Changes in the National Minimum Wage! Caution needed!

Stop Press Jan 31st; Since originally posting this Fine Gael has announced it will reverse this decision in Government!

NERA has taken advertisements in the weekend papers outlining the change in the National Minimum Wage which will take effect on February 1st. You can get to the NERA information by clicking here.

Can an employer reduce an existing employee’s pay to the new minimum wage level level?

Contrary to press reports (even in the Irish Times!) this will not lead to a reduction in the wages of ’50,000’ workers as was suggested. For the most part this will apply to new recruits who may be employed on the basis of the new adult rate of €7.65.

An employee’s rate of pay is a term/condition of their contract of employment. Employees have a contract of employment whether expressed in writing or not. Even among people who should know better the terms ‘Contract of Employment’ and ‘Statement of Terms of Employment’ under the relevant statute are used interchangeably, even though they are not necessarily the same thing.

And as we stated on this site and in our other social media last week (Twitter, follow by clicking here) the only circumstances (that we can think of) where wage reductions might be permitted is in the unlikely event of an employee contract stating that the pay rates shall be ‘whatever the national minimum wage is ‘for the time being’ or some such phrase,

Where this is the case then an employer may legally reduce the employee’s pay in line with the NMW rates or if there if there is a specific provision in the contract that provides for a reduction in pay. 

Where this is not the case any change would have to be by agreement between the parties, and even where it is consultation is recommended. It is its own reward.

NERA notes in its statement that ‘any such agreement can be expressed or implied, tacit or by acquiescence (i.e. it can be formally agreed, informally or verbally agreed or accepted by the employee). But the point is; it must be agreed.

Our advice is that subsequent to agreement it should be recorded in writing,  ideally in a revised statement of the Terms of Employment or a revised contract. (Click to go to the ‘The Advice Page’ on this site.)

An interesting question is what impact this will have on the JLC pay rates? There is now a glaring anomaly that the newly recruited worker in a butcher’s shop, for example may be employed on €7.65 an hour and the counterhand in the Spar next door is on €9.59.

I know ‘every little helps’ but when a saving of one euro an hour climbs to almost two euros, you’re getting into more serious money; for every three staff it’s nearly €10,500 a year of a difference over the new NMW! This is giving retail businesses outside the JLC system a serious competitive advantage.

Taking a (very) hypothetical example of a retail unit with 10 staff all on the NMW or the JLC rate, the extra wage burden on the JLC employer is a significant €35,ooo per annum higher (taking a 35 hour week).

I’m not an advocate of low pay, but I’m even less fond of unemployment and these facts give pause for thought.

Follow me on Facebook or on Twitter

Callely judgement in Haughey footsteps

Callely judgement in Haughey footsteps

Ivor Callely probably (undoubtedly) had ambitions to follow in the footsteps of his hero Charlie Haughey in other ways.

He may not have done so in the way he most wanted to by achieving high political office but he has got close with another, unintended connection.

Lawyers refer to the rights a citizen has in such matters, especially in relation to tribunals of one sort or another) as ‘Haughey rights’ as a result of a case in which the great man’s brother was involved arising from the political turbulence in Northern Ireland. (Apologies for saying in an earlier version of this that it was Charlie himself).

That case was In re Haughey [1971}IR 217 which is, in many ways the foundation for what we today describe as ‘constitutional’ justice, i.e. natural justice enhanced by the commitments in Article 40 of the constitution to fundamental personal freedoms. Indeed the Taoiseach had reason to be gratefiul for these rules in his appearances before the McCracken tribunal.

While further detail on the case is awaited press reports give us a reminder that whatever one thinks of the actions of a person, let’s say an employee guilty of suspected theft, this will not diminish their right to a fair disciplinary process. In this writer’s opinion the notion of ‘summary dismissal’ is legally questionable and potentially exposes an employer to great risk. Where such ‘smoking gun’ cases arise the better route is suspension and intiation of the full procedure; investigation, notice of charges, displinary hearing with representation etc.

A few years ago an employee in a Dublin city centre convenience store who was captured on CCTV stealing bus tickets got €15,000 in compensation when she was summarily dismissed (admittedly by text message!), but without the benefit of any of the procedure just mentioned.

The higher courts have consistently taken a very firm line on application of the principles and practise of fair procedure. (Even the Labour Court got a rap on the knuckles in the Ryanair case). The Employment Appeals Tribunal has done likewise.

Concern about Quinn Bill on construction arbitration (adjudication)

The Construction Contracts Bill  (Click for bill)  was initiated in the Seanad by Feargal Quinn.  A recent report in the SBP suggests that this is likely to be adopted by the government and enacted before the election. It is apparently with the A-G at the moment.

It essentially proposes a system of fast track arbitration, styled as ‘adjudication’ into disputes over contract payments between various parties in the construction chain (‘employer’- main contractor-sub-contractor etc).

While the objective of speeding up disputed payments is a laudable one especially in the current climate facing the construction industry there are significant concerns about the bill within sections of the construction related professions (engineers, architects, surveyors etc) and within the arbitration ‘community’.

In principle it sounds fine; but it draws on a UK model which has been the subject of much criticism, and there are alternative models (New South Wales) which are regarded as superior. Something between the two might be an option.

Notably, the precise limits of the ‘chain’ is an issue.  (Does it include a solicitor drafting a contract at the end of the chain as well as a main and a sub contractor?)

Also there are issues about how a dominant party can abuse the process to strong-arm weaker parties within the tight time frame for the adjudication. This danger is anathema to fair procedure concepts associated with arbitration.

There is no urgency about this Bill. Such a measure is, in principle a good idea but the detail needs to be refined. Little of this was done in the Seanad which in this case at least has reinforced critics as to its role.

Much better to let the civil service do what it does well and extend the period of consultatiom on the measure with a view to bringing an improved version to the Dail later in the year.

A group representing engineers, architects, surveyors etc is very critical of the measure and has made its views known in a paper submitted to the Government. I can make it available (with the approval of the authors) on request.

As a general arbitrator some of the issues involved here are, frankly beyond my experience (and I suspect beyond Senator Quinn’s) but we should not ignore the views of those with practical experience of the operational strengths and weaknesses of existing provision.

But the paper describes how a dual process of adjudication would solve many of the perceived problems with adjudication in the building and construction industry. The proposed dual process is a combination of the existing process of adjudication in NSW, Victoria and Queensland, which is described as the certification process, and the process of adjudication in the UK, NZ and elsewhere: the traditional process.

Under the dual process, the procedure for adjudicating progress claims would be slightly different to the procedure for adjudicating ‘ex–contractual claims’for debt or damages.

This is something which should not be rushed. Better to wait and do it well than just add to a list of swan song enactments. There are dangers in creating legal rights in a situation where there is such uncertainty as to their implications.

Landmark European decision on right to collective bargaining discussed

UCD School of Law

2010 Distinguished Guest Lecture; Professor Keith Ewing, Professor of Public Law, Kings College London, President Institute of Employment Rights

I had the pleasure of being invited to this lecture which was a follow on to the excellent seminar organised by the UCD Law School on twenty years of the Industrial Relations Act, 1990 in July. (The papers from that were launched as a book following the lecture. Available from Round Hall Press. Much more than a commentary on the Act; an overview of our IR dispute resolution machinery)

 The subject of Professor Ewing’s lecture was the decision of the European Court of Human Rights in Demir and Baykara v Turkey . (Application no. 34503/97;) Read full case report  

Professor Ewing described this as a landmark case and one of the most important in his entire career as a labour lawyer. ‘You wait a lifetime for a case like this but it is worth the wait.

Mrs Demir was a member of the union and Mr Baykara its president. Their union entered into a collective agreement with the local council in Gazientap  in Turkeyin 1993 covering the usual range of workplace issues. Not long after, the council thought better of it and decided to break the agreement.

The union sought enforcement of the agreement; succeeded but after some further legal to-ing and fro-ing a superior court, the Court of Cassation ruled that while unions had the right to exist; that was it. They had no right to collective bargaining. (Incidentally, the court ruled that any benefits union members got were void AND council officials who had signed off on them would be liable for the losses if they could not be recovered from the workers!!!)

Eventually, Demir and Baykara, on behalf of the union, claimed at the European Court of Human Rights (ECtHR) that the right to collective bargaining was established by article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. Article 11 states:

1. Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests.

2. No restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary in a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others. This article shall not prevent the imposition of lawful restrictions on the exercise of these rights by members of the armed forces, of the police or of the administration of the State.

The Court noted the declaration of the right in article 11(1) and the restrictions under article 11 (2). It held that these had to be strictly construed and that they could not limit the right to organise. Any restrictions imposed by the state had to be shown to be legitimate and civil servants could not be treated as “members of the administration of the state”. The court went on to rule that the right to collective bargaining with an employer had become one of the essential elements of the right to form and join trade unions, guaranteed under article 11.

This means that the right to freedom of association includes the right to collective bargaining.

Professor Ewing noted that in arriving at this conclusion the Court had to find a way of essentially departing from one of the central pillars of judicial decision making; precedent, and had to confront an established body of jurisprudence.

A number of cases in the 1980’s (details available) had ruled that while the right to trade union membership existed, acting on that right was another matter, and was not protected by law. This is the settled position in this jurisdiction also.

It did so by ranging widely and reviewing material such as the ILO convention 98 on the Right to Organise and Bargain  and the NICE Treaty, for example in an attempt to update what is meant by the right to collective bargaining and the court followed the ILO jurisprudence in determining the necessary standard of compliance.

The implications of this case are clear according to Professor Ewing and the reasoning of the court can not be limited to the right to bargain but extends to the right to strike, on the basis that industrial action is a human right. What is more, this probably covers all types of action including ‘political’ strikes (days of action etc).

Bear in mind also that the Charter of Fundamental Rights which, to many people was the strongest reason for voting Yes to Lisbon contains an identical provision to that in the ECHR which grounded the Demir and Baykara case. (Demir etc was decided before the Lisbon Treaty was passed)

Ewing is clear about the implications of this.

Irish constitutional law and employment law students learn that the corollary of the freedom of association is a freedom to disassociate, and in the particular case of the Ryanair and earlier Supreme Court judgements the right to run a ‘union free company’. In his view the Supreme Court decision is incompatible with the Demir decision and irreconcilable with ILO conventions.

Tony Kerr in concluding would go no further than to say that the decision was ‘significant for Ireland’. Precisely how this will work its way through the system we will have to wait and see. Trade union membership is about 30% of the working population and Ryanair can’t be to blame for all of that, so those who see this decision as a panacea may be engaging in wishful thinking.

Finally Keith Ewing noted that it was a remarkable coincidence that the European countries which had the most highly developed union rights were the ones doing best in the current economic challenges!

Please see link to UCD Diploma in Employment Law course on Links page. We at Workplace Solutions strongly recommend this course

Labour Court extends Retail Grocery JLC terms to petrol stations

Note 1.

The National Minimum Wage is currently €8.65 per hour. The Government is proposing to reduce this to €7.65. Under the Employment Regulation Order (ERO) the rate for a ‘General Sales Assistant’ is €9.59 rising to €9.90 after 3 years. There are other benefits also not available as a matter of right to workers not covered by an ERO.

THis link will bring you to the ERO

Note 2 Added March 1st

  • Independent review of ERO/REA system ordered by EU/IMF due to report relatively quickly. More here
  • LABOUR COURT DECISION (DEC106) Edited

    ‘The Court determines that the Topaz Carlow retail unit situated at Green Lane Carlow is a Department of an undertaking engaged wholly or mainly in the retail grocery and allied trades. The nominated employees comes within the scope of the Joint Labour Committee and is subject to the provisions of the relevant Employment Regulation Order.’

    This was an action by NERA against TOPAZ / ARD SERVICES represented by IBEC concerning the  Applicability of Retail Grocery and Allied Trades ERO to a service station

    Text of Recommendation

    2. The central issue for the Court to determine is whether or not the Retail Grocery and Allied Trades Joint Labour Committee (JLC) and the Employment Regulation Order (ERO) (Retail Grocery and Allied Trades Joint Labour Committee S.I. No.374 of 2009) operates as respects workers in Ard Services trading as Topaz, Green Lane Carlow and specifically to Mr Patrick Burns who is employed there.

    The ERO in setting out the definition of Workers who come within the remit of the ERO states that they are: – All workers employed anywhere throughout the State in any undertaking or any branch or department of an undertaking being an undertaking, branch or department engaged wholly or mainly in the retail grocery and allied trades and who are engaged on any of the following duties, that is to say:
    (a) operations in or about the shop or other place where the sale by retail aforesaid is carried on being operations for the purpose of such sale or otherwise in connection with such sale;
    (b) clerical or other office work carried on in conjunction with the sale by retail aforesaid and relating to such sale or to any of the operations in (a) of this sub-paragraph.
    he ERO goes on to exempt some retail operations which are not relevant in this case.

    The ERO goes on to state

      • For the purposes of this schedule “the retail grocery and allied trades” consist of the sale by retail of:
         a) bacon, ham, pressed beef, sausages, or meat so treated as to be fit for human consumption without further preparation or cooking but does not include the sale, by retail, of other meat;
        (b) all other food (including bread or flour confectionery, articles of sugar confectionery and chocolate confectionery and ice cream) or drink for human consumption other than for immediate consumption on the premises at which the sale is effected;
        (c) tobacco, cigars, cigarettes, snuff and smokers’ requisites.
         
        3. For the purpose of this schedule:

    (a) in determining the extent to which an undertaking or branch or department of an undertaking is engaged in a trade or group of trades, regard shall be had to the time spent in the undertaking, branch or department on work in those trades; 

      • (b) an undertaking or branch or department of an undertaking which is engaged in any operation in a trade or group of trades shall be treated as engaged in those trades.Accordingly the Court must in the instant case determine
        a) whether a relevant undertaking, branch or department within the meaning of the ERO is in operation at the service station
        b) whether such undertaking, branch or department is engaged wholly or mainly in the retail grocery and allied trades and; 
    • c) whether the employee cited is engaged on any of the duties specified in section (a) or (b) above.

    a) The existence of the relevant undertaking, branch or department

    Ms Ruth McDonagh, M.G. Ryan Solicitors on behalf of Topaz Carlow submitted that the relevant undertaking for the purposes of the ERO is Topaz Carlow whose main activity is the sale of fuel and fuel related products that are not encompassed by the ERO. She said that fuel and non-ERO products in the current year accounted for 78% of turnover. Accordingly, she said, the undertaking was not wholly or mainly engaged in the retail grocery and allied trades and does not come within the scope of the relevant JLC and ERO.

    Mr Alan Haugh Solicitor on behalf of NERA submitted that the undertaking comprises a convenience store that is engaged in the retail sale of all items listed in the order and a facility for the retail sale of fuel (petrol and diesel). Accordingly he submitted that the undertaking came within the scope of the relevant ERO and JLC.

    Findings of the Court:

    The Court is satisfied that the ERO is so worded as to encompass not only an “undertaking” but also a “branch” or “department” of an undertaking when determining the relevant unit of operation for the purposes of determining whether and to what the ERO applies. The Court, on the basis of the evidence presented to it by the parties to the dispute, is satisfied that in the instant case, while the overall undertaking might be described as a service station within that undertaking there are several branches and departments as follows:
    · the main undertaking which is a retail petroleum fuel sales undertaking,
    · A department which sells services related to the main undertaking including car wash and other vehicle maintenance services such as vacuum and air services and
    · A department which is a retail shop.

    The Court is mindful that the purchase of motor fuel is not a precondition for the purchase of items in the retail unit. The retail unit and the purchase of motor fuels are not inextricably linked, interdependent or necessarily part of a continuous transaction. The selling of fuel and the retail unit are separate and distinct entities with different trading patterns, operating in different market places, against competition of different types. The Court accepts that they are mutually supportive from a business perspective i.e. business in one area may lead to business in the other, but that does not mean that they are so interdependent as to create a single homogenous unit. The retail shop undertaking could close or change the items stocked without affecting the capacity of the fuel sales business to operate and vice versa.
    The Court is therefore satisfied that the retail shop is a department of an undertaking within the meaning of that term in the ERO.

    b) Engaged wholly or mainly in the retail grocery and allied trades:

    The second issue for the Court to decide is whether the undertaking, branch or department is engaged wholly or mainly in the retail grocery and allied trades.

    Section 3 (a) provides that for the purpose of the schedule

      • ”in determining the extent to which an undertaking or branch or department of an undertaking is engaged in a trade or group of trades, regard shall be had to the time spent in the undertaking, branch or department on work in those trades;”
        Section 3(b) goes on to state: –(b) an undertaking or branch or department of an undertaking which is engaged in any operation in a trade or group of trades shall be treated as engaged in those trades.
         
        Ms McDonagh on behalf of Topaz Carlow submitted that 78% of turnover on the site comes from fuel, fuel related and non ERO items. She submitted that turnover was the most appropriate measure for determining whether the undertaking was wholly or mainly engaged in activities encompassed by the ERO. She referred the court to its decision in the case of Dagges Newsagents Limited v Department of Enterprise and Employment [DEC952 1995]. She submitted that the Court applied the turnover test in this case when deciding whether or not Dagges Newsagents came within the scope of the ERO. Applying this test in the instant case would mean that the undertaking was not wholly or mainly engaged in the retail grocery and allied trades as defined in the ERO. She also submitted a Daily Time Sheet that showed the standard time required of a named sales assistant to perform the different duties expected of him on the site. In submitting the document she advised the Court that no measurement of the actual time spent took place in the preparation of the time sheet. Rather it was the company’s best estimate of the time required to discharge the relevant duties associated with the operation of the site. From this document she concluded that 51% of the Shop Attendant’s time is spent at the Tills and 49% of time is spent attending to other exempted duties. She went to say that 22% of sales by value are of products covered by the ERO whilst 78% are of sales of fuel and non ERO products. She submitted that the Court is required to have regard to the time spent in the undertaking, branch or department on work in those trades and that it was clear that the sales assistant only spent a minority of his working day engaged on work associated with products that came within the scope of the ERO. She submitted that in a case such as this where the assistant spent the majority of his time dealing with matters which did not come within the ambit of that department which fell within the ERO, then even if a department could be identified which fell within the ERO the fact that the person who worked within that department spent the majority of their time on duties which did not fall within the ambit of the ERO meant that the person themselves could not fall within the ambit of the ERO.Mr Haugh on behalf of NERA submitted that turnover was an arbitrary criteria for determining this matter and was no more meritorious than floor space, profit margin, contribution to overhead or any other metric. He submitted that the ERO did not specify turnover as the appropriate metric to be employed in determining this matter and that the Court should ignore the evidence submitted in this regard as irrelevant and inappropriate. He said that Section 3(a) and (b) of the ERO requires the Court to have regard to the time spent in the undertaking on work in those trades. He submitted that the time spent by workers on work in these enterprises is wholly or mainly in the convenience store rather than on the forecourt. He further said that in the majority of cases, the workers in question have little or no forecourt duties, the enterprise in question being self service in relation to petrol / car wash duties. He further said that the workers were engaged in operations in or about the shop which invariably included one or more of those listed at paragraph 1(a) and (b) of Part 1 of the Schedule to the Order which brings them within the scope of the JLC and the provisions of the ERO. Findings of the Court:

    The ERO refers to “time spent in the undertaking, branch or department on work in those trades”.

      •  It would appear from this wording that being available at the till to process purchases within the shop or being available on a deli counter attending to customers constitutes work in those trades. Moreover duties are defined as “operations in or about the shop ….. being operations for the purpose of such sale or otherwise in connection with such sale”. Again this would suggest that being available to deal with customer purchases meets the criteria also. As this availability appears to be an ever-present feature of work in the retail unit along with operations for the purpose of transacting the sale of such products, the time spent in the undertaking appears to be indistinguishable from the opening hours of the unit. Taking all of these factors into account the Court determines that the retail unit is a Department of an undertaking wholly or mainly engaged in the retail grocery and allied trades and comes within the scope of the JLC and the ERO.c) Duties of the WorkerThe final question for the Court to address is whether the Worker cited is engaged on any of the duties specified in Section 1 (a) or (b) of the ERO.The Court notes that the terms “wholly or mainly” governs the business transacted in the undertaking, branch or department but does not explicitly govern the work undertaken by an individual employee. Section 1 of the ERO says that any worker employed in an undertaking, branch or department who performs “any” of the “following duties” is covered by the Act. The ERO then goes on to specify the following duties as : –(a) operations in or about the shop or other place where the sale by retail aforesaid is carried on being operations for the purpose of such sale or otherwise in connection with such sale;

        In its own submission Topaz Carlow acknowledges that the worker cited Mr Patrick Burns carries out some of the operations specified in Section 1 ( c ) of the ERO. As the Court has already found the business of the retail unit brings it within the scope of the ERO the Court finds that Mr Patrick Burns comes within its scope also.

        DECISION :

        The Court determines that the Topaz Carlow retail unit situated at Green Lane Carlow is a Department of an undertaking engaged wholly or mainly in the retail grocery and allied trades. The nominated employees comes within the scope of the Joint Labour Committee and is subject to the provisions of the relevant Employment Regulation Order.

        The Court so decides.

        Signed on behalf of the Labour Court

         Brendan Hayes
        8th October, 2010 ______________________
        JF Deputy Chairman
          

        NOTE
        Enquiries concerning this Decision should be addressed to John Foley, Court Secretary.

         

         
         
         
         

         

         
         

         

         
         
         

         

         

    Dispute Resolution; an opportunity to influence the next government?

    Let’s get a discussion started on what measures the dispute resolution community, if I might call it that would like to see in the next Programme for Government.

    Here is the text of what is in the Four Year National Recovery Plan (Page 33). This is in the somewhat limited context of bringing professional costs down. A broader focus on dispute resolution an all walks of Irish life might be a more positive approach

    Action Points

    Provide for a more structured approach to mediation in the legal system and promote further the use of Alternative Dispute Resolution taking into account recommendations of the Law Reform Commission in its Final Report 2010 on the subject.

    A package of measures to reduce legal costs will be implemented, including

    •  increased use of tendering by the State;
    • prioritising publication and enactment of the Legal Costs Bill; and
    • additional proposals for legislation to reduce legal costs, drawing on the recommendations of the Legal Costs Working Group and the Competition Authority.
    •  Provide for increased use of arbitration and mediation.

    As always, turning these fine words into reality will be a task in itself, but a first step will be to ensure that the parties which might make up the new government are also committed to them.

    Also, it is a chance to look at dispute resolution in the employment law area. Kieran Mulvey says the LRC is inundated. It takes a year to get to the EAT.

    I have some thoughts on these problems which I will return to shortly. Yours are more than welsome.