I was interested in the “John Grace Fried Chicken” High Court case. I am also covered by a Joint Labour Committee Agreement, although not within the catering industry. Are all Employment Regulation Orders now unlawful and unenforceable? Does the John Grace case just apply to catering or can I start to offer lower wages within my industry? Can I reduce the wages of existing staff based on the decision? How do I handle it?

Antoinette Vahey writes:

In the John Grace Fried Chicken High Court case, Mr Justice Feeney ruled that the provisions of the 1946 and 1990 Industrial Relations Acts permitting Joint Labour Committees (JLCs) to prepare Employment Regulation Orders (EROs), which were incorporated into law by the Labour Court, were unconstitutional.

Although Mr Justice Feeney’s judgement was made in respect of the catering industry in particular, it has challenged the entire constitutionality of the JLC/ERO system.

There are 19 JLCs, which set pay rates and conditions of employment, through ERO’s for the following sectors:

* Aerated waters and wholesale bottling
* Agricultural workers
* Brush and broom
* Catering (excluding Dublin city and Dun Laoighaire)
* Contract cleaning (city and county of Dublin)
* Contract cleaning (other)
* Hairdressing (Dublin city, Dun Laoighaire and Bray)
* Hairdressing (Cork city)
* Handkerchief and household piece goods
* Hotels (Dublin city and Dun Laoighaire)
* Hotels (others excluding Cork)
* Law clerks
* Provender milling
* Retail, grocery and allied trades
* Security industry
* Shirt making
* Tailoring
* Women’s clothing and millinery

Following the High Court decision, EROs no longer have statutory effect and the EROs which have been made under the JLC system are unlawful and unenforceable. There are significant plans for reform in the area, however, until such time as the system is reformed, employers are seeking guidance on the effect of the High Court case in practice.

In examining the effect of the case, a distinction has been made between existing employees and new hires, in these sectors. Having regard to existing employees, employers should be aware that these employees have operated under terms and conditions of employment which formed part of their contract of employment. An employer cannot unilaterally change the terms and conditions of employment of existing employees, without obtaining their express consent to the change. As a result, existing employees in these sectors will continue to have the same rates of pay and conditions of employment that were set by the JLC/ERO system, their contracts of employment and custom and practice, unless they consent otherwise.

Having regard to hiring new employees, employers are not bound by the rates and terms of conditions of employment which were set under the JLC/ERO system. As a result, any new employees can be employed on more competitive rates of pay and conditions, which are not based on any JLC/ERO. However, employers will be keen to maintain a harmonious work force and should have regard for any collective agreements in place with Trade Unions, dealing with terms and conditions of employment.

Employers are reminded that there are numerous existing legislative measures, outside of the JLC/ERO system, governing conditions of employment, which should be taken into account if an employer is seeking to implement new terms and conditions of employment.

Some examples of which are set out below:

* Since 1 July 2011, S.I. 331 of 2001 sets the national minimum wage rate at €8.65 per hour.

* The working hours for young people are regulated by the Protection of Young Persons (Employment) Act, 1996 which sets maximum working hours, rest intervals and prohibits the employment of young people under 18 years of age in late night work. Full time work is also prohibited for children under 16 years of age.

* The Organisation of Working Time Act, 1997 lays down rules for minimum breaks, rest periods and night work. In addition, Section 14 requires employers to pay increased allowance to employees who work on Sundays.

* Section 5 of the Payment of Wages Act, 1991 prohibits a deduction from wages of an employee, unless it is either authorised or required by statute, a term of the employee’s contract of employment or the employee has given prior consent in writing.

* Employers should be also be aware of any Codes of Practice published by the Labour Relations Commission, dealing with terms and conditions of employment e.g. Code of Practice for Sunday Working in the Retail Trade. Although these codes are not legally binding, employers ignore them at their peril.


Registered Employment Agreements

It is important to note that the recent High Court case does not have a direct effect on Registered Employment Agreements (REAs) which governs pay and conditions in certain sectors such as drapery, footwear and allied trades and construction industries. REAs are collective agreements made between trade unions and employers which are registered with the Labour Court. As a result, REAs remain in force for now. However, it should be noted that REAs are the subject of separate court proceedings which will challenge their constitutionality on a similar basis to the John Grace Fried Chicken case.

In addition, the Minister for Jobs, Enterprise and Innovation has also sought to include REAs in his proposals for reform.


Proposals for Reform

On 28 July 2011, the Minister for Jobs, Enterprise and Innovation, Richard Bruton, announced that legislation reforming JLCs and REAs, will be introduced in Autumn 2011.

The principle measures announced include:-

* Reducing the number of JLCs from 13 to 6;

* JLCs to set a basic adult rate and two higher increments to reflect longer periods of service. JLCs previously set over 300 different wages rates;

* JLCs to no longer set Sunday premium rates or any other conditions of employment covered by universal standards provided for in existing legislation, but the special position of Sunday working to be recognised;

* Companies to be able to derogate from EROs and REAs in cases of financial difficulty;

* In setting rates, JLCs to take account of factors such as unemployment rates, competitiveness and wage trends here and in all major trading partners;

* Record keeping requirements for employers under EROs and REAs to be reduced;

* The constitutionality of EROs to be restored through inclusion of robust principles and policies.

It is clear that we are in unchartered waters at present. Further developments in this area are eagerly awaited by all interested parties. The indications from the Minister are that he intends to bring about these reforms as rapidly as possibly. Employers are advised to keep this area under review.