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Collective Bargaining

A series of National Partnership Agreements provided a non-binding framework for pay bargaining from 1987 to 2009. However, this system collapsed as a result of the economic crisis, and the country returned to company level bargaining in the private sector with a relatively low level of coverage, although the public sector continues to be covered by national bargaining.  

The framework

 

From 1987 to 2009 collective bargaining in Ireland took place within the framework of a series of national agreements (National Social Partnership Agreements), between the union confederation, the ICTU, the employers’ association IBEC, the government and other groups. These agreements dealt with pay but also tackled broader economic and social issues. They did not have legal force, but unions and employers' organisations were expected to exert discipline on their own members to ensure they kept to the terms of the agreements. Disputes related to their implementation at industry or local level could be referred to two state bodies the Labour Relations Commission (LRC) and, in the case of a failure to reach agreement, to the Labour Court.

 

This system broke down under the impact of the economic crisis, and finally ended in December 2009, when the government announced it intended to impose pay cuts in the public sector, and IBEC formally withdrew from the last social partnership agreement (signed in 2006 and updated in the light of the crisis in 2008). Even before this date many private sector companies were not implementing the pay element of the deal.[1]

 

Since then pay in the private sector has been set primarily at company level, either through negotiations in unionised companies or through a unilateral decision by the employer where unions are not present. Initially negotiations were conducted within the framework of a voluntary protocol “for the orderly conduct of industrial relations and local bargaining in the private sector” signed by the ICTU and IBEC in 2010. This did not set any pay norms, but it did state that both sides would encourage their members “to abide by established collective agreements” and ensure that “local negotiations … take place on the expiry of existing agreements.” The protocol was initially only valid during 2010 but it was extended in February 2011 and again in October 2012.

 

At the start, a majority of private companies covered by collective bargaining maintained pay freezes. However, a study looking at pay increases after 2011 found that unions were able, through a coordinated strategy, to achieve increases of around 2% a year in most companies where they negotiated.[2] More recently pay increases have been higher, with the annual CIPD/IRN pay surveys showing an average basic pay increase of 3.0% in 2016, 3.1% in 2017 and 3.0% in 2018.[3]

 

However, the surveys also make clear that only a minority of private sector employers are covered by collective bargaining. The 2019 survey states that “Less than one third of companies in the survey engaged with trade unions for collective bargaining”. The survey indicates that the proportion of employees covered may be larger, as “these [companies covered by collective bargaining] tended to be large employers with over 250 employees, 68%, compared to only 8% of organisations with less than 50 employees”. However, on the other hand, those completing the survey, members of CIPD in Ireland, the body for HR professionals, and subscribers to IRN industrial relations news service, seem more likely to be covered by collective bargaining than other employers.

 

As well as company level bargaining, in some industries terms and conditions are set at industry level with statutory support.

 

There are two statutory mechanisms for setting minimum rates at industry level: 

  • Employment Regulation Orders (EROs); and
  • Sectoral Employment Orders (SEOs).

 

Both are the result of relatively recent legislation that was introduced to take account of court decisions which declared the previous legislation to be unconstitutional. It is also important to note that the impact of these two provisions, in terms of the industries covered is relatively limited.

 

Employment Regulation Orders are regulations drawn up under the terms of the Industrial Relations (Amendment) Act 2012. This provides for Joint Labour Committees (JLCs) to be set up to fix pay rates and some contractual terms for employees in specific industries. The JLCs consist of equal numbers of employer and employee representatives plus an independent chair and vice chair and “operate in areas where collective bargaining is not well established and wages tend to be low”.[4] In drawing up the recommendations on pay rates the JLCs must take specific account of the interest of employers and the need to maintain competitiveness. The recommendations are adopted by the Labour Court and then given statutory force by the government. The legislation also allows employers to be exempted from the rates in the case of financial difficulties.

 

There are now seven industries with JLCs covering:

  • agricultural workers;
  • catering;
  • contract cleaning;
  • hairdressing;
  • hotels (excluding Cork);
  • retail, grocery and allied trades; and
  • the security industry.

 

However, in practice only two of the JLCs, those for contract cleaning and the security industry, are functioning as intended, and setting minimum terms and conditions. The others have not drawn up proposals for minimum pay rates, which can only be done on the basis of a joint proposal for the employers and worker representatives. In the view of the ICTU, this means that the intention of the law has “been subverted by the concerted actions of employers in refusing to nominate employer members to those Committees”.[5] With only two industries (contract cleaning and security) covered by EROs many fewer employees are benefitting from their protection than was the case before the system was successfully challenged in the courts by the employers in 2011.

 

The second mechanism for setting minimum pay levels in particular industries is provided by Sectoral Employment Orders. In contrast to EROs, which cover industries with low levels of bargaining coverage, SEOs are for industries where a high proportion of employees are covered by collective bargaining and they are similar to the extension mechanisms found in other countries.

 

The legislation under which SEOs can be introduced is the Industrial Relations (Amendment) Act 2015 which came into force in August 2015.As well as improving the situation where unions are not recognised (see section on employee representation), the 2015 legislation allows unions and/or employers’ associations to ask the Labour Court to review the pay and key conditions of employees in a specific industry. However, in order to be able to make this request the unions or employers’ must be “substantially representative” of the workers or employees in that industry. They Labour Court will then review the situation and may make a recommendation to the minister that an SEO should be made, setting levels of pay, overtime pay, sick pay and pensions that all employers in that industry must observe. In deciding whether or not to make a recommendation, the Labour Court must, among other things take account of “the terms of any relevant national agreement” and the potential impact of the SEO on employment and competitiveness. The Labour Court is able to exempt individual companies from complying with the terms of an SEO, but only where the business is facing “severe financial difficulties”.

 

In fact only three industries are covered by SEOs: construction, mechanical engineering and electrical contracting.   

 

These SEOs replace what were formally known as Registered Employment Agreements, where the two parties to an agreement could make a joint request to the Labour Court to makes its terms binding on all the employers in the industry. However, this practice was ruled to be unconstitutional in 2013. Registered Employment Agreements continue to exist as a way of giving legal force to the terms of a collective agreement, in a way that normal collective agreements, which are not legally binding, do not. However, they are only binding on the company that signs the agreement and do not have industry-wide application. By mid-2019 three of these new-style Registered Employment Agreements had been registered with the Labour Court.

 

In the public sector, such as in the health service or the civil service, bargaining on pay continues to be at national level. Following the imposition of pay cuts on the public sector during the crisis, the government reached agreement with public sector unions on pay cuts in June 2010, and in a follow-on agreement, which involved further pay cuts for higher-paid employees, which was finally accepted in July 2013.[6] The agreements which have followed have started to restore pay to its pre-crisis levels.[7]

 

There are no national statistics on the coverage of collective bargaining. Overall, the OECD, using the figures from the ICTWSS database, estimates that a third of employees (32.5 %) were covered by collective bargaining in 2014.[8]

 

Who negotiates and when?

 

The national partnership agreements, which were in place between 1987 and 2009, were negotiated between the ICTU for the unions, IBEC for the employers, and the government, with other groups, such as farming and voluntary organisations also involved. These negotiations no longer take place.

 

Currently negotiations in the private sector are normally between unions or groups of unions and individual employers or employers' federations. Trade unions and employers’ organisations must be registered with the Register of Friendly Societies and need a licence to negotiate. This system aims to exclude bodies which are very small or financially unviable.

 

Negotiations at company level are typically undertaken by shop stewards (workplace union representatives), although often with the support of a full-time union official. It is also possible for negotiations to take place with an “excepted body”, a group of employees in a single employer who come together to negotiate their own pay and conditions and must be independent of the employer. (The rules on excepted bodies’ right to negotiate were tightened in 2015 – see section on workplace representation.)

 

In the public sector, negotiations are between the government and the Public Services Committee of the ICTU.

 

There is no obligation on employers to negotiate with unions, irrespective of the level of their membership in the company concerned. However, legislation (the Industrial Relations (Amendment) Act 2015) can compel companies to provide terms and conditions similar to those in other companies (see section on workplace representation).

 

Collective agreements can be signed at any time during the year and usually last between one year and three years.

 

The subject of the negotiations

 

The national partnership agreements used to set pay increases, but they also dealt with a wider range of other social topics. This has ended, and the range of topics covered by collective bargaining is now substantially reduced, even in the public sector, where national level bargaining still takes place.[9]

 

Negotiations at company level cover pay and a wide range of conditions issues, including pensions, sick pay, maternity and paternity arrangements and other conditions issues like leave. The SEOs are obliged to cover pay, sick pay and pensions.

 

Ireland has had a national minimum wage since 2000, which is set by the government. The 2000 legislation gave an explicit role to national partnership agreements in fixing the rate, although the final decision remained with the government. Following the collapse of the national partnership agreement in 2009, the minimum wage remained unchanged at its 2007 level until January 2016. (The one exception was the six months in 2011, when it was cut by 12%. However, this cut was reversed following a change of government.)

 

New legislation in 2015 set up a Low Pay Commission, made up of representatives of unions, the employers and independent academics, whose main role is to make recommendations on the level of the national minimum wage. Starting in January 2016 it has gone up each year since then. Figures from the CSO indicate that 7.6% of employees earned the National Minimum Wage or less in the fourth quarter of 2018.[10]

[1] According to a survey by the employers’ association IBEC, 57% of respondents were freezing pay and 10% cutting it at a time when the Transitional Agreement provided for a three month pay freeze followed by a 3.5% pay increase. IBEC Business sentiment survey May 2009 – Quarter 2,2009

[2] The durability of coordinated bargaining: Crisis, recovery and pay fixing in Ireland by William K Roche and Tom Gormley, in Economic and Industrial Democracy, 2017

[3] CIPD-IRN private sector pay surveys 2017 to 2019, https://www.cipd.ie/knowledge/hr-fundamentals/pay/survey (Accessed 15.08.2019)

[4] Workplace Relations Commission  https://www.workplacerelations.ie/en/what_you_should_know/hours-and-wages/employment%20regulation%20orders/  (Accessed 16.08.2019)

[5] Realising the Transformative Effect of Social Dialogue and Collective Bargaining in Ireland, ICTU, July 2019 https://www.ictu.ie/download/pdf/156283954032063131.pdf (Accessed 18.08.2019)

[6]  Public Service Agreement, 2010-2014 (known as the ‘Croke Park Agreement’), June 2010 and the Public Service Stability Agreement, 2013-2016 (known as the ‘Haddington Road Agreement’), May 2013 

[7] Public Service Stability Agreement 2013-2018 (Known as the’ Lansdowne Road Agreement’, May 2015)  and the Public Service Stability Agreement 2018 – 2020, June 2017

[8] OECD Stat: Collective bargaining coverage https://stats.oecd.org/Index.aspx?DataSetCode=CBC (Accessed 16.08.2019) and  J. Visser, ICTWSS Database. version 6.0. Amsterdam: Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam. June 2019  

[9] Ireland: life after social partnership by Vicenzo Maccarrone, Roland Erner and Aidan Regan in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[10] LFS National Minimum Wage Estimates, Q4 2018

L. Fulton (2020) National Industrial Relations, an update. Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.