Registered Employment Agreement (“REA”) – Republic of Ireland only

Scales-of-JusticeREAs were first introduced under the Industrial Relations Act 1946.  Part III of that Act makes provision for employment agreements to be registered with the Labour Court (“the Court”) provided certain criteria are satisfied.  These agreements are entered into between trade unions, representing employees, and employers who are substantially representative of a particular industry.  Once registered, the agreement becomes a legally enforceable statement of minimum rates of pay and/or conditions of employment that is binding on every worker and his or her employer of the type, class or group to which the REA applies, regardless of whether the worker and his/her employer are parties to the agreement.

Functions Of The Court

Any party to the agreement can apply to the Court to have the agreement registered in the Register of Employment Agreements. Prior to registration, the Court must be satisfied that where there are only two parties to the agreement, both parties consent to its registration.  Where, however, there are more than two parties to the agreement (which parties must be largely representative of the workers and employers who will be affected by the REA), there must be substantial agreement to its registration amongst the parties representing the interests of workers and employers to whom the agreement will apply.  Prior to registration, the Court must satisfy itself that the agreement is not intended to unduly restrict employment generally, or the employment of workers of a particular class, type or group.  The agreement must specify that where a dispute arises between workers and employers to whom the agreement relates, the dispute must first be submitted for settlement pursuant to the terms of the agreement before a strike or lock-out takes place.

Before the Court will register an agreement, certain particulars of the agreement must be published in a manner that is likely to give those who will be affected by its terms, notice of the application for registration. The Court will not register the agreement until 14 days after such publication to allow any interested parties to submit a notice to the Court of an objection to its registration.

The Significance Of REAs To Employment Law

REAs are very significant to employment law.  When, for example, an employer is drafting a contract for a worker who is in a class, type or group to which an REA applies, he/she must ensure that the contract provides for the rate of pay and/or conditions of employment that are provided for in the REA.  If the rate/conditions in the contract are less favourable than those provided for in an REA, the contract shall have the effect as if the REA rate/conditions were substituted for the contract rate/conditions.

Also, where a trade union representing workers affected by an REA complains to the Court under the Industrial Relations legislation that an employer has failed or neglected to comply with the REA, the Court can order the employer to so comply, including the making good of unpaid entitlements on a retrospective basis. An employer who fails to comply with an order may be fined and may also be the subject of a prosecution by the Minister for Enterprise Trade & Employment.

Of more immediate significance to non-compliant employers who take on a new contract is the fact that the company may be reported to bodies such as EPACE  – www.epace.ie – for non-compliance, thus prompting threats of prosecution for non-compliance.

The Significance Of REAs To Northern Ireland Employers Contemplating Submitting Tenders For Contracts In The Republic Of Ireland

Northern Ireland companies, who are requested to quote or tender for Contracts in the Republic of Ireland, need to aware of the existence of these agreements and whether the services to be supplied by their company come within the terms of the registered agreements. For example, a Construction or Electrical Services company from Northern Ireland contemplating entry into the Republic of Ireland market would be called upon to pay the wage and pension rates registered under the current agreements. The fact that Northern Ireland companies are obliged to comply with the agreements was dealt with extensively by the Labour Court in a case concerning the Electrical Contracting REA which was heard in January/February 2009 (CD/09/158).

A Northern Ireland company could find itself subject to industrial relations problems which it never envisaged at the time of taking on the Contract. A sub-contractor needs also to be aware that it, and not the Main Contractor, has the responsibility to comply with the REAs even in circumstances where, for instance, the employees may have come from Northern Ireland and have Northern Ireland Contracts of Employment.

In the case of John Taheny – and – SIPTU the union submitted claims on behalf of 18 employees against a construction company that was paying the employees less than the rate of pay specified in the relevant REA.  The company argued that if it complied with the REA, it would be operating at a competitive disadvantage, as other non-compliant companies could offer customers more competitive prices on the basis that they were not paying employees the rate of pay specified in the REA.  The Court directed that the company pay the REA rate of pay to the employees. Ironically, one of the issues which arose in the Electrical Contracting REA case ref CD/09/158 was the fact that heretofore Northern Ireland companies were in a position to submit more competitive tenders than their Republic of Ireland competitors because of non-compliance by some Northern Ireland companies with the REAs.

There are currently 46 REAs on the Register maintained by the Court, including (as stated above) REAs in place by the Electrical Contracting Industry, the Construction Industry and the Printing Industry.  A complete list of all 46 REAs can be found at www.labourcourt.ie.

An REA is also enforceable as against employees.  An employer may complain to the Court that a trade union representing workers affected by the REA is promoting or assisting in the maintenance of a strike which is, to its knowledge, in contravention of the REA. In this situation, the Court may direct that the trade union refrain from assisting in the maintenance of the strike or it may cancel the registration of the agreement.

The REA system has been the subject of much interest in recent times. Furthermore, the constitutionality of the REA system is currently the subject of High Court challenge.

Determination of Labour Court – Hearing CD/09/158

The Labour Court was requested to consider the application of the various applicant companies to vary the employment agreement for the electrical contracting industry.  Various companies, such as NECI and the Unaligned Group of named Electrical Contractors were requesting the Labour Court to cancel the registration of the latest agreement. The Labour Court decided against cancellation of the registration of the agreement.

The Labour Court Decision was appealed to the High Court where it was heard by Mr Justice Hedigan who delivered his Decision on the 30th June 2010. Mr Justice Hedigan refused to overrule the Decision of the Labour Court, pointing out in particular that the High Court should be slow to interfere with Decisions of the Labour Court and that there had been delay on the part of the Applicants in bringing the Proceedings.

Employment Regulation Orders

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. More information on EROs is available  on the website of the Labour Court at www.labourcourt.ie but, suffice to say that, they are another type of regulation of conditions of employment and pay within certain regulated industries.

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.

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.

ContractHow does this affect the current status of the Registered Employment Agreements?

It is important to note that the recent High Court case does not have a direct effect on Registered Employment Agreements. 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, was to be introduced in Autumn 2011.

The principle measures announced included:-

* 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.

Further developments in this area are awaited by all interested parties but, as of December 2011, no new legislation has been introduced.

Are REAs in breach of EU Law?

Where companies coming into Ireland from other jurisdictions, such as Northern Ireland, there is an argument to be made that the prohibition on those companies providing more competitive rates by compelling them to comply with the REAs is in breach of the Freedom of Establishment and Movement provisions of Treaty of Lisbon.

See Brian Morgan`s Submission Article  :

Are the current Registered Employment Agreements and Employment Regulation

Orders which are enforceable in the Republic of Ireland in breach of Freedom of Movement and Right of Establishment provisions of the Treaty of Lisbon?
at https://www.morganmcmanus.com/pdfs/Registered_Employment_Agreements_May2011.pdf

For further advice on REA’s contact our office to arrange an appointment with one of our Solicitors.