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A Move Towards Collective Bargaining?
PRACTICE AREA GROUP: Employment, Pensions and Benefits
Unlike other European jurisdictions, Irish employers are not required to engage with trade unions for the purposes of negotiating pay and conditions of employment. However, in the light of political pressure from the trade union movement, attempts have been made by the legislature to encourage employers to engage in collective bargaining. The latest attempt has seen the introduction of the Industrial Relations (Amendment) Act 2015. This means that, in certain circumstances, the Labour Court may make a binding determination in relation to employee pay and conditions in favour of a trade union on behalf of those of its members employed in a non-unionised company.
The 2015 Act only applies to employers that do not already engage in collective bargaining. The act defines what is meant by “collective bargaining” for the first time. It also limits the extent to which employers can claim to be engaged in collective bargaining with “excepted bodies” (ie a staff body that is capable of engaging in collective bargaining). As a result the extent to which an employer can claim that it is already collectively bargaining with its employees has been reduced significantly. The potential likelihood of a referral to the Labour Court has increased.
Under the 2015 Act, an unresolved trade dispute between a trade union and an employer may be referred by a trade union to the Labour Court. The trade union demonstrates that the employer does not engage in collective bargaining either with a trade union or an excepted body, and that the number of employees involved in the dispute is not insignificant.
If these hurdles are overcome, then the Labour Court engages in a benchmarking exercise against comparable workers in similar employment in order to determine the dispute. The Labour Court issues a recommendation, which, if it is not complied with, can be converted into a binding determination that is enforceable in the civil courts.
Earlier this year, the first case under the 2015 act came before the Labour Court: SIPTU v Freshways Foods Company. Freshways, a non-unionised sandwich producer, contended that it engaged in collective bargaining through a staff representative group, and so fell outside the scope of the 2015 Act. However, based on the narrow definitions of collective bargaining and excepted bodies contained in the 2015 act, the Labour Court disagreed.
In carrying out the required benchmarking exercise, the Labour Court considered detailed information on the terms and conditions of employment applicable elsewhere in the sector. Based on this information, and the particular facts of the case (including the financial position of the employer), the Labour Court ruled in SIPTU’s favour on four of eight complaints, including an incremental pay increase, but notably did not grant the entire pay increase sought by the union.
The Freshways case may demonstrate sea change in this particular area of employment law. While the 2015 act does not mean that all employers will be forced into collective bargaining, trade unions are likely to use it as a tool to gain an influence in non-unionised workforces. Employers are also likely to feel upward pressure in terms of employee pay and conditions, by potentially being benchmarked against other comparable employers. If an employer is not inclined to engage with trade unions, then it is certainly still permissible to continue with that stance.
Following the success of the Freshways case, unions may try and push employers to engage in collective bargaining thinking they may be more inclined to engage with a union rather than the Labour Court. But there is no reason why this success should dishearten employers.
It remains a legitimate defence for an employer to show that their pay and conditions are in line with comparable employers in the market.
Employers are well advised to consider how well their pay and conditions are benchmarked against comparable employers. This can reduce the risk of a referral to the Labour Court, or indeed the risk of a trade dispute arising in the first place.
Authored by Niall Pelly, Partner in the Employment Group, and Blathnaid Evans, Associate in the Employment Group, this article first appeared in The Sunday Business Post on 6 November 2016.