The Industrial Relations (Amendment) Act 2015 came into effect last year on the 01st of August 2015. This Act greatly amended the rules on collective bargaining in Ireland and it allowed the Labour Court to issue binding decisions against employers who do not engage in collective bargaining. In a landmark case, the Labour Court has just issued its first binding decision against an employer under these new rules and has awarded a permanent 21% pay increase to the employees concerned.
What is Collective Bargaining?
Collective bargaining is a form of consultation and negotiation on terms and conditions of employment which takes place between employers and a body of employees or their trade union.
What is the Collective Bargaining position in Ireland?
Previously in Ireland, employers were not obliged to recognise trade unions and therefore were not obliged to engage in collective bargaining. This is due to the fact that Ireland operates a ‘voluntarist’ approach to industrial relations so that while employees have a constitutional right to form trade unions, employers had an equal constitutional right ‘not’ to recognise trade union. Accordingly, collective bargaining could only take place in Ireland where the employer recognised the employee body as being a legitimate bargaining representative of the employees in question.
Changes to Collective Bargaining under the Industrial Relations (Amendment) Act 2015
The 2015 Act was introduced to strengthen the rights to collective bargaining in Ireland. In short, the new Act now allows employees or their trade union to take an industrial relations claim against their employer where (a) it is not the practice of the employer to engage in collective bargaining and (b) the dispute concerns a significant number of employees. Once these conditions are met, the Labour Court can review the employees’ terms and can issue a binding decision which is the employer is legally obliged to comply with. This could, for example, result in a pay increase for employees. If the employer does engage in collective bargaining, however, then the Labour Court will not issue a decision on the trade dispute and will instead instruct the two sides to go back to the bargaining table.
Freshways Food Company -v- SIPTU (LCR21242)
The importance of this case cannot be underestimated as it represents the first binding decision against an employer under an industrial relations dispute. The company in question works in the prepared foods sector and employs 250 workers, 170 of whom are general operatives, out of a production facility in Finglas. This dispute concerned 63 employees who worked as general operatives, earning €9.38 per hour.
(a) Did the employer engage in collective bargaining?
Remember, the Labour Court can only issue a binding decision where “
it is not the practice of the employer to engage in collective bargaining in respect of the grade, group or category of workers who are party to the trade dispute”. An employer can satisfy this if they negotiate with a trade union or with an ‘excepted body’ of employees. The employer argued that they do engage in collective bargaining, highlighting that there is a Staff Representative Group (SRG) in the company, made up of management and employees, “
which was established internally to deal with employment related issues”. The employer stated that the SRG was an ‘excepted body’ and that they had previously engaged with the SRG which resulted in a 2.5% pay increase in February 2016.
The Labour Court, however, determined that the employer did not engage in collective bargaining highlighting as follows:
- Firstly, they stated that the employer must engage in collective bargaining with a trade union or excepted body “in respect of the grade, group or category of workers who are party to the trade dispute”. The Labour Court stated that the employer had not satisfied this as the SRG was a general body for all 250 employees, whereas this dispute only concerned the 170 general operatives.
- Secondly, the Labour Court stated that it must be the “practice” of the employer to engage in collective bargaining. It was decided that the employer did not satisfy this as they only ever had one collective bargaining process (of which the employer could not produce evidence of) and that one process could not be considered a “practice”.
(b) Did the dispute concern a significant number of employees?
The Labour Court were quite satisfied that the dispute concerned a significant number of employees considering that it concerned 63 workers out of 250.
As a result, the Labour Court were satisfied that they could consider the terms and conditions in question for the purposes of a binding decision as the employer did not have a practice of collective bargaining and the dispute concerned a significant number of employees.
Trade Dispute
When considering a trade dispute, the Labour Court must look at the totality of the employment package in reaching in its decision. In doing so, the Labour Court can look at comparator companies within the relevant industry, in this case the prepared foods sector. The trade dispute here concerned 5 major issues: (a) rate of pay, (b) pensions, (c) sick pay, (d) annual leave, and € grievance and disciplinary procedures.
The Labour Court considered the terms and conditions received by the Freshway employees and determined that they were inferior to those on offer in general in the prepared foods industry.
(a) Pay
SIPTU argued here for an increase to €13.34 per hour (that being a €3.96 increase per hour). The Court felt that this would be excessive but still determined that the employer should increase the employees’ wages to €11.50 per hour via three incremental pay increases between ~September 2016 and January 2018.
(b) Pensions
It was noted that the employer operated a pension scheme and did not recommend any further changes.
(c) Sick Pay
The employer was instructed to introduce a new sick pay scheme which would provide 10 days’ paid sick leave to each employee in a 12 month period.
(d) Annual Leave
The Court determined that the employer should give one additional day’s annual leave to each employee with over 5 years’ service.
(e) Disciplinary and Grievance Procedures
In an interesting finding, the Labour Court recommended that the employer “
provide for trade union representation in processing individual grievances and disciplinary matters, where an employee wishes to avail of such representation” in accordance with the Code of Practice.
Learning Points and Critical Comment
There are a number of learning points to take away from this case but there are also a number of concerning issues that employers will need to be mindful of:
- The Labour Court placed heavy emphasis on the word ‘practice’ in determining if the employer engaged in collective bargaining at a local level. Therefore, having a nominal body that is rarely engaged is unlikely to satisfy the Act.
- It was interesting that the Labour Court felt the SRG were not an ‘excepted body’ on the basis that it conduct negotiations on behalf “of the generality of those employed by the employer”, whereas this dispute concerned the general operatives only. This creates the impression that an employer may need to have multiple excepted bodies, unique to each department, in order to satisfy the definition of collective bargaining.
- It is most questionable as to how the Labour Court arrived at the 21% pay increase. It cannot be a coincidence that the increases will mean €11.50 per hour, often referred to as the Living Wage. Indeed, the uneven incremental increases of €0.70c in 2016, €0.70c in 2017, and €0.72 in 2018 would lead one to believe that the decision was guided by the Living Wage figure. Considering that this Living Wage has no legal or industrial relations basis, one would hope that it is not being seen as some aspirational benchmark by the chief industrial relations body in Ireland.
- In assessing the trade dispute, the Labour Court considered other companies in the prepared foods sector. However, in doing so, the Labour Court noted that “there are differences in size and scale” when you compared Freshways with the comparators, in addition to the fact that Freshways “produces sandwiches” whereas other the comparators used “produce types of prepared or convenience foods”. Whilst acknowledging that it will be very difficult to find a perfect comparator, it seems onerous on an employer to have to implement these costly changes on the basis that the changes are more comparable to other companies which actually produce a different product and who also differ in size and scale.
- The obligation imposed on the employer to provide for trade union representation in internal disciplinary and grievance matters is questionable. It has long been the view of non-unionised employers that they are not obliged to allow trade union representatives into such matters as the Code of Practice requires a fellow employee or a trade union representative; the argument being that if you allow a fellow employee to attend then the Code has been satisfied. Indeed, this view was endorsed by the EAT in O'Halloran -v- Dunnes Stores Parkway (UD1503/2009) where it was expressly determined that it was not a breach of the Code of Practice to refuse trade union representation in circumstances where the employee was permitted to be represented by a fellow employee.
The ramifications of this decision are still being assessed and it will be interesting to see how this area develops in future. Employers are strongly encouraged to keep abreast of these developments and if you have any queries on the topics above then please do not hesitate to contact our 24 Hour Advice Service on 01 855 50 50 and one of our experienced Employment Consultants will be more than happy to assist.
