility was reflected in the fact that prior to the McGowan judgment, six sectoral REAs had been registered or varied by the Labour Court and between 70,000 and 80,000 workers were covered.

The Government was of the view that a framework to facilitate sectoral terms and conditions was in the public interest and the general scheme, as published, is designed to deliver one. There has been extensive consultation with stakeholders on these proposals. In early 2014 a framework document setting out draft proposals on the issue was circulated by the Department to relevant employer and worker representative organisations and the subject of subsequent engagement and discussion. The input of these stakeholders in the context of the consultation process has been very constructive and informed the approach proposed in the Bill. While stakeholders have concerns about some elements of the overall scheme, it is fair to say there is broad support from employer and worker representative organisations for the proposed new framework and a desire to have it put in place as soon as possible.

For the purposes of outlining the background, the committee will be aware that in May 2013 the judgment in the McGowan case was published. The Supreme Court held that Part III of the Industrial Relations Act 1946 was invalid, having regard to Article 15.2.1o of the Constitution. That article provides, in effect, that the exclusive power to make laws is vested in the Oireachtas. In that case, the Supreme Court took the view that the registered employment agreements were instruments having the status of laws made by private individuals which impacted on all employees and employers in the relevant sector. While the Constitution allows for the limited delegation of law-making functions, the provisions of the 1946 Act went beyond what was permissible under the Constitution. The effect of this decision was to strike down as unconstitutional the registration of agreements previously registered under the 1946 Act. As a result, all such agreements no longer have any application beyond the subscribing parties and are not enforceable in law.

It is important to remember that the existing contractual rights and sectors covered by REAs were unaffected by the ruling. Contractual rights can only be altered by agreement between the parties involved. However, it means that since May 2013 new employees in these sectors can be hired at a rate agreeable between workers and their employers.

This is subject only to the provisions of the National Minimum Wage Act 2000. In addition, as a result of the striking down of the registered employment agreements, a not insignificant level of industrial unrest in relation to procurement contracts and appropriate rates of pay has developed recently, particularly in relation to construction-related projects.

From the parties' perspective, the primary objective of REAs was to provide them with a sense of certainty around terms and conditions that would apply when the employer was tendering for and working through contracts and to have in place agreed grievance and industrial peace provisions. The agreements also had the effect of ensuring industry terms and conditions were recognised and maintained. In addition, the existence of these legally backed agreements was recognised under European Union law and ensured, in accordance with the EU posted workers directive, that contractors from outside the jurisdiction who might be using employees from lower wage economies did not obtain an advantage over local contractors in wage costs.

The Industrial Relations (Amendment) Act 2012 included a number of provisions amending and inserting new provisions in Part III of the 1946 Act relating to the REA mechanism. The aim of these provisions was to make the mechanism more responsive to changing economic and labour market conditions, as well as making the legislative framework much more constitutionally robust, in the light of the 2011 High Court ruling in the John Grace's Fried Chicken case which struck down the system of making employment regulation orders, EROs, on similar constitutional grounds, partly by way of making ministerial orders to give registration sectoral effect. However, the effect of the 2013 Supreme Court ruling was to make Part III of the 1946 Act void ab initio and consequently the amendments and additional provisions inserted in the 1946 Act by the 2012 Act were no longer either coherent or effective. However, while the Supreme Court ruling only addressed Part III of the 1946 Act in its unamended form, there is uncertainty as to whether the new provisions of the 1946 Act, as then amended, would withstand constitutional scrutiny based on the approach taken to Article 15.2.1o in the McGowan judgment. Accordingly, having considered the legal advice from the Attorney General on the implications of the Supreme Court ruling and given the importance of the issue for employers and their employees, particularly in relation to rates of pay and tendering for contracts, the Government has decided to legislate to address the ruling and provide for a revised legislative framework that would be fully informed by the Supreme Court judgment and expected to withstand constitutional challenge to the greatest extent possible.

As I said, the primary objective of legally binding sectoral terms and conditions is to provide a sense of certainty around terms and conditions that would apply when the employer was tendering for and working through contracts and to ensure industry terms and conditions and standards were recognised and maintained. The draft scheme does this. The new framework will provide a mechanism whereby the existence of legally binding terms and conditions of employment relating to rates of remuneration and sick pay, pensions and mortality provision in a particular sector will contribute to the promotion of harmonious industrial relations between workers and employers and assist in the avoidance of industrial unrest in the sector, the promotion and preservation of high standards of training and qualifications in the sector and ensuring fair and sustainable rates of remuneration in the sector, in the light of EU law on the transnational provision of services.

In the future it is proposed that the Labour Court, when requested to do so, will initiate a review of the pay, pension and sick pay entitlements of workers in a particular sector and, if it deems it appropriate, make a recommendation to the Minister in the matter. A trade union or employer body that is substantially representative of workers or employers of such workers in a sector may make an application to the Labour Court to initiate the process looking for a possible recommendation to be made to the Minister to make the order. Interested parties - this is an important point from a legal perspective - will be given an opportunity to make submissions to the Labour Court in the context of such a review. The new legislation will provide the Labour Court with specific principles and policies that it will be obliged to take into account when considering whether to make and, if so, what recommendation to make to the Minister in relation to pay, pension and sick pay terms in a particular sector. If satisfied, the Minister will give effect to the recommendation by order. The standard Oireachtas oversight provisions will apply.

In addition, the Bill provides for mandatory dispute settling procedures to be included in a Labour Court recommendation to the Minister in the event of a trade dispute in relation to the provisions of the order. Provision will be made to allow firms in financial difficulty to apply for a temporary derogation from the obligation to pay the rate of remuneration provided for in an order.

Additional protections will be introduced in the form of anti-penalisation measures to protect workers who invoke any right conferred on the worker by the Act or take other specified actions under the Act.

The enforcement and compliance measure to be provided for in regard to the new sectoral terms and conditions will be drafted to ensure consistency with the measures proposed in regard to employment rights compliance and enforcement provisions under the separate workplace relations Bill. In addition to the new sectoral framework, it is proposed to reintroduce the facility for the registration of employment agreements to which there are only subscribing parties and which are voluntarily entered into by those parties. Enterprise-level registered employment agreements provide certainty for the employer and worker in terms of rates of pay and other terms and conditions over the period of the agreement. Furthermore, all such agreements will be required to contain a provision that, if a trade dispute occurs between workers and their employer, a strike or lock-out shall not take place until the dispute has been submitted for settlement by negotiation in the manner specified in the agreement, thereby contributing to industrial peace in the enterprise or enterprises. As such agreements are not legally binding beyond the subscribing parties, the constitutional issues regarding the delegation of legislative authority that arose in the McGowan case do not apply in those cases. For the same reasons, it is not considered necessary for the registration of such agreements to be confirmed by ministerial order.

I will now briefly outline the purpose of each head of the scheme. Part I is the preliminary and general aspect. Heads 1 and 2 include provisions on Short Title, citation, constructive provisions and commencement. Part II provides for the reintroduction of a legislative framework governing the registration of employment agreements between individual enterprises or a number of such enterprises and trade unions that will be binding only on the parties to the agreement. Head 3 provides for definitions of key terms to be used in this Part of the Bill. Head 4 provides for the register of employment agreements to be maintained by the Labour Court.

Head 5 provides that, where an application is made to the court to register an employment agreement, the court shall register the agreement in the register only where it is satisfied that there is all-party agreement that it should be registered, and it is satisfied that it is desirable or expedient to have a separate agreement of a class, type or group of workers covered by the agreement. Similarly, the court shall only register the agreement where it is satisfied that the trade union of workers is, or trade unions or workers are, substantially representative of such workers, that the agreement is not intended to restrict employment generally, or the employment of particular workers, and that the agreement provides that, if a trade dispute occurs between workers to whom the agreement relates and their employer, a strike or lock-out shall not take place until the dispute has been submitted for settlement by negotiation in the manner specified in the agreement. In addition, the court shall not register any such agreement unless it is satisfied that registration of the agreement is likely to promote harmonious industrial relations between workers and their employers and the avoidance of industrial unrest.

Head 6 provides for the variation of registered employment agreements in certain circumstances where all parties to the agreement so agree, or, where one party wishes to vary the agreement but the other does not, the court, after exhaustion of dispute provisions, local discussions and LRC conciliation, or the workplace relations commission variant thereof, or a Labour Court recommendation, may refuse or grant such a variation as the court deems appropriate. In addition, provision is made for a party to withdraw from an agreement following any such variation where the agreement provides for the party to do so in such circumstances.

Head 7 provides that the court may cancel the registration of an employment agreement where all parties so request, or where the registration of an employment agreement has continued after the finishing date of the agreement, on the application of any party made after three months' notice to the court and consented to by all parties, to ensure all parties are aware that the termination date is due and imminent. It may also cancel the registration where it is satisfied that the trade union or trade unions of workers who are party to the agreement are not any longer substantially representative of the workers concerned.

Head 8 provides for the incorporation of the terms of any registered employment agreement in respect of remuneration or conditions of employment to be incorporated into a contract of employment. Head 9 provides for publication of particulars in regard to registered employment agreements and the right of persons to obtain copies.

Head 10 provides that, where a trade union representative of workers or a worker affected by an REA complains to the proposed workplace relations commission that the employer has not complied with the agreement, the WRC shall consider the complaint, and if, after such consideration, the matter has not been resolved, and where an adjudication officer of the WRC is satisfied that the complaint is well-founded, such officer may direct the employer to do such things, including the payment of any sum due to a worker from remuneration in accordance with the agreement, as will, in the opinion of the officer, result in compliance with the agreement by the employer.

Where an employer fails to comply with such a direction, the provisions of the WRC Bill shall apply, i.e., determination by the Labour Court and order of the District Court. The head also provides that where the Labour Court is satisfied that a strike is in contravention of the agreement and has as its object the obtaining of remuneration or terms and conditions other than those fixed in the agreement, the court may direct the trade union concerned to refrain from providing funds to assist the strike, or cancel the registration.

Head 11 provides that the court may, where asked, give its decision on any question as to the interpretation of a registered employment agreement or its application. In addition, a court of law, in determining any question arising in proceedings before it as to the interpretation of a registered employment agreement or its application, shall have regard to any decision of the court on the agreement, or it may, if it thinks proper, refer the question to the Labour Court for its decision, and the decision of the Labour Court shall be final.

Part III of the Bill covers sectoral minimum rates of remuneration and other terms and conditions. It provides for a revised legislative framework to address the issues arising as a result of the absence of any sectoral wage-setting mechanism following the Supreme Court ruling in the McGowan case. Head 12 provides for definitions of key terms to be used in Part III of the Bill, including the definition of "remuneration". Head 13 provides that Part III will not apply to close family members. This provision mirrors the exclusion of family members for the purposes of the National Minimum Wage Act.

Heads 14 and 16 provide that any organisation that satisfies the Labour Court that it is substantially representative of employees or employers or a particular class, type or group of workers can separately or jointly request the Labour Court to examine the terms and conditions relating to the remuneration, under head 14, or the sick pay, pension and mortality pay provisions, under head 16, of workers of that particular class, type or group, and request the court to make a recommendation to the Minister as to what the court deems appropriate remuneration and terms and conditions of such workers.

Head 15 provides that the rate of basic pay recommended by the court may be in excess of the national minimum wage. The recommendation may also provide for not more than two higher hourly rates of basic pay, based on length of service in the sector or enterprise concerned or the attainment of recognised standards or skills in the sector concerned, and minimum rates of pay in respect of young workers which are lower than that of an experienced adult worker, as provided for and in accordance with the relevant percentages set out in the National Minimum Wage Act. The recommendation may include a minimum rate of remuneration for apprentices and provisions regarding any pay in excess of basic pay in respect of shift work, piecework, overtime, unsocial hours worked or travelling time.

Head 17 provides for the scope of a Labour Court recommendation in relation to the requirements for pension and mortality and sick pay schemes. I should point out that head 17(i) provides that the Labour Court recommendation may provide for the requirements of a particular pension and mortality scheme or schemes for a class, type or group of workers, including a minimum daily rate of contribution to a scheme by workers. It is appropriate that it makes reference to the employer as well, and this will be dealt with in the Bill.

Head 18 provides for the submission of supporting evidence from employers and trade unions in relation to their being substantially representative of relevant employers and workers, respectively.

Head 19 provides that the court shall not undertake an examination unless it is satisfied that the request applies to all workers of a particular class, type or group and their employers in the identified sector and the court is satisfied that it is desirable or expedient to have separate terms and conditions relating to pay or pension schemes and sick pay schemes for that class, type or group. In addition, the court shall only undertake an examination where it is satisfied that the organisation or organisations making the request is or are substantially representative of the class, type or group of workers or employers in the sector to which the request is expressed to apply, and any recommendation is likely to promote harmonious relations between such workers and employers.

Head 20 provides for procedures in relation to the holding of a hearing by the court on an application for a review under Part III.

Head 21 provides the necessary guidance to the Labour Court in terms of the principles and policies that it will be required to take into account before making a recommendation to the Minister.

Head 21 provides the necessary guidance to the Labour Court in terms of the principles and policies that will be required to be taken into account before a recommendation is made to the Minister.

Head 22 provides for mandatory dispute settlement procedures to be included in a Labour Court recommendation in the event of a trade dispute arising in regard to provisions of the order. Heads 23 and 24 provide for the submission by the Labour Court to and for consideration by the Minister of the Labour Court recommendation. The Minister shall refuse to make such an order if not satisfied that the process has been complied with. Otherwise, the Minister shall make the order. The standard provisions dealing with the laying of orders before the Oireachtas are proposed.

Head 25 provides that if an order has not been amended or revoked within three years, the Minister may request the Labour Court to undertake a review of the terms and conditions of the previous order. Head 26 provides for a mechanism to allow an employer experiencing financial difficulties apply to the Labour Court for a temporary derogation from the requirement to pay the remuneration provided for by order. Head 27 provides that the enforcement and compliance measures to be provided for in regard to Part III of the Bill will be drafted to ensure consistency with the measures proposed by the Minister in regard to employment rights, compliance and enforcement provisions under the Workplace Relations Bill 2014, approved by the Government on 8 July this year.

Head 28 provides that a provision in a contract of employment is void in so far as it purports to exclude or limit the operation of any provision of this Bill when enacted. Head 29 provides for anti-penalisation measures to protect workers who invoke any right conferred on them by the Act or who other specified actions under the Act.

While the drafting of the legislative proposals has also been informed by comprehensive legal advice, I would welcome hearing the views of this committee on the general scheme, which will be of assistance to me in informing the drafting of the Bill.

Chairman

I now invite Deputy Calleary to put his questions. I ask him to state the head number to which he refers in each question.

Deputy Dara Calleary

I will refer to heads 14 and 26 and Part II of the scheme and will make some general comments.

I welcome the Minister of State to the committee and wish him luck in dealing with this complex area. The key issue in regard to the failure of the Industrial Relations Act 1946 relates to Article 15.2.1° of the Constitution. How confident is the Minister of State in regard to this Bill? He said in his remarks that he expects the Bill to withstand constitutional challenge, but is he confident that the work he and his officials have done is robust enough to withstand constitutional challenge, or will we have to take the same road again in a year or two, particularly in regard to Article 15.2.1°? I refer specifically to head 14, which allows the Labour Court to initiate a review on the basis of whether employers and unions both agree. Is there a danger that section 14 could be in breach of Article 15.2.1° of the Constitution?

Head 26 deals with situations in which the employer's business is experiencing "severe economic difficulties". I welcome that, but what exactly does it mean and what is the test for "severe economic difficulties"? What process exists for a company to engage in and what role will workers in the company play? What role can competitors who may see a company using this provision for competitive advantage play?

In regard to Part II of the overall scheme, the Minister of State used the words "substantially representative". What is the test of "substantially representative"? For instance, the construction sector employs tens of thousands of people, but at what stage does one say a particular union or group is substantially representative of that sector? The same question goes for the retail sector and for other large areas of employment. What process will define what "substantially representative" means?

The committee is fortunate to have received good documentation from the Oireachtas Library and Research Service on the Bill, but significant detail is missing, as always happens in regard to heads of a Bill. I have found over the years that it is the detail that is used to frustrate the implementation of the legislation, be that on the employers' or the unions' side. When will we get a sense of the exact details on the legislation from the Minister of State? Will we have those details before Second Stage of the Bill?

One of the major issues of the previous JLC and REA system was that it caused many businesses on this side of the Border, particularly in the construction sector, to be uncompetitive in comparison with those on the other side of the Border which did not face this legislation.

There was the lack of a willingness on the part of NERA to enforce the various directives that were in place. Has the Minister of State given any thought to addressing that issue and on a European basis also?

Deputy Gerald Nash

I thank the Deputy for his comments. I know that he understands from his own experience how complex this area can be. The progress through the courts of wage setting mechanisms in the past few years has been interesting. The former joint labour committee system was essentially struck down by the High Court in 2012 and the registered employment agreement system in 2013. The Government has acted swiftly to close the lacuna and we are confident that this legislation is sufficiently robust constitutionally to withstand any challenge. The Deputy knows, however, that nobody can say this with 100% certainty because we have a system in place under which any legislation can be challenged through the courts. It is important that there be this appropriate division of labour between the Oireachtas, the Executive and the courts, but we have worked extremely hard over a period of time, particularly through the consultation process with the stakeholders representing employers and employees, to ensure we get this right, that it will respond to their needs, as well as changing needs in the economy, and that it is constitutionally robust. I am satisfied that the legislation, when published, will withstand that test and be constitutionally robust.

On the Deputy's question about whether parties are substantially representative, the Labour Court has a test on this. I am confident that the test applied by the Labour Court in terms of declarations made by trade unions which are substantially representative of workers and employers will meet these requirements and that this will be reflected in the legislation. It is important to ensure the legislation will be as constitutionally robust as possible and that these tests are met. I am confident that they have been met in the context of this legislation.

Deputy Dara Calleary

In respect of head 26 which states "the employer's business is experiencing severe economic difficulties", is there a similar roadmap in place?

Deputy Gerald Nash

If the Deputy recalls, there is a similar provision in the National Minimum Wage Act, 2000 which, in fact, has not been invoked, as far as I can recall, by any employer. The tests are stringent, properly so. This should not be allowed, for example, to distort competition. There is a very clear provision in the heads in that regard. Anybody seeking a derogation of any description will have to deliver very significant financial information to the Labour Court in order to take advantage of it and the derogation will also be time-limited. We have run this through the process of consultation with employers and trade unions and there is some experience of having a test like this with the National Minimum Wage Act which has not been invoked. It must be very robust. Employers, for example, are only allowed two exemptions in a particular period. It is important that we state very clearly that this is tight and robust and will not be open to abuse.

Deputy Dara Calleary

On the question of cross-Border and cross-Europe competition, there was a feeling the old system made us uncompetitive and was being used in particular by companies the other side of the Border or across Europe. There was a sense that they were using lower wage rates and that there was no enforcement; therefore, it brings in the issue of workplace relations also.

Deputy Gerald Nash

This is about standards in the industry. We have reached the stage where through the consultation process employers and trade unions, broadly, agree that we should put in place a new system to replace the old one but which would be more constitutionally robust and deliver the fairness employees expect. The requirement to have certain rates of pay for standards of qualification is important, as is our compliance with the posted workers directive, which is important European Union legislation. I mentioned in my opening remarks that it was important that we comply with it because we must look at the transnational position and ensure workers working in this country are paid the appropriate rate.

What we do not want is a race to the bottom which benefits no one but rather badly affects employees and standards across industry.

Deputy Anthony Lawlor

This is my second experience with this type of process, the first being with agriculture. A number of delegations will come before the committee and we will ask them questions. The Minister of State has obviously met with them already. Is it possible for the Minister of State to attend again after we have met the delegations rather than for us to communicate with him in writing to put forward the points they raise, whether they have done so with him before or not?

Deputy Gerald Nash

I have no difficulty considering any request from the committee to attend again. If members feel it is helpful to address issues various stakeholders discuss here, I have no difficulty considering the matter. I note in that regard that the legislation is a priority as the members will find from the stakeholders who come before them over the duration of the pre-legislative period. They see it as a priority perhaps for different reasons but are on the same page in terms of the necessity of getting the legislation onto the Statute Book. I am very happy to facilitate the committee in any discussions members wish to have.

Chairman

I call Senator Feargal Quinn.

Senator Feargal Quinn

The Minister of State is very welcome and I am glad to see him.

Senator David Cullinane

On a point of order, I remind the Chair that there is an agreed rotation of speakers from Fianna Fáil, Sinn Féin and then others. I am not sure why we have bypassed that today.

Chairman

I was not aware of that. It is the first time we have had such a large crowd in. We can talk about it in private later if the Senator wishes.

Senator Feargal Quinn

I am happy to hand over.

Senator David Cullinane

It is all right.

Chairman

I am taking the people who signalled to me first.

Senator Feargal Quinn

I will concentrate on a particular point of concern, which is head 15. Head 15 provides that the rate of basic pay recommended by the court may be in excess of the national minimum wage. I have always had a concern about competition across borders. We have one of the highest minimum wage rates in Europe and, until recently, also had one of its highest unemployment rates. There is a link between the two, particularly in the case of competition from countries with different rates. On that basis, Northern Ireland was mentioned by Deputy Calleary. If we are competing with them and they have lower rates, it makes it very tough for an Irish employer. It does not have to be the Border, but can be across any border. The Minister of State said in answer to Deputy Calleary that the aim of the provision is to protect workers. While it protects workers, it does not protect the unemployed. How do we ensure we get the balance correct? Does the Minister of State consider that we have in the head the correct procedures to ensure we protect those who do not have jobs by enabling them to get them, even if it is not at the highest rate they would like? I hope the Minister of State can put my mind at rest in that respect.

Deputy Gerald Nash

I am satisfied we can address those sometimes competing demands. I appreciate where the Senator is coming from and understand where he sits on this. Some have argued that the re-introduction of wage-setting mechanisms is somehow anti-competitive, but this is about standards also. It is about standards of training and the retention of workers. There has always been a premium for skilled workers, particularly across the construction sector which formerly had the REA and ERO arrangements with which people are most familiar. We have tried to strike a balance on the competitiveness of industry across the former REA areas. We are going through a draft Bill and cannot anticipate which sectors of the economy will engage in this process, but we are very much of the view that we must re-establish this mechanism to ensure we respect the competitive nature of business while ensuring that rates of pay apply over and above the rate of the national minimum wage where people's skills insist on that.

It is a balancing act, but it is important to reintroduce a system such as this to ensure standards across the industry. It is about much more than pay because it also involves terms and conditions, as well as standards and training. I am satisfied that we are on the right path towards balancing these interests.

Senator Feargal Quinn

I accept that, but I have a concern. In the years ahead I look forward to seeing whether it works out. I wish the Minister of State well with the legislation, but let us make sure it will work.

Senator David Cullinane

I do not believe that either aspiring to a minimum wage or cutting it will reduce the level of unemployment in the State. It is naive to think that will happen. In fact, it is the reverse.

I commend the Minister of State for the opportunity that has been afforded to us to engage in pre-legislative scrutiny of the Bill. This is important because of a series of constitutional challenges in the Supreme Court on the issue of collective bargaining and workers' rights. They involve REAs, JLCs and the concept of collective bargaining. There is an opportunity for the Minister of State to reflect on the issue today because there does not seem to be a proper constitutional floor to protect workers. The small number of employers who took those cases effectively dismantled the industrial relations machinery of the State in terms of collective agreements. They were able to do so because of the failure of the Constitution which favour private property rights, the weakness of powers of employment rights bodies and the lack of Oireachtas accountability in this case. As the Minister of State said, all of this is subject to future court challenges. We, therefore, need to ensure the Constitution is robust enough to protect workers' rights. It is welcome that the Minister of State seems to be pre-empting the outcome of future legal challenges and I hope this legislation can withstand any such challenge.

The Irish Congress of Trade Unions has expressed concern about flaws in the judgment which led to the collapse of REAs in the first place. ICTU has also made a complaint to the European Court of Human Rights. I would like to know what is the Minister of State's view of that complaint.

The Bill needs to be much clearer on specifics. The Minister of State said:

A trade union and-or employer body that is substantially representative of workers or employers of such workers in a sector may make an application to the Labour Court to initiate the process looking for a possible recommendation to be made to the Minister to make the order. Interested parties - this is important legally - will be given an opportunity to make submissions to the Labour Court in the context of a review.

However, the general scheme does not seem to define a "substantially representative" organisation. Is this a weakness? If there is to be a future court challenge, could this be an area in which an employer could seek to find a loophole? We must ensure we close any potential loophole; therefore, we need a clear understanding and definition of what this term means.

The Minister of State also mentioned "interested parties", but is there a definition of what constitutes "interested parties"? Such a legal definition would be helpful.

In head 7 there is no provision for notice to be given to a trade union organisation by the Labour Court of its intention to cancel an REA. ICTU has expressed concern about this.

Head 14 deals with the "substantially representative" of workers element. The Minister of State might advert to it.

In the case of young workers, head 15 makes provision for minimal early rates of basic pay lower than those for an experienced adult worker. ICTU has expressed the view that we should not have different rates of pay based on class, type or group because, as a result, we could end up with a two-tier workforce and all of the complications and difficulties this might entail.

Enforcement and compliance are obviously important because any legislation is only as valid as the State's ability to enforce it.

If one looks at the construction sector as a good example, we have seen unscrupulous employers use subcontractors to bypass agreed rates of pay. There are a number of examples of which the Minister of State will be aware. A strike has been ongoing for a number of weeks. The employer was able to deem some workers as subcontractors and avoid having to pay proper rates. Has that been looked at in the context of this legislation? The legislation needs to be robust and able to protect all workers. We need to look at the loopholes that have been and are being used by employers, because that is the key to this.

What happens if an employer is outside the Construction Industry Federation or IBEC but wants to be part of an REA? Is it allowed to be part of it?

Deputy Gerald Nash

It can enter an enterprise-level agreement. One of the important provisions of this Bill is the establishment of that sort of approach, where individual enterprises can come to an agreement and register it with their own workers. That addresses one of the deficits identified through the courts in respect of deficiencies in previous legislation. I agree completely with the Senator when he makes reference to enforcement and compliance. If one looks at some of the measures that we are seeking to introduce in the Workplace Relations Bill, which we have discussed at length here over recent times and which relate to the use of compliance notices, fixed charge notices and new mechanisms for enforcing awards with adjudicators or in terms of Labour Court determinations, one can see that we want to have a similar suite of provisions available in this context to deal with issues that might arise under this legislation. However, there needs to be consistency, and compliance and enforcement are very important. Without proper enforcement and compliance, the legislation and its use will be degraded.

Senator David Cullinane

I know that a number of employer organisations have expressed concern about what they see as the criminal element of those fixed charge notices applying to this area. I do not agree with that, and I hope from what the Minister of State is saying that this will not be the case and that those strong enforcement mechanisms will apply.

Deputy Gerald Nash

Senator Cullinane made a general point about the deficiencies in the legislation or deficiencies identified by the superior courts in the past. The reason we are reconstructing some of those systems, to a point, is that we believe it is in the public interest and the common good to do so and that it gives everybody consistency regardless of whether they are employers or employees. A series of lacunae were identified in those cases. One of the key deficits identified was the issue of Oireachtas oversight. This is effectively addressed in the heads of the Bill. It is very important that we plug that gap and make sure this is constitutionally robust. The Oireachtas is the Legislature in this State and makes the law. Obviously, there are limited law-making functions, if I can put it like that, outside the Oireachtas, but ultimately the order will be registered with the Minister and the Oireachtas, which is very important.

Senator Cullinane made a point about decisions relating to whether a trade union or indeed an employer body would be considered substantially representative. The court is where that test takes place and it is important that the court be allowed to continue to do that because it is the expert body dealing with this. The court should have the latitude to do that. It is a very important aspect of this that the court may make a decision relating to the evidence provided to it as to whether a trade union or an employer body is substantially representative.

Senator David Cullinane

Are there guidelines from which the court could work?

Deputy Gerald Nash

In terms of principles and policies that would be provided for in the legislation, it will certainly be robust enough. As an expert body, a court must have that space to make those decisions based on the evidence it has.

Senator David Cullinane

There is another point about the difference between young and more established workers and different rates of pay.

Deputy Gerald Nash

It has always been the case that apprentices would have a different rate of pay from qualified workers. That has been the case right across the system for many years. There is nothing new in that in terms of apprentices and established workers.

Senator David Cullinane

The Bill does not talk about apprentices; it talks about young workers.

Deputy Gerald Nash

There is nothing new in respect of that. It will be more accurately codified in the Bill when published. I understand where the Senator is coming from and it is something that will be mentioned in the context of the stakeholder consultation with the Irish Congress of Trade Unions in particular.

Deputy Seán Kyne

I welcome the Minister of State and look forward to the details of the Bill. I wish to raise two points. Head 5 provides that the court shall not register any agreement unless it is satisfied that the registration is likely to promote harmonious relations between workers and employers and the avoidance of industrial unrest. What criteria will be laid out? Surely any employer and employee representatives who come together do so in an attempt to promote harmonious relations. What criteria have been laid down for a court's refusal to register an agreement? Are there any specifics, or is it left entirely to arbitration and the court?

Where our EU partners have minimum wage agreements that have been breached, has an examination taken place of the models they use, given the constitutional difficulties we have had?

Deputy Gerald Nash

Does the Deputy mean the mechanisms across the European Union?

Deputy Seán Kyne

Has the Minister of State looked at those models where there are breaches of minimum wage agreements?

Deputy Gerald Nash

Yes, and also from a competitiveness point of view. We take into account the arrangements in states across the European Union and particularly those closer to us. Traditionally we have had particular processes and wage-setting mechanisms here. I note that the UK decided to rid itself of those a number of years ago. We feel it is in the public interest. The test applied to harmonious industrial relations is whether it is in the public interest to engage in agreements of this type. Ultimately, that test is considered by the Labour Court. It is the Labour Court that will decide whether to recommend the registration of an agreement based on that test. It is a matter for the court to decide.

There are a range of different wage-setting mechanisms across the European Union. Different states have their own way of doing this. We have made our own decision to proceed with legislation based on the fact that the superior court struck down the former wage-setting mechanism regime. There are a range of different systems across the European Union, some of which are similar to those operated here previously, before the legislation was struck down by the courts. We have looked at the judgments that were handed down, obviously on the advice of the Attorney General, on plugging those gaps and making sure that what we have now is robust draft legislation - on which I welcome members' comments - which I think will be accepted and supported by stakeholders right across industry.

Chairman

I thank the Minister of State and his officials for their attendance and for briefing the committee on the heads of the Industrial Relations (Amendment) Bill 2014.

Sitting suspended at 2.44 p.m. and resumed at 2.45 p.m.

Chairman

I ask witnesses and members to switch off mobile telephones. I welcome Mr. Kieran Mulvey, chief executive of the Labour Relations Commission, and from the Irish Congress of Trade Unions, Ms Patricia King, vice president, and Ms Esther Lynch. I thank the witnesses for coming before the joint committee to brief members on the general scheme of the Industrial Relations (Amendment) Bill 2014.

Witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence in relation to a particular matter but continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable.

I invite Mr. Kieran Mulvey to make his opening statement.

Mr. Kieran Mulvey

I thank the Chairman and members for extending an invitation to the Labour Relations Commission to make its observations on the general scheme of the Industrial Relations (Amendment) Bill 2014.

First of all, I apologise. I sent down a draft of our observations on the Workplace Relations Bill and it was brought to my attention last Friday that I had sent the committee the wrong observations in terms of the other Bill. I have amended that to forward the committee my observations.

It is important at the outset for me to clarify that the Labour Relations Commission has not had statutory responsibility with regard to the operation of joint industrial councils or indeed registered employment agreements in the past. It is clear that the new Bill will not afford responsibility for the registration of agreements to the Labour Relations Commission-workplace relations commission. The commission has had no role in the development of the current draft legislation and that is appropriate.

The commission historically has assisted the operation of joint industrial councils through the provision of its staff, when requested, as chairs of various councils, although not all councils. These are experienced conciliation officers of the commission. In particular, the commission has had a long involvement with the operation of the construction industry national joint industrial council and the electrical contracting industry national joint industrial council, which are two of the more eminent and active joint industrial councils. The commission is hopeful that the new legislation will facilitate the employers and trade unions in such sectors to conclude sector applicable agreements, although it is not entirely clear whether it will do so.

The parties' wish to have the officers of the commission chair certain councils over the years has been a reflection of the parties' commitment to achieving consensus wherever possible in the process of developing proposed registered employment agreements for the consideration of the Labour Court. The new Bill carries an emphasis on finding agreement on matters between employers and trade unions and that is an objective clearly consistent with the achievement of harmonious industrial relations in the economy. I think the Minister of State placed particular emphasis on this earlier. We must recall that harmonious industrial relations and industrial peace are a very important part of the economic activity of the State. Compared to some of our European counterparts, we enjoy a particularly good industrial relations environment in this country. Over the past number of years, the number of disputes involving workers has been at an all-time low.

The commission has a clear statutory function of promoting good industrial relations. In that light, the commission supports the concept of registered employment agreements as a means of facilitating employers and trade unions to come together to establish the basic arrangements to apply to the employment relationship in a given industry or sector. The commission believes that competition between entities on the basic cost of labour is inimical to the achievement of harmonious industrial relations in some sectors of the economy. The commission, therefore, believes that the structure provided by registered employment agreements, if capable of producing sector applicable agreements, is important to the effective operation of some sectors.

The construction industry, for example, has always been an industry characterised by competition between employers for business in the particular context of that industry. I think most employers and trade unions would agree that the achievement of reasonable levels of industrial peace in this industry through various cycles has been largely attributable to the existence of a structured capacity on the part of the parties to remove the cost of labour from otherwise intense competition across the sector.

I believe that the provisions contained in the Bill, in particular, heads 6 and 10, setting out a requirement that all registered agreements will contain dispute resolution provisions involving the future workplace relations commission and the Labour Court is very important. The history of engagement in this type of structure has been characterised by a capacity on the part of parties to resolve disputes through dialogue and negotiation. The work of the Labour Relations Commission and the Labour Court is focused on empowering employers and trade unions to achieve agreement between themselves and the Bill underlines the value of this approach.

Key to the effective operation of registered employment agreements is compliance. This is a big challenge for all of us. The Bill sets out in head 27 that the Minister is preparing arrangements consistent with the Workplace Relations Bill in this regard. Fundamentally, this likely to involve a significant role for the former inspectorate of NERA, which will be the future workplace relations commission. Operationally, this poses challenges in terms of ensuring effective compliance and my priority as a director general designate will be to enhance the achievement of compliance with registered employment agreements by utilising all of the compliance and enforcement mechanisms which are part of the new Workplace Relations Bill.

These arrangements include increased powers and capacities on the part of compliance officers, as well as enhanced inter-agency capacities on the part of the workplace relations commission. If the Bill becomes law, the work programme of the future workplace relations commission will have a focus on compliance with registered employment agreements. I note, for the information of the committee, that the inspection services of NERA have handled over 4,688 cases to date in 2014, in which the incidence of breach has been high at 43%. These cases have covered 72,634 employees and resulted in the recovery of unpaid wages of almost €720,000.

The Labour Relations Commission welcomes the legislation and its intent. Allied to the Workplace Relations Bill, the rationalisation of dispute resolution bodies, the enhancement of the work of the inspectorate which will become a body of compliance officers and the collective bargaining focus of the workplace relations commission as exemplified by the current conciliation service provided by the Labour Relations Commission, the draft Bill will assist considerably to ensure we create harmonious relations in so far as possible and reasonable within the confines of the human condition among employers, trade unions, their representative bodies and employees. It is vital for those employees who are sometimes outside the comfort blanket of formal representation to ensure in so far as possible that the floor rights of employment rights are observed and adhered to by all and, where possible, enhanced. I understand that in the circumstances that previously obtained enhanced mechanisms were overturned by the Supreme Court, but we must balance the fact that engagement, negotiation and voluntary agreement have led to the industrial peace we enjoy.

Chairman

I invite Ms King to make her opening statement.

Ms Patricia King

The Irish Congress of Trade Unions, ICTU, thanks the joint committee for giving it the opportunity to make a written submission on the heads of the Industrial Relations (Amendment) Bill 2014. ICTU is the representative body for workers and their unions on the island of Ireland. It is a federation of 47 trade unions which operate in Ireland, with a total membership of 768,991 workers. Congress affiliates represent tens of thousands of workers in sectors which benefited for decades from registered employment agreements and who stand to benefit from the proposed legislation. The experience of trade unions is that many workers have seen a worsening of their situation as a consequence of the ruling of the Supreme Court in the McGowan case. This is because registered employment agreements no longer have application beyond the subscribing parties and, as a consequence, employers who previously abided by collective agreements are now refusing to do so. It has created an unsustainable race to the bottom based on unfair competition, with tenders for work based on bids involving wages and terms and conditions below REA rates. This is threatening the livelihoods of workers and standards in the industries affected. Congress welcomes the heads of the Bill as a significant step in restoring the balance.

Once enacted, the legislation will provide legal underpinning for the operation of single company and group of companies registered employment agreements. It will also put in place a system for registered employment orders. Congress supports the overall legislative approach and wishes to draw the committee's attention to a number of key observations and recommendations for amendments to the heads. The Bill does not provide adequate safeguards for workers from reprisals or threats where, for example, a worker or workers seek to negotiate or secure a registered employment agreement or report breaches of the legislation. Critically, there can be no rowing back on the whistleblower protections afforded under the Protected Disclosures Act 2014.

The situation of agency workers must be confirmed. They are entitled to equal treatment, pay and conditions, as established in an REA or REO in line with the EU directive.

The heads of the Bill do not make provision for a minimum pension contribution by employers, only by employees. Therefore, an amendment should be brought forward to provide for an employer contribution.

There is no provision for access by trade unions to members to discuss compliance with an REA or REO. Assurances are sought about the phrase "workers of any class, type or group" and it is essential that its meaning is that the REO has three rates of pay in respect of each of the categories.

Technical amendments are also needed. For example, the wording must be amended to allow groups of employees to be party to a registered agreement without the necessity to form a trade union.

The proposed legislation is unquestionably a major step forward. However, congress notes that the new framework does not address the deficit whereby Ireland, unlike most EU countries, does not have a system by which collective agreements can be concluded at a sectoral level and be made universally applicable for that sector. This places employers and workers at a disadvantage compared with their EU counterparts.

It is regrettable that in McGowan v. the Labour Court the Supreme Court did not comment on the constitutionality of the REA provisions in the Industrial Relations (Amendment) Act 2012. That Act provided for employment agreements, made between trade unions and employer representatives, to be given general application by being registered by the Labour Court and by statutory order made by the Minister confirming the registration of the agreement. It is worth noting that the EU Charter of Fundamental Rights and the European Convention on Human Rights require that collective bargaining should take place at the "level" where it is "effective". Given the nature of employment in many sectors, effective collective bargaining can only take place at sectoral level. This was a key point made in the Duffy Walsh report. The consequence of the McGowan ruling means that there is still no framework for collective agreements to be concluded at sectoral level, and this is the subject of a reference, by the ICTU and our affiliate the Technical, Electrical and Engineering Union, TEEU, to the European Court of Human Rights.

Finally, Congress stresses that it is urgent and critical that legislative progress to give effect to the right to collective bargaining in line with the commitment in the programme for Government is made. We have set out in our submission our observations and recommendations according to the order of the relevant heads of the Bill.

Deputy Peadar Tóibín

Cuirim fáilte mór roimh na toscairí agus gabhaim buíochas leo as an gcur i láthair. The presentation has been interesting and it is good to see ICTU here.

Ms King alluded to the fact that the lack of collective bargaining has left us with a massive problem. The result of this has been the collapse of the previous system and we are now trying to build the complex and difficult system that will replace it. However, there may not be confidence that this will be robust enough to stand, although it seems a simpler and fairer solution to have proper collective bargaining to resolve the issues. Since the collapse of the previous structures, it is clear that a number of sectors are in complete chaos as far as wage rates and conditions are concerned. We have discussed the issues here and in other forums. In the construction, waste and retail sectors, individuals are struggling seriously due to a new form of competition which is eating into their pay and conditions to achieve a competitive advantage and until these issues are resolved, decent employers will not be able to compete in these sectors.

One of the issues this committee has been considering concerns the length of time it takes for issues to be resolved. Perhaps Mr. Mulvey will address this when he responds. A case in Lucan, which is being discussed currently, involves allegations that have been made by employees against employers. Some elements of State agencies are investigating these issues - the issues of self-employment, subcontracting etc. - but the investigations are too slow to deal with the realities of people's lives and the bills they face. Justice delayed is justice denied. My concern is that this experience may continue in the new workplace relations experience and the new industrial relations Bill. We need an effective and timely response to people's experience if there is to be proper adherence to the rights of employees. What is the Labour Relations Commission view on that? What is the typical timescale within the LRC for applications and resolutions and is there a backlog? On the issue of reprisals, it strikes me that it is difficult to legislate against the behaviour of unscrupulous employers who might create a block against staff who have applied to these processes.

Subcontracting can be another major issue in the current labour market, particularly in construction where there is a competitive advantage among employers who either seek or forcibly seek subcontracting.

It strikes me that the only way to resolve this issue is to rebalance in order that there will be a competitive advantage for employers to employ people directly under the PAYE system. How will subcontracting staff be dealt with in these two areas?

On the issue of compliance, how do we create a system under which the staff would become the police force? If they were, it seems the system would be self-policing, but if a staff member believes he or she cannot police his or her experience in any way, there is a difficulty.

I am still confused about the mix on the employer and employee sides. For example, if there are two unions which are roughly equally representative of a group of workers, how will the system operate? Similarly, how will it operate in the case of employees within an enterprise?

Chairman

I remind delegates not to refer to ongoing cases or any specific person. They should reply in general terms.

Mr. Kieran Mulvey

Gabhaim buíochas leis Teachta as na ceisteanna a chuir sé. On the issue of delays, in the context of the conciliation service, the Labour Relations Commission operates a just-in-time service. As soon as the parties involved are willing and able to engage with us, we arrange conciliation conferences. Not only are we proactive in the sense that we do not wait for them, we contact both sides and offer our services almost on an immediate-day basis. Our view is that it is better to avoid threatened disputes actually turning into strikes.

In regard to the rights commissioner service, we are up to date. Effectively, when we receive a complaint in the rights commissioner service - we receive over 10,000 a year - we can offer a rights commissioner hearing quickly. For example, in the case of the complaints we received in September, hearings are being scheduled for January. There is a high degree of productivity and case work in that regard, although, unfortunately, in the case of the Employment Appeals Tribunal and the Equality Tribunal, it is an entirely different story. That is one of the reasons we have decided on a single adjudication service under the new Workplace Relations Bill. I am hopeful that, given the powers and processes being put in place, there is a reasonable expectation that if somebody makes a complaint, he or she will have it scheduled for hearing and a decision made in three to six months, depending on the nature of the case.

A considerable number of cases in the rights commissioner service revolve around the payment of wages, holiday pay, and terms and conditions of employment. These are the bread and butter issues for any worker who is being made redundant or in the context of unfair dismissal or, alternatively, who is in work. What we have managed to do in recent years, despite the volume of cases, is avoid the situation the Deputy addressed where justice delayed is justice denied. I am very conscious of this issue. However, we still have an uphill struggle to change the culture, milieu and operational arrangements for the Equality Tribunal and the Employment Appeals Tribunal, in fact, the Employment Appeals Tribunal will be abolished under the new arrangements and there will be a single adjudication process. However, it is very clear from our point of view that there will be a customer focus and delivery. I am very conscious that it is a resource issue, but, certainly, we believe this issue must be addressed within the system because, in some cases, the delays are unconscionable. I accept the point the Deputy made in that regard.

On the issue of competition, to which Senator Feargal Quinn referred in a question to the Minister, I hold the view that it largely revolves around quality of service, quality of product, quality of delivery and quality of staff, which is why I made the points on labour costs. One of the issues from which we must protect good employers is that of fly-by-night competition from people who operate systems that are not amenable to and do not observe the floor of employment rights established in domestic and European legislation.

This creates the most unfair competition.

The issues that must be addressed in the context of good employment are pay; terms and conditions of employment; and pensions where they apply and are appropriate. That is why we have codes of practice and why, time and again, we issue strategy documents and statements. The issue in the modern economy is quality of competition, product, service and the interface with employee and customer. That is why it is important to place emphasis on it. Registered employment agreements have the capacity to eliminate the labour cost orientation and force employers around the business of what I have suggested. This happens in the retail market and should be happening in the hospitality sector in product delivery. It is about learning and skills development.

Compliance is vitally important. Because of the reorganisation, I am acting director of the National Employment Rights Authority, NERA. Compliance is one of the issues we must address in the Workplace Relations Bill. Moving from the concept of an inspector to a compliance officer is very important. It is more proactive and about regulation, both inspection and enforcement. It will be important in the new Bill that the enforcement processes are faster and clearer. Once the Labour Court has heard a case, we do not want people to have to go through a complex system of enforcement orders, going through the District Court or the Circuit Court, but to have fast enforcement. People who have had decisions made in their favour by the dispute resolution bodies should actually get the money they are due before the employers involved go into liquidation or use some other device to avoid liability. Although this is the first time I have been involved in the inspectorate and the issue of compliance, I am very conscious of this through the Labour Relations Commission in the past and the Rights Commissioner Service. Having gone through the system, with its delays, people should not find that they cannot get the money they have been awarded because the employer has disappeared, gone into liquidation or will fight the payment all the way. This will be very important in the context of what we are trying to do.

Subcontracting has been the bane of the construction industry, with questions such as who is a subcontractor, who is an employer and what is their social welfare or Revenue status. This has been an issue for as long as we have been around and we must set very clear regulations for it. In the new Bill there will be a process whereby we will be allowed to share data with Revenue, the Garda, the fraud office and other bodies and this will assist us considerably in enforcement and ensuring compliance. The dispute the Deputy mentioned is with the LRC conciliation service. We had a conciliation conference which did not succeed in resolving it, but we are available to the parties involved.

Ms Patricia King

I will confine my comments to the Bill we are dealing with which allows for registered employment agreements because one could say much about the Workplace Relations Bill, to which a considerable number of amendments have been tabled. There is no registered employment agreement. One of the biggest sectors in the past to have had registered employment agreements was the construction industry. The only thing that stands between a construction worker and outright exploitation is the minimum wage which, by any standard, is awful.

For somebody coming in as a trained cranesman, banksman or electrician, the only thing to which they are entitled in law is the minimum wage, which from our point of view is outrageous.

ICTU has worked hard at trying to influence the establishment to get us to a place where we will have legislation. We thought we had it in the 2012 Act, but it was challenged and we ended up back in the same place again. We then had to redouble our efforts to influence the establishment to get into this space.

Let me deal with the subcontracting issue and outline what it now means for a grade, group or category of workers. I have mentioned some of the grades and groups in the particular industry. Employers and trade unions can make a case to the Labour Court which will say X, Y and Z and what should happen under various headings such as the rate of pay, overtime, etc. That gives a set of terms and conditions for the workers involved. The regulation goes to the Minister, is laid before the Houses of the Oireachtas and becomes law. It does not matter whether one's name is Mickey Mouse or J. J. and company; an employer must pay what the law states. That provision is of huge value in the sector.

We have had several discussions. We are not allowed to put our heads in the sand; we must talk to employers on occasion. They have shared their view with us that they would also like to have this legislation in place because they have found that two things happen. First, the black economy thrives when there is no regulation; and, second, there is very bad behaviour in tendering for public contracts and everything else. People might say they will pay a particular rate and have priced at a particular rate, but when it comes to the crunch, we have awful problems in having the rates paid to. This legislation should make it very clear to all involved that this is now the law. It means that when one has gone through the proper process and the legislation is laid before the Houses of the Oireachtas and becomes law, workers should then be paid in accordance with the terms and conditions determined. By any standard, that provision has to be positive for those who work in the industry and also for employers because it provides for the creation of a level playing pitch.

The reason ICTU sought the amendment on the agency sector is agency workers are a particular category catered for, as members will well know, by legislation approved not that long ago by the Oireachtas. Any member who saw a programme broadcast last week by the national broadcaster on agencies supplying labour will have seen that there can be a European and global network whereby people can interact to ensure workers do not achieve the rates of pay they should and that an agency can be used as a conduit. Years ago I was here when we worked on the temporary agency Act. At the time I described the machinations involved such that the person at the end of the chain - the agency worker - got nothing more than the minimum wage. We are anxious that the committee give due consideration to nominating agency workers in the Bill in order that nobody, including main employers and subcontractors, will be in any doubt that the rate specified in a regulation order also applies to agency workers. It is my judgment and that of Congress that one will have agency suppliers of labour. There are construction companies in the State which employ very few people directly and which take their labour force from labour suppliers. Some of these companies will look for loopholes to ensure they will not have to comply with a regulation order but still operate within the law.

There is no suggestion that they will be illegal, but they will try to be within the law. We believe that consideration should be given to closing off a possible loophole in that in order to make this as tight as it can be because it is very positive for workers in the sectors. The other aspect, which Mr. Mulvey referred to in his contribution, is that Part II of the Bill allows for an employer and a trade union or trade unions to come together with the employer and have a single registered employment agreement. That is also positive, in that there are some big employers, which I will not name, both in the public and the private sector, where industrial peace is very valuable to the State, the employers and the customers. The registered employment agreement provides for the procedures both sides must go through before they take action that might be regarded as premature or unwarranted. This means that there is at least a procedure which both sides are expected and have agreed to go through, before they get into the endgame. Along with many employers, we feel that is valuable because it is an avenue where one is focused on living up to one's own part of the agreement. What good is being party to an agreement if one does not try to live up to one's own side of it? That is expected, and rightly so. Much positivity may arise from registered employment agreements and registered employment orders, but I urge the committee to consider the agency issue.

Deputy Seán Kyne

I welcome the panellists. The Minister earlier said that there is broad support for the proposed framework from representative organisations for employers and employees, and a desire for it to be put in place as soon as possible. Does that surprise the witnesses or is it welcome that there is a general consensus that this is necessary for harmonious relations? It is also stated under head 5, and I asked the Minister about this, that the Labour Court shall not register any such agreements unless it is satisfied that the registration agreement is likely to promote harmonious relations. In what general areas does Mr. Mulvey think that the court would not register agreements? The basis of an agreement is that both sides come together and want to sign that agreement. On what basis does he think that might not be registered by the court? The last REA provisions included six sectors. Does he think the new framework would allow an increase in the number of sectors interested in putting in place regulations? Does he think this is likely, discussed or possible?

Mr. Kieran Mulvey

At the moment I could not envisage a case where the Labour Court would not register an agreement where the parties themselves are seeking one if the initial negotiations had taken place under the aegis of the Labour Relations Commission by which either a group of employers and trade unions had combined to discuss and agree, as they apply to their employments. If we return to the efficacy of the situation, it is important to remember that no major employer really attempted to set aside these agreements. We must remember that. By and large, the Construction Industry Federation, the major contractual body and the unions within those areas did not seek to set aside these agreements because they have brought industrial harmony and peace. Contracts could be fulfilled, end dates decided, penalty clauses avoided, and arrangements made for travelling time, overtime, shift premiums, sick pay schemes, and so on. There is a value in that one gets, not so much a uniformity, but certainly a sector-wide arrangement. The alternative to this is a free-for-all. We would not have the capacity in the Labour Relations Commission or the Labour Court to service the number of disputes that would emanate in individual employments across the country if we did not have some kind of agreed sectoral arrangement.

We just simply could not have that because every huckster arrangement in the country would have a dispute. While I do not mean that in any disparaging manner, it would affect any small arrangement, any small employer with a group of employees, and we just simply could not service that.

In a sense, that arrangement satisfied the interests of all parties. I believe we are going to need it more than ever now, with the recovery in the economy, in particular in the construction industry. Members will remember that, recently, when the TEEU, the union representing electricians, threatened the group of employers that if they did not adhere to the terms of the old registered agreement, there could be industrial relations difficulties, we had to intervene in those situations, and we have had no strikes. It is about the value of maintaining the continuity of service, the continuity of employment and the continuity of business. We are going to need that more than ever as we recover from the recession.

We should remember what has happened over the course of the recession. Now, SIPTU and its unions are beginning to negotiate collective agreements of 2%, 3%, 4% and beyond that, and that is beginning to take root within the economy. The Minister for Public Expenditure and Reform has already indicated that, for the Haddington Road agreement, he would be in a position to invite in the parties at some stage early next year for discussions. The Haddington Road agreement for all practical purposes is a national registered employment agreement, if one wants to take it that way, for the collectivity of the 300,000 public servants.

Ms King made a very important point that registered employment agreements are not necessarily confined to construction or to the electrical industry, and, for example, airport fire and police workers have a registered agreement with the Labour Court, as have some other enterprises. These are going to be vital around essential services or services that are vital to the economy, where there is an understanding in these areas. Also built into these will be dispute resolution mechanisms, which I referred to in my opening address. One of the most vital components of the parties in promoting good industrial relations is the use of the dispute resolution bodies of the State, which have a very good record, if I may say so, of resolving the most intractable of industrial disputes. The issue of collective bargaining may be raised at another stage.

The vital importance in all of these issues is that we use the processes available to us, because they are free, independent and have a track record of resolving disputes, which applies equally to unions and employers. In the context of the question the Deputy asked, I believe the economy as a whole will benefit from this because the issues of competition are linked to many other issues. There is no competition on the minimum wage; the competition will now be on the living wage - minimum plus, whatever shape that may take. This is the real problem which will be facing us in the coming years, and the Conservative Party Government in the United Kingdom has already started to address it. I hope it will be addressed in the context of the low pay commission, which may need to be renamed the "living wage commission" or something like that.

That is what is going to happen. As we always say in the adage, the construction industry lifts all boats. That may happen again, although we hope we do not get into the same problems that related to other elements of the construction industry in terms of its financing through financial institutions. The economy is reflecting that at the moment and we must try to have, if not so much organised change, then a situation whereby all parties who are central to this have, first, a forum by which they can address the issues that arise for them in their employment and, second, a reasonable mechanism by which these can be independently adjudicated.

Ms Patricia King

I was asked whether we were surprised the employers want it. We were not surprised, for the reasons I set out earlier, in that there is as much advantage to them in having an even playing pitch, and all of the other points around that. We obviously interact with the employers on an ongoing basis so they would share with us at any opportunity they felt appropriate what their view was on this.

With regard to harmonious industrial relations, the committee has heard Mr. Mulvey's view. Harmonious industrial relations are a positive for everybody in the workplace, if they can be achieved.

They can be achieved if there is an equity in terms of how people are dealt with, in particular if people get a decent rate of pay, are treated with respect, are properly compensated for their efforts and are rewarded in the context of terms of conditions.

Most people who go to work are adults who want a harmonious industrial relations scenario. They want to come to work and they spend a lot of time in the workplace, so they do not come to work not wanting harmonious industrial relations. Trade unions do not go around looking for disharmony. There would be some who would advocate that we do but, actually, we do not. However, we have to deal with a lot of disharmony. If I may say it, sometimes the role of the trade union in bringing about harmony can be discredited when, in fact, the contrary can often be the case. Notwithstanding that, as I said, having an employment regulation order that lists the terms and conditions and makes it clear to everybody what they have to pay and so on, having been through a thorough process which has ownership of the Houses of the Oireachtas, can only be a good thing.

I believe the employment regulation orders in the six sectors the Deputy is referring to come under the 2012 Act, which is still standing and operating. The Deputy is being more ambitious than I am in this regard because my ambitions would be fulfilled if we could just get the three sectors that will not go in to go into it. At the moment, a draft REO is published for the security sector, and the objections and so on are now coming in on that, which is very progressive for people working in the security sector; the contract cleaning sector is in discussions under the REO, which, again, is progressive; and the hairdressing sector is also having discussions. Of course, the hotels have gone back up to the place with the green roof looking for a judicial review for some reason, the catering employers have indicated no interest whatsoever in taking part in this and retail are in the same space. There are swathes of low paid workers in all of that, so the Deputy's ambition goes beyond mine in that, if I could ensure we could get those three groups in, we could come back and talk about who else should be in it. All our efforts are going into trying to encourage and persuade, and whatever other appropriate word might be used, those employers to get into that scenario. That is my response to the Deputy.

Deputy Anthony Lawlor

I believe this is a very worthwhile process. As I said earlier, I hope the Minister will come back in after we have met all the groups so we can refer back to some of the issues the witnesses have highlighted. We want to deal with this in a robust manner in order that, when the legislation comes before the Dáil, it can be moved through fairly quickly.

Ms King stated that many workers have experienced a worsening of their situation as a consequence of the ruling of the Supreme Court in the McGowan case. Could she quantify that? Words are easy but I am a practical sort of person and I deal better with numbers. I can count my sheep in the field and I would like to know how many workers are directly affected.

Head 26 involves a situation where an employer might be experiencing financial difficulties. Does Mr. Mulvey see a need for an outside body to examine what this term means as it seems very vague or to adjudicate on the position of employers who may be having difficulties?

Ms Patricia King

I am glad the Deputy drew the analogy with the sheep because I was born and reared in Wicklow and, as a young girl, I used to have to go and count the sheep too. I counted them on the Sugar Loaf but they got hidden behind rocks, so I got used to not seeing everything the first time I looked.

I will focus my comments on the construction industry. First, in the downturn, five out of eight workers in the construction industry lost their jobs.

Second, there was considerable change in the employment methodology. I do not intend to name any of the bigger construction employer groups. A number of them fell into liquidation due to the economic collapse. At least six or seven of the bigger construction employers use indirect employment, for example by using agencies. Most of the agencies are not offering employment which comes anywhere near the former registered employment levels. As I explained before, the only law they have to comply with is the minimum wage. Although they are in a minority, there are still employees who did not lose their jobs but have maintained their employment and whose terms and conditions did not improve, because construction workers have taken a 7% pay cut. Turnover in the industry is very high. Most of the new job offers, whether short term or long term, offer wages that are nowhere near previous levels, and there are extremes. There are employers who offer extremely low wages, between €10 and €12 per hour. A general operative in the registered agreement before this fell was probably earning approximately €15.40 per hour while workers such as crane operators and banksmen earned approximately €22 per hour. Many people have lost their earning potential and have a major interest in the legislation passing.

Other issues are overtime and how it is paid for and travel time. There is a long tradition regarding rates for travel time, much of which fell off the cart. This is not anecdotal, but based on strong feedback from our membership. We are the main union for the general operatives. Other categories such as carpenters and electricians are in the craft unions, although we have some craft workers, such as painters. Feedback from our members is that everybody should maintain his or her contract, even in catering and hospitality. When the employment regulation orders, EROs, fell, before we got them back, there was an increase in employment but a 24% drop in full-time employment and a 33% increase in part-time employment. There has been considerable slippage in the bigger sectors, such as construction, in terms of wages, pay rates and terms and conditions. This sort of regulation order would be extraordinarily positive in getting back to where people were.

Mr. Kieran Mulvey

Not to be outdone by Ms King, I come from a county where the sheep's head is part of the county emblem.

Deputy Anthony Lawlor

I did not know this was the agriculture committee.

Mr. Kieran Mulvey

We could go into that as well. On the Deputy's question about head 26, although this is a matter for the Labour Court, I hope we would never be in a position where employers claimed inability to pay the minimum wage. If it were the case, under previous national agreements we had the old inability to pay clause.

In those cases, where we had that arrangement, an independent assessor was appointed by the court or by the commission to evaluate the company's performance, look at its accounts and come back to the court with a report stating whether what is being claimed is true or one could vary it in terms of paying at that stage what were the national pay rounds in that case. We have much experience over the years of using independent assessors to assess the capacity of a company to pay a pay claim. That has fallen into disuse over the last few years but the precedent is there and there used to be ten or 12 individual practitioners who did this independently for us. There is a limitation of about 24 months - no less than three months and no more than 24 months - and one cannot get the exemption twice in any five-year period, so one would be hard pressed to look for that in the context of even the period available to one. That is the way it would be adjudicated, I anticipate, by the court, which would appoint an independent assessor who would look at the company's books and report back to it.

Chairman

I thank everyone for attending the meeting to discuss the heads of the Industrial Relations (Amendment) Bill 2014. It has been most helpful and will help to inform our consideration and deliberations when we respond to the Minister.

The joint committee adjourned at 3.45 p.m. until 1.30 p.m. on Tuesday, 18 November 2014.