Employers empowered to pay new staff lower wages than serving peers

ANALYSIS:While efforts are being made at temporary protection, new recruits are set to take a hit

MINISTER FOR Enterprise and Jobs Richard Bruton has announced plans for temporary protection for those covered by the joint labour committee system for setting wages. This is aimed at alleviating fears among thousands of workers following the High Court ruling yesterday.

The Minister said the proposed temporary protection would cover both existing personnel and new recruits taken on by companies while it was in force. However, the Government has not said when exactly it will be introduced.

The announcement came as employers indicated that, in the absence of Government intervention, the High Court ruling could have wide-ranging implications, particularly for new workers.

About 190,000 workers are employed in the 13 sectors covered by employment rights orders drawn up under the joint labour committee system.

Legal and Government sources said last night that while the court challenge only related to the employment regulation order covering terms and conditions drawn up by the labour committee for the catering sector, the ruling also affected employment regulation orders in 12 other sectors based on the same legislation.

Legal and employer sources also maintain that a separate system of setting pay and conditions in more than 60 companies and industries – known as “registered employment agreements” – could be “legally shaky” based on the ruling, although they are not specifically covered by it.

The judgment also means that prosecutions being brought against employers by the National Employment Rights Authority for allegedly breaching pay rates set down under the joint labour committee system will now fall.

Employers’ organisations yesterday said the ruling would not have a major impact on existing employees. However many unions are sceptical.

John Grace, chairman of the group of employers in the fast-food sector, which brought the legal challenge, said it was not its intention to reduce the pay of its existing staff on foot of the ruling.

However, he signalled new employees would be covered in future by the national minimum wage and the organisation of working time legislation. This could mean that rather than having specific legally binding premium rates for Sunday working, for example, employers could offer alternative arrangements such as time off in lieu.

In a bulletin to member companies last night, employers group Ibec said serving employees would continue to have the same rates of pay and conditions of employment “unless and until they agree otherwise”.

“Ibec is encouraging members to reflect before attempting any changes to the conditions of existing staff, and to consider all legal and industrial relations issues very carefully.”

Unions have expressed concern that some employers may not be prepared to wait until staff freely agree to change their contracts.

They have argued that some companies could use the High Court ruling as a cover to effectively demand their staff renegotiate employment agreements and accept inferior terms and conditions.

Unions have also maintained some employers could seek to effectively force out existing workers and replace them with new personnel. Many of the employer organisations yesterday appeared to agree that without any Government intervention, the implications of the High Court ruling could be more serious for new workers than those in place.

Ibec, in its bulletin, said: “The biggest impact will be that employers will be able to hire new employees on more competitive conditions. Until today, employers were prohibited from hiring and retaining staff at rates of pay which were less than employment regulation order rates.”

In short, Ibec advised member companies any new employees hired from yesterday onward “may be offered rates and conditions which are not based on any employment regulation order”.

Attention will now focus on the nature of the protection Bruton indicated last night he would like to bring in. He signalled this would effectively be an interim measure for a particular duration pending an overall reform of the joint labour committee system.

The full scope of the proposed new measure and when it will be introduced remain to be seen. It also remains to be seen whether some employers will seek to pay lower rates to any new employees taken on in advance of the new protection. In the meantime, the arguments over the nature of the longer-term reform measures are likely to continue.