Ireland: Employment rights compliance under debate

The issue of enforcing compliance with employment law is topical in Ireland in early 2010, with legislation on the issue before Parliament. We look at the role and activities of the National Employment Rights Authority and at current debates on compliance.

On this page:
The National Employment Rights Authority
Inspection findings in 2009
Other NERA activities
Employment Rights Compliance Bill
Employer opposition
Proposed merger of NERA and HSA.

The National Employment Rights Authority

The National Employment Rights Authority (NERA) was established by the Government in February 2007, following a commitment made in the current national social partnership agreement, "Towards 2016", signed in September 2006. The agreement provided for enhanced and expanded inspection of employers' compliance with employment legislation and more effective enforcement of the law. Trade unions had made this a precondition for signing up to the agreement, reflecting concerns about inadequate compliance, especially in respect of Ireland's increasing number of foreign workers.

The NERA is an office of the Department of Enterprise, Trade and Employment, and incorporates the Department's former labour inspectorate service, employment rights information unit and enforcement and prosecution section.

The NERA's aim is to secure compliance with employment rights legislation and to foster a "culture of compliance". To this end, it:

• provides free information on employment rights to employers, employees and other interested parties (including through its website, which includes information in a number of foreign languages);
• undertakes both announced and unannounced inspections of workplaces; and
• ensures compliance with employment rights legislation.

The main items of legislation that fall within the NERA's remit include those relating to:

• minimum wages;
• working time;
• holidays;
• part-time and fixed-term workers;
• the protection of young workers;
• parental and carers' leave;
• payment of wages;
• dismissals;
• notice periods;
• redundancy and redundancy payments;
• employment agencies;
• employers' insolvency;
• employment permits; and
• information and consultation.

The NERA is also responsible for enforcing:

• Employment Regulation Orders (EROs) setting minimum pay and conditions for specific sectors (including agriculture, catering, hairdressing, hotels, retail grocery and security) issued by the Labour Court on the basis of proposals from Joint Labour Committees in these sectors; and
• Registered Employment Agreements (REAs), which are collective agreements registered with the Labour Court that are legally binding, not only on the parties to the agreement, but also on other employers and employees in the sector concerned (for example, in construction, electrical contracting, printing and the drapery and footwear industries).

The NERA does not deal with the monitoring and enforcement of compliance with health and safety legislation, which is dealt with by the Health and Safety Authority (HSA).

Where they find a breach of legislation, NERA inspectors seek in the first instance to achieve compliance and rectification of the problem, including redress for the employees concerned and payment of any arrears due. In serious cases, or where an employer fails to rectify the breach, the NERA's prosecution services refer the matter to the state solicitors' office with a view to initiating a prosecution in the courts. The NERA may also, in certain circumstances, enforce determinations from the Labour Court (external website) or the Employment Appeals Tribunal (external website) through the courts if an employer fails to comply.

Inspection findings in 2009

On 31 December 2009, the NERA issued a preliminary report on its activities during 2009. In the period up until 18 December, it carried out a total of 22,065 inspections, almost identical to the number in 2008. In 19% of inspections, a breach of employment legislation was identified (the rate differed widely between sectors), again almost the same as the 2008 figure. NERA inspection activity resulted in over €2.3 million in unpaid wages being paid to employees by their employers in 2009, down from around €3.1 million in 2008.

Since July 2009, NERA inspectors have taken on a role in monitoring compliance with legislation on employment permits for foreign workers. During the remainder of the year, they conducted 1,062 checks of employment permits.

More detailed data are available for the first three quarters of 2009. During this period, the NERA conducted most of its inspections in the catering sector, followed by construction, retail grocery and contract cleaning. The sector where employers' "compliance rate" with employment legislation was lowest was catering, followed by retail grocery, the electrical trades and hotels. The highest compliance rates were in agriculture and security.

Between January and September 2009, the largest single number of NERA inspections (6,121) related to compliance with legislation on the protection of young workers, followed by the organisation of working time (3,001), payment of wages (2,987), the national minimum wage (2,126) and employment permits (345). The compliance rate found in inspections was highest for the protection of young workers (99%) and the minimum wage (93%), and lowest for employment permits (51%) and working time (53%). Some €168,000 was recovered in unpaid wages following inspections related to the minimum wage, and €98,000 following inspections related to working time.

During 2009, the NERA conducted 38 joint inspections with the Department of Social and Family Affairs (external website) and the Revenue Commissioners (external website) (the tax authorities), compared with 12 in 2008.

Other NERA activities

The NERA's information services dealt with over 149,000 calls in 2009, an increase of 38% over 2008. Over 40% of the calls were from employers or their representatives. Between January and September 2009, the most requested information categories were redundancy, holiday/public holidays, terms of employment and payment of wages.

In 2009, the NERA introduced a 24-hour comprehensive recorded information service on a range of employment rights-related topics. Over 18% of those who subsequently contacted NERA's information services accessed this recorded information service.

During 2009, the NERA participated  in 36 national and local conferences, exhibitions and seminars in conjunction with both employer and employee representative bodies. It worked closely with a number of employers' bodies in order to encourage compliance. For example, it:

• participated in a series of one-day employment law programmes organised by the Small Firms Association for its members in Dublin, Cork, Galway and Limerick;
• participated in an eight-week roadshow with the Restaurants Association of Ireland, which reached hundreds of employers in the catering sector and gave the NERA an opportunity to brief them on revised catering EROs introduced in June 2009; and
• developed with Fáilte Ireland - the national tourism development authority - a series of employment law guides for tourism and hospitality businesses to help ensure compliance.

In the first three quarters of 2009, the NERA referred 61 cases of non-compliance with employment legislation for prosecution. It also opened 49 proceedings for the enforcement of Labour Court (external website) or Employment Appeals Tribunal (external website) awards, and 43 such cases were concluded over the period.

The minister for labour affairs, Dara Calleary, welcomed the NERA's preliminary report for 2009 and commented: "NERA's activities help not only individual workers to obtain their entitlements but also ensure that employers operate on a level playing pitch whereby no competitive advantage can be gained by undercutting workers' legal entitlements in the area of pay and conditions."

Employment Rights Compliance Bill

The NERA currently operates on an "interim" basis, without a specific statutory foundation, which was promised when it was set up in 2007. In March 2008, the Government published the Employment Rights Compliance Bill, which provides this legal basis. The Bill included further measures to enhance the enforcement of employment rights, including the following:

• stronger inspection powers, including greater access to premises, personnel and data for inspectors, empowering the NERA to prosecute summary offences and allowing it to take evidence on oath;
• new powers for inspectors to examine employment permits, prosecute offences and conduct investigations jointly with other agencies (some of these powers have since been introduced in practice);
• higher penalties for employment law offences - in most cases up to €5,000 and/or 12 months' imprisonment for summary offences and €250,000 and/or three years' imprisonment for indictable offences;
• measures to protect whistleblowers who report breaches of employment law in good faith; and
• the specification of a comprehensive list of documents relating to each employee that employers must keep in respect of the most recent three-year employment period and retain for a further two years after the employment relationship ends.

Two years after its publication, the Bill has not yet been adopted. Following two readings in the lower house of parliament (Dáil), it has been awaiting its committee stage and consideration by the upper house (Seanad) since March 2009. It would appear that the Bill has been a low priority, with the Government focused on dealing with pressing issues such as the economic crisis and massive public spending cuts. It is currently predicted that the Bill should be adopted in the first half of 2010, although no date has yet been set for the committee stage.

Employer opposition

The Bill received a generally positive response from trade unions and from the Chartered Institute of Personnel and Development Ireland. However, employers' groups have expressed strong opposition and have been lobbying in the hope of having the Bill amended substantially before it is enacted.

The Irish Business and Employers Confederation (IBEC) believes that, even before the NERA is given new powers, compliance with employment rights is onerous and expensive. According to its director of industrial relations and human resources, Brendan McGinty: "Full compliance with Ireland's complex and often ambiguous legislation is difficult to achieve and the implications of non-compliance are costly to the employer, both monetarily and in terms of reputation. Employment law compliance issues cost businesses in Ireland more than €7 million in 2008 in awards by the Equality Tribunal, the Employment Appeals Tribunal and by NERA. These figures substantially understate the cost of claims to employers as they do not include the cost of settlements, the legal costs of defending claims and the cost of settlements paid over by employers as a result of Labour Court or Rights Commissioners awards."

For IBEC, the Bill would add to this burden, a development which would be particularly harmful in the current difficult economic climate. In a presentation to the Joint Parliamentary Committee on Enterprise, Trade and Employment in November 2009, IBEC described the Bill as "fundamentally flawed", creating "enormous new administrative and regulatory burdens on employers without substantially benefiting employees". It would "completely change the nature of our employment law from being a voluntarist system based on local engagement and civil redress to being a system driven by prosecution, enforcement and regulation". IBEC argues that the Bill would create 23 new criminal offences, many of which are "entirely unnecessary". The Bill, as published, does not reflect the agreement of the social partners in the Towards 2016 accord and needs to be radically amended to make it "fit for purpose".

IBEC called on Parliament to delete or substantially amend numerous sections of the Bill. The focus should be "shifted away from enforcement and prosecution towards the principle of local resolution of disputes" and the Bill should be modified to remove: many of the new criminal offences; the "battery of oppressive powers" for the NERA (such as the power to search and secure business premises); and the "onerous new obligations" on employers.

Unions have responded by calling for the Bill to be adopted rapidly in its current form and for employers' efforts to water it down to be resisted.

Proposed NERA and HSA merger

In July 2009, a "special group on public service numbers and expenditure programmes" issued its report. The group, chaired by economist Colm McCarthy, had been asked by the Government to make recommendations for cutting public expenditure in the light of Ireland's public finances crisis. The McCarthy report proposed savings of €5.3 billion across the board. Among its recommendations is a streamlining and rationalisation of the various state industrial relations and employment rights bodies.

As well as a merger of the two main dispute-resolution bodies, the Labour Relations Commission and the Labour Court, the report proposed merging the NERA and the HSA into a single Workplace Inspectorate. This would "realise operational efficiencies and synergies worth at least €5m each year" and overall staffing should be cut by 10%.

The Government has not yet completed its consideration of the McCarthy report's recommendations and has given no response to the proposal to merge the NERA and the HSA. It did not include the recommended streamlining of industrial relations and employment rights bodies in the 2010 state Budget.

This article was written by Mark Carley, European editor, XpertHR.

European employment policy, practice and law, February 2010