2nd May 2017
Today, the Government approved draft legislative proposals brought forward by the Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor TD, and the Minister for Employment and Small Business, Pat Breen TD, in response to the commitment in the Programme for Government to address problems caused by the increased casualisation of work and to strengthen the regulation of precarious work. The draft proposals, which address zero hour contracts, low hour contracts, banded hours and related matters, are targeted at low-paid workers in particular.
The proposals address the issue of employees on low hour contracts who consistently work more hours each week but whose contracts do not reflect the reality of their hours worked. The proposals also seek to ensure that employees are better informed about the nature of their employment arrangements and their core terms at an early stage in their employment. They include provisions aimed particularly at low-paid, more vulnerable workers. The proposals also include an amendment to the Organisation of Working Time Act which will prohibit zero hour contracts in most circumstances.
Commenting after the Government meeting, Minister Mitchell O’Connor said “I am very pleased that the Government has agreed to the priority drafting of this important legislation. It is important because it will improve the employment protections for low-paid, vulnerable workers in particular. It will also improve the predictability of hours of work and earnings for many employees whose contract of employment does not reflect the reality of the hours they work on a consistent basis.”
The Ministers’ proposals were informed by the University of Limerick study on zero hour contracts and low hour contracts as well as the extensive material and practical examples provided by respondents to the public consultation on that study conducted by the Department of Jobs, Enterprise and Innovation. These proposals have also been the subject of a detailed dialogue process with ICTU and Ibec over a number of months.
The Minister for Employment and Small Business, Pat Breen TD, said that “Developing policy proposals on employment rights is a complex matter. A balance needs to be found between protecting the rights of employees and avoiding unintended consequences on business, particularly small and medium sized businesses, which may negatively affect the competitiveness of the Irish economy. These proposals have been subject to broad consultation and represent a balanced response to the commitment in the Programme for Government to tackle problems caused by the increased casualisation of work and to strengthen the regulation of precarious work. We have listened carefully to all sides to ensure that the proposals are workable in practice, while minimising the impact on businesses.”
The Ministers added “We look forward to engaging with all parties in the Oireachtas in pre-legislative scrutiny of these proposals.”
The draft legislation will now be referred to the Office of the Attorney General for priority drafting of a Bill.
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Notes to Editors
Background to the proposals
The draft legislative proposals brought forward by Minister Mary Mitchell O’Connor and Minister Pat Breen are in response to the commitment in the Programme for Government to address the problems caused by the increased casualisation of work and to strengthen the regulation of precarious employment.
The draft legislative proposals take account of the study conducted by the University of Limerick (UL) on the prevalence of zero hour contracts and low hour contracts and their impact on employees.
Following the UL Report, the Department of Jobs, Enterprise and Innovation sought submissions from interested parties by way of a Public Consultation. Some 48 responses were received from a wide range of stakeholders, including trade unions, employers and business representative bodies, public representatives, Government departments/agencies and non-Governmental organisations. The responses to the public consultation contained extensive material and practical examples of the impacts of the specific legislative changes proposed by UL, which have informed the draft proposals approved by Government.
Further, the Department of Jobs, Enterprise and Innovation engaged in a detailed dialogue process with Ibec and ICTU over the period October 2016 to March 2017 in an effort to secure the deepest understanding of the issues and implications before finalising proposals.
Core Issues being addressed by the draft proposals
The draft proposals aim to address key issues which have been identified as being areas where current employment rights legislation can be strengthened to the benefit of employees, particularly low-paid, more vulnerable workers, without imposing unnecessarily onerous burdens on employers and businesses. The proposals address the following:
• Ensuring that workers are better informed about the nature of their employment arrangements and in particular their core terms at an early stage of their employment.
Currently 15 terms of employment are required to be given by employers to employees within two months. The UL study recommended that all 15 items be given on the first day. Following consultation, it is accepted that this would be excessive. Instead, it is proposed that employers must inform employees in writing, within 5 days of commencement of employment, of the following 5 core terms of employment:
- the full name of the employer and employee,
- the address of the employer,
- the expected duration of the contract (where the contract is temporary or fixed-term),
- the rate or method of calculating pay, and
- what the employer reasonably expects the normal length of the employee’s working day and week will be.
Other required terms of employment should be provided within the current 2 month period.
The Ministers’ proposals also provide for the creation of a new offence where an employer does not provide the proposed statement of the five core terms of employment within one month of commencement of employment. Strengthening the sanction for non-compliance will help to promote better work practices and provide greater clarity around the essential elements of the employment relationship for both the employer and the employee.
• Strengthening the provisions around minimum payments to low-paid, vulnerable workers who may be called in to work for a period but not provided with that work.
It is intended to introduce a floor payment for low-paid workers who are called into work and then sent home in these circumstances. The UL study called for a minimum of three continuous working hours where an employee is required to report for work and if there is not, the employee should be paid for the three hours. The UL recommendation did not differentiate between low-paid workers and high-paid workers. It would result in disproportionate benefits for high-paid employees over low-paid employees and significant costs for employers. Furthermore, the UL recommendation did not take account of arrangements where it suits both parties to agree a contract of employment for less than three continuous working hours. The UL recommendation would set aside the possibility of individuals agreeing mutually convenient contracts for less than 3 continuous hours. Following consultation it is accepted that changes in this area should focus on improved compensation for low-paid workers and to this end, the Ministers’ proposals introduce a new minimum floor payment, of 3 times the National Minimum Wage or 3 times the minimum rate set down in an Employment Regulation Order (ERO), to compensate workers if they are called in to work but do not receive the expected hours of work.
• Prohibiting zero hours contracts, except in cases of genuine casual work or emergency cover or short-term relief work for that employer.
It is intended to delete the phrase ‘zero hours practice’ from the title of Section 18 of the Organisation of Working Time Act 1997. The Ministers’ proposals will provide that an employer will no longer be able to engage an employee on a contract within the meaning of Section 18(1)(a) or 18(1)(c) where the stated contracted hours are zero, unless it is genuinely casual work, emergency cover or short-term relief work for the employer. This proposal is to avoid the contagion of an increase in zero hours practices in this jurisdiction.
• Ensuring that workers on low hour contracts who consistently work more hours each week than provided for in their contracts of employment, are entitled to be placed in a band of hours that reflects the reality of the hours they have worked over an extended period.
The proposals provide for the creation of a new right for an employee, whose contract of employment does not reflect the reality of the hours worked on a consistent basis over a reference period of 18 months, to be placed in a band of hours that better reflects the actual hours worked over that reference period. This will provide greater certainty and a truer reflection of their hours of work and level of earnings, thereby addressing, in particular, difficulties employees may have accessing financial credit, including mortgages. The reference period of 18 months is considered sufficiently long to allow for the normal peaks and troughs of businesses, including those subject to seasonal fluctuations. The proposals also provide a mechanism for a review of the arrangement after a period of 18 months, i.e. after the employee has sought and been placed in a band of hours in exercise of their right under this proposal. An employee will be able to seek redress through the Workplace Relations Commission (WRC) but redress will be limited to being placed in an appropriate band of hours. The proposal includes reasonable defences for employers to refuse an employee’s request where
- the facts do not support the employee’s claim,
- significant adverse changes have impacted on the business (e.g. loss of an important contract),
- emergency circumstances (e.g. business has had to close due to flooding),
- where the hours worked by the employee were due to a genuinely temporary situation (e.g. cover for another employee on maternity leave).
The provision will not apply to an employer who has entered into a banded hour arrangement through an agreement by collective bargaining with their employees.
• Strengthen the anti-victimisation provisions for employees who try to invoke a right under these proposals.
It is intended to provide against an employer penalising or threatening to penalise an employee for exercising any right under the proposed legislation.