I welcome very much the opportunity to accede to the wishes of Senators that legislation be initiated in this House. I have come to the Seanad frequently in recent years. It has been said, quite rightly, that the Seanad wishes to be taken seriously and one of the ways in which it can be taken seriously is to have a legislation initiated here. I pushed for this Bill to be initiated in the Seanad and not in the Dáil.
I realise that Aer Lingus is an important issue, carrying with it enormous repercussions and I welcome the fact that Senators are rigorous in their pursuit of that matter. However, we must deal with this Bill this afternoon and I am glad to be here.
The Unfair Dismissals Act, 1977 was enacted by the Oireachtas in April, 1977. Prior to that time, employees had a minimal degree of protection against wrongful dismissal, principally under common law. Considerations such as lengthy delays, the expense involved and the lack of industrial relations expertise in the civil courts, deterred many aggrieved employees from using these courts.
The 1977 Act brought about a significant change in this situation. The Act provided that thereafter dismissal would be regarded as unfair unless there were substantial grounds justifying such action. It provided a system under which claims of unfair dismissal could be investigated impartially by a Rights Commissioner or by the Employment Appeals Tribunal. It also provided for redress for unfair dismissal in the form of reinstatement, re-engagement or compensation for financial loss.
The 1977 Act, therefore, protected the employee from arbitrary dismissal and it enhanced employment rights. It also provided an avenue of redress which was designed to be speedy. As such, the Unfair Dismissals Act, 1977, might be said to be one of the most significant pieces of labour law on the Statute Book. It is an important source of worker protection and provides a charter of rights for over 750,000 employees in Ireland.
The need for the type of protection provided by the Unfair Dismissals Act is illustrated by the number of cases referred under the Act to the Employment Appeals Tribunal for adjudication. In the period 1984-91, inclusive, a total of 7,751 direct claims of alleged unfair dismissal was dealt with by the Employment Appeals Tribunal. Of these, the appeal was allowed in 1,734 cases and disallowed in 2,414 cases. The balance was made up of cases which were either disposed of without a hearing or withdrawn during a hearing. In cases where dismissal has been found to be unfair, and compensation has been decided upon as the remedy, the average amount of such compensation has risen from £1,864 in 1984 to £2,660 in 1991. In 1991, the size of such awards ranged from less than £100 to £15,000 in the light of the circumstances of individual cases.
Thus, the 1977 Act was introduced to deal with a situation where instant dismissal without reason was common and could only be challenged by trade union action. Employees in non-union or weakly-organised areas had little protection.
Even those who are critical of the Act do not seriously dispute that such employees needed some legal safeguards against the actions of a minority of employers who would have resorted to instant and unjustified dismissals. In view, however, of the length of time the Act has been on the Statute Book a review of its contents was considered necessary.
Following on in a evolutionary way, a discussion document was published in November 1987. This document outlined possible options which might be considered in three specific areas of our employment protection legislation namely, unfair dismissal, employment equality and payment of wages. As Senators will be aware, a new Payment of Wages Act was enacted in 1991 whereby workers are paid through the banks. The present Bill results from consultations and discussions with both sides of industry and other organisations interested in the operation of our unfair dismissals legislation.
The Bill is in line with an undertaking in theProgramme for a Partnership Government 1993-1997“to amend and improve the working of the unfair dismissals legislation” and also fulfils a commitment in the Programme for Economic and Social Progress, Section IX. It is important to put that on the record.
Quite obviously the two main constituents interested in this type of legislation are the workers and the owners management. However, under theProgramme for Economic and Social Progress which was a social forum whereby various social partners found their voice it was quite clear that the commitments were seriously entered into with the expectation that they would be delivered on and upheld.
In introducing this legislation I am conscious that the Programme for a Partnership Government commits this Administration to a review of labour legislation to ensure that it extends full protection against discrimination to a range of minority and disadvantaged groups. Among the possible grounds for discrimination listed in the Programme for a Partnership Government for inclusion in the review are parental status, religion, age, handicap, race, colour, sexual orientation and national or ethnic origin, including membership of the travelling community.
The review falls within the brief of my colleague, the Minister for Equality and Law Reform. I have discussed with him relevant aspects of unfair dismissals legislation which already provides protection in a general way against dismissal on the grounds listed in the programme and designates some of them specifically — race, religion, colour, and now in this Bill, sexual orientation — as grounds for automatically unfair dismissal. In this context, the Minister for Equality and Law Reform has indicated to me that, following review of equality aspects of labour law, he will be promoting proposals for legislation framed to ensure full equality of opportunity for all in the workplace. If necessary, when that time comes and his legislation is ready, those proposals may incorporate suitable amendments of unfair dismissals legislation. However, that is for another day, and I know from speaking to the Minister and his staff that they are busy drafting the legislation.
Before I come to deal specifically with the contents of the Bill which is the amendment to the 1977 Unfair Dismissals Act, I would like to say a few words about the positive aspects of that Act on our system of industrial relations and to refute suggestions that it has had a negative effect on employment creation.
When the 1977 Act was being prepared it was considered that the right to secure a speedy impartial decision on a claim of unfair dismissal would help to reduce the incidence of industrial disputes related to dismissal. The success of the Act in achieving this can be seen from an examination of the relevant statistics. Since 1976, the year preceding enactment of the legislation, disputes relating to dismissals have decreased both in numerical terms and when expressed as a percentage of the total number. Statistics show that the reduction in the proportion of disputes arising from dismissal since the enactment of that Act is quite significant.
In 1976, almost 20 per cent of all disputes arose from dismissals. Since the introduction of the 1977 Act, the number has decreased to about 10 per cent a year and, in some years this statistic has been as low as 7 to 8 per cent. This fact, taken in conjunction with the number of claims made under the Act, suggests that it has played a major role in reducing industrial relations tensions. Indeed, this view is borne out by the conclusions of a study published in 1987 on "The Impact of the Unfair Dismissals Act, 1977 on Workplace Industrial Relations". The study, by the very distinguished Tom Murphy of the Department of Industrial Relations in UCD, concludes, and I quote:
The Unfair Dismissals Act may be regarded as very successful in the way in which it has contributed to an improved ability on the part of employers and trade unions to resolve dismissal issues through discussion. It has not led to the marginalisation of the significance of collective bargaining for the regulation of the dismissal issue at the workplace. The law has instead strengthened collective bargaining at workplace level by creating a closer harmony between employer and trade union views of what constitutes a fair dismissal. What has evolved under the Act's implementation is a very detailed and comprehensive code of practice relating not to the dismissal decision alone but to the whole process of disciplinary control and administration. In industrial relations terms, therefore, the Act has been a major benefit.
I am aware that in recent years there has been much emphasis in many countries on the creation of an environment where businesses can operate with the minimum of constraints consistent with good business practice and hence create maximum employment opportunities. The expression "labour market flexibility" has become common currency and questions have been posed as to how responsible the various institutions, regulations and practices are to changing conditions. In Ireland, the debate has tended to focus on one single aspect, the extent to which worker protection legislation, and particularly the Unfair Dismissals Act, constitutes a disincentive to employers to hire workers. Various commentators have advanced the argument that the Act hinders employment creation. I would like to put some facts on the record with regard to that.
A survey commissioned by the Department of Labour and carried out by the ERSI in 1986 suggested that the scale of these alleged effects is not significant. The study found that practically none of the firms surveyed saw the legislation as one of the main problems facing them, and only a small minority cited it as having caused them a problem in the previous year.
Apart from the UCD study to which I have already referred, other surveys on the operation of the 1977 Act have demonstrated that there have been beneficial effects for management flowing from the legislation since it has contributed to improved personnel practices and to a more stable industrial relations climate. In many instances, the Act has provided an impetus for the reform of disciplinary and dismissal procedures and has helped to tighten up selection procedures. This, in turn, has led to a better selected and more suitable workforce with obvious benefits to employers and a lower likelihood of industrial disputes because of dismissals.
As a final point on this issue, I think it is worth noting that the implication in repeated criticisms of the Act, that it prevents employers from letting staff go in any circumstances, does not stand up to examination. For example, if an employer takes on additional staff and subsequently finds that because of a reduction in business they must let them go, they are not inhibited from doing so by the Act which recognises an employer's entitlement to terminate employment on grounds of redundancy, or indeed, on grounds arising from the capacity, competence or conduct of the employees concerned.
The emphasis in the Unfair Dismissals Act, 1977, is on the protection of employees from being unfairly dismissed from their jobs by setting down criteria by which dismissals are to be judged unfair and by providing an adjudication system and redress for an employee whose dismissal has been found to be unjustified. That objective remains as valid today as it was in 1977.
Before proceeding to the sections of the Bill, I should mention that the question of the optimum hours threshold for eligibility for protection under the 1977 Act, set at 18 hours per week in that Act, was a matter of major concern at the time of publication of the discussion document. However, the debate on that issue has, in practical terms, been overtaken by the enactment of the Worker Protection (Regular Part-time Employees) Act of 1991. That Act extended the protection of the 1977 Act to regular part-time employees, i.e., defined as those who, subject to the one-year service requirement, have been in the continuous service of an employer for at least 13 weeks and are normally expected to work for that employer for not less than eight hours a week.
Before I discuss the technicalities of the Bill I beg the indulgence of the House. While the technicalities are the nuts and bolts of legislation, they sometimes appear very complicated when taken section by section.
This Bill is about people, about workers' rights and the creation of a proper business environment. Above all, we are saying in this Bill amending the 1977 Act that, in Churchill's words, "To jaw-jaw is better than to war-war". Disputes should be resolved through discussion, wherever possible. Employee and employer relations can be fraught and difficult occasionally but in essence, discussion is a peaceful way to resolve disputes.
I turn now to the provisions in the Bill which provide for changes in the 1977 Act. While no fundamental alteration to the broad trust and purpose of the 1977 Act is proposed, the Bill addresses a number of important issues of substance relating to the Act and effects a range of technical and administrative amendments.
Section 1 is a standard interpretation section. Section 2 makes technical amendments to the definitions of "trade union" and "the Tribunal" in the principal Act — the Unfair Dismissals Act, 1977 — and clarifies that an award of reinstatement entitles an employee to benefit from any improvement in terms and conditions of employment which may occur between the date of dismissal and the date of reinstatement.
Section 3 amends section 2 (2) of the principal Act by inserting a proviso to the exclusion in that subsection from coverage by the Act of certain fixed term or fixed purpose contracts of employment. The proviso will allow a rights commissioner (the Employment Appeals Tribunal or the Circuit Court, as the case may be) to examine any second or subsequent fixed term or fixed purpose contract of employment and, to take a view as to whether the fixed nature of the contract was wholly or partly for, or connected with, the avoidance of liability under unfair dismissals legislation. In such circumstances, a claim for unfair dismissal at the expiry of the contract may be heard in the normal way.
The section also broadens the scope of the legislation to include temporary officers of health boards and deletes the obsolete reference to a committee on agriculture by amending section 2 (1) (j) of the principal Act. Maybe the committee on agriculture will return. I do not know. For the moment it is deemed to be obsolete.