Policies & Procedures

If a salary reduction is imposed without consultation or employee agreement, an employee now only has three (rather than four) potential legal opportunities to seek redress from his or her employer. If an employee’s wages are cut his or her first option is to claim Constructive Dismissal under the Unfair Dismissals Acts 1997-2007. Constructive Dismissal is the term used when an employee terminates his or her employment based on the conduct of the employer. In this instance, the employee must be able to prove that their position became unsustainable as a direct result of the involuntary reduction in pay. Secondly, where an employee’s salary is reduced, he or she has the opportunity to bring a trade dispute under the Industrial Relations Acts. The Industrial Relations Acts deal with disputes between employers and workers that are connected with the employment or non-employment, or the terms and conditions of or affecting the employment, of any person. Thirdly, if an employer cuts an employee’s pay, the employee could claim that their contract has been breached. Defending this could prove very costly for the employer. Furthermore, an injunction may be granted to prevent the contract breach/reinstate the original salary. In the past employees whose wages were cut without prior consent had a fourth option. They had the opportunity to take a case (and were likely to succeed) under the Payment of Wages Act 1991. Claims in relation to a reduction in wages, however, may no longer be successful if taken under this Act as a result of a recent Employment Appeals Tribunal determination. The specific EAT case referenced here is an appeal of a Right’s Commissioner decision in the case of Santry Sports Clinic v 5 employees. The employees in the aforementioned case were claiming for an 8% reduction in their pay that was imposed between February and March 2010. Santry Sports Clinic stated that the reduction was essential. According to the employer, all employees received letters detailing the 8% reduction in advance and, while only 30% of employees agreed to the reduction via return letters, no one officially objected or stated that they would not accept the pay cut and so it was implemented as planned. The Employment Appeals Tribunal considered all evidence and representations made at the hearing as well as all other submissions made. The Tribunal noted the High Court decision in the case of Michael McKenzie and others and Ireland and the Attorney General and the Minister for Defence Rec. No. 2009. 5651JR. In paragraph 5.8 of this decision the Judge stated that “the Payment of Wages Act has no application to reductions as distinct from ‘deductions’.” The Tribunal followed the High Court decision on a point of law and, therefore, the appeal was successful and the decision of the Rights Commissioner was entirely overturned in the case of Santry Sports Clinic v 5 employees. This case brought to light the fact that the Payment of Wages Act 1991 refers to “deductions” as opposed to “reductions” and, as a consequence, employees whose wages are reduced without prior consent are now unlikely to succeed if they opt to take a case against their employer under the Payment of Wages Act 1991. This is particularly significant for claims that are currently being processed by the Employment Appeals Tribunal. Employers need to remember that, although this option has essentially been closed off for employees as a result of the above-mentioned High Court decision and the EAT case, they still have several avenues open to them if they wish to take a claim where a reduction of wages has been imposed by the employer without prior consent.

There are several types of leave that an employee may be entitled to. Some forms of leave are statutory entitlements and some other forms are not. Maternity Leave, for instance, must be given to employees when they are pregnant. Some forms of leave are paid and others are not. This can depend on statutory obligations and on the terms and conditions set out in the Contract of Employment. Annual Leave is a statutory entitlement and it must be paid by the employer. Sick Leave, however, is not always paid by the employer (this depends on individual company policies). Force Majeure Leave is less commonly discussed. The purpose of Force Majeure Leave is to provide limited, paid leave to enable an employee to deal with family emergencies resulting from injury or illness of a close family member. Force Majeure Leave applies where the immediate presence of the employee is urgent and indispensable (essential). A close family member is defined as one of the following:

• A child or adopted child of the employee
• The husband/wife/partner (same or opposite sex) of the employee
• A parent/grandparent of the employee
• A brother/sister of the employee
• A person to whom the employee has a duty of care (where he or she is acting in loco parentis)
• A person in a relationship of domestic dependency with the employee
• Persons of any other class (if any) as may be prescribed

By its nature, an employee will not usually be able to give notice of the need to take Force Majeure Leave. The employee should, however, inform the employer (in writing) of reasons for taking the leave as soon as is reasonable practicable. The employee should provide details regarding the need for the leave and should confirm who the leave was taken in respect of. Employers are obliged to keep a record of Force Majeure Leave taken by employees. Employees will be entitled to: -   up to 3 days paid Force Majeure Leave in any consecutive 12 month period; or -   up to 5 days in a 36 consecutive month period. Absence for part of a day is usually counted as a full day of Force Majeure Leave. Employees are entitled to receive pay for this type of leave. Employers can grant employees more than the number of days outlined above; however, they are not obliged to do so. Employees are protected against Unfair Dismissal for taking Force Majeure Leave or for proposing to take it. Death is not covered under Force Majeure Leave – Leave taken when a death occurs falls under Compassionate Leave and this tends to depend on employee contracts as well as custom and practice within the workplace.

Services Industrial Professional and Technical Union (SIPTU) held a secret ballot of its members at Liebherr Container Cranes in Killarney yesterday, 14th January 2014. SIPTU members voted to reject Labour Court proposals geared at resolving a long-term pay increase dispute with the Company dating back to 2009. Liebherr Container Cranes Ltd., a member of the large family-owned German Company, Liebherr Group, was established in Killarney in 1958 and has been a significant direct and indirect employer in the area in recent years. The Company is one of the largest firms in Kerry and one of the largest of its kind in the country. The German company has warned that its commitment to the plant in Killarney has been weakened in recent months as a result of the on-going pay issues and the industrial action which forced them to send work from Killarney to Germany. Fears are now growing for jobs at the Company as Management admit to reviewing its operations in the region. Liebherr stated that a small number of employees have seriously compromised its future in Killarney. Based on the details of Towards 2016 Review and Transitional Arrangement, an agreement drawn up by the Company, a 2.5% pay increase was due to be implemented for employees in January 2009. The Company did not pay the expected increase and argued that payment would severely impact its competitiveness and limit its ability to preserve its headcount numbers in a time of economic hardship. The Company proposed to pay the increase due in three distinct phases beginning in 2012 in return for a number of concessions including cost-offsetting measures. Union members and the Company were unable to resolve the dispute at local level and it became the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. Agreement was not reached at this stage and, on the 28^th January 2011, the pay dispute was referred to the Labour Court. A Labour Court hearing was scheduled for, and took place on, the 2^nd May 2012. The Labour Court considered the submissions of all parties and a decision was made that further engagement was required if the claim was to be resolved before the Court. The Court recommended that the discussions/negotiations were to be facilitated by the Labour Relations Commission.   As a result of the unresolved pay dispute, industrial action was served by SIPTU in November 2013. Workers at the plant implemented a ban on overtime and undertook a one-day work stoppage late in November. All industrial action was suspended on 28^th November when members of the union accepted an invitation to attend a hearing of the Labour Court on 4^th December 2013.   In December 2013, the Labour Court recommended that the firm award the disputed 2.5% increase backdated almost two full years to its workers. The Court provided a list of recommendations to both sides. Liebherr said that, while the industrial action and the pay award had increased its cost base, they accepted the recommendation. SIPTU workers at the plant, however, voted on the 14^th January 2014 to reject the Labour Court proposals. The union was said to be dissatisfied with the proposal and wanted the 2.5% wage increase to be implemented on an unconditional basis.  

 There is no single fixed/mandatory retirement age (age at which you must retire) for employees in Ireland. Typically, an employee’s retirement age is set out in their Contract of Employment and this can vary from one company/industry to the next. Alternatively, precedent/established custom and practice within the Company can determine the retirement age of its employees. E.G: if Mary was forced to retire at the age of 62 then Jack should also have to retire upon reaching the same age (assuming the circumstances are the same and that Mary was not ill, for instance).

Contracts provided by employers to their employees usually incorporate a mandatory retirement age (Normal Retirement Date/NRD). This tends to make it compulsory for the employee to retire at a certain age, usually this is somewhere between the ages of 60 and 65. Most contracts also include some sort of provision for early retirement on ill-health grounds etc.

In certain occupations there is a state-imposed compulsory retirement age. This arises for members of An Garda Síochána and members of the Defence Forces, for instance. Gardaí are forced to retire from their roles by the age of 60.

General Practitioners are obliged to retire from the General Medical Services scheme when they reach the age of 70. They may, however, continue to practice privately if they are approved by the Medical Council – the Medical Council will ensure that they meet their fitness to practice criteria.

There is no set retirement age when a person is self-employed, similarly, unless specifically set out in the Company’s Articles of Association, Company Directors are not usually bound by a maximum working age either.

Interestingly, employers are allowed to set minimum recruitment ages provided that the minimum age is 18 or under.

The most common company retirement age is 65 and, until recently, people went straight from receiving their salary from the company to receiving a pension from the State (provided they paid enough PRSI contributions during their working life). The Social Welfare and Pensions Act 2011, however, legislated for certain changes to the pensions system in Ireland effective from 1^st January 2014. The State Pension (Transition) has been discontinued for new claimants from 1^st January 2014. As a result, the State Pension minimum age has been increased to 66 years for all. It will increase to 67 years in 2021 and to 68 years in 2028.

What this means is that:

• If a person was born between 1^st January 1949 and 31^st December 1954 inclusive, the minimum qualifying State Pension age will be 66 (rather than 65).
• If a person was born between 1^st January 1955 and 31^st December 1960 inclusive, the minimum qualifying State Pension age will be 67.
• If a person was born on or after 1^st January 1961 the minimum qualifying State Pension age will be 68.

When asked, in 2011, about the changes to the State Pension the Minister for Social Protection, Joan Burton, said:

“Given the changes to State pension age and the other proposals in the Framework, both employees and employers must be encouraged to change their attitudes to working longer. In the workplace employers must seek to retain older employees and create working conditions which will make working longer both attractive and feasible for the older worker. Where this is not possible and people leave paid employment before State pension age they will be entitled to apply for another social welfare payment until they become eligible for a State pension”.

The Transition Pension will not be payable to anyone who reaches 65 years of age after 1^st January 2014. Instead, individuals will have to apply for Jobseeker’s Allowance and should be entitled to receive this payment until they become eligible for the State pension. Jobseeker’s Allowance is considerably less per week than the pension is (€188 compared to €230.30).

Employees due to retire from their jobs upon reaching the age of 65 may not be able to afford to do so for another year unless they are able to access savings, draw down a private pension or unless their employer graciously extends the retirement age. To date there is no obligation on employers to increase the retirement age or to somehow bridge the gap financially however, employers nationwide may find themselves receiving requests to increase the retirement age for employees.

Please note that if an employer wishes to increase the contracted retirement age he or she is still obliged to consult the employee in relation to same as written consent is required to change the terms and conditions of employment.

No matter how big or how small your company may be – or whether your employees are part-time, seasonal or fixed-term - every Irish employer is obliged to enter into a contract with a PRSA provider and to provide access to at least one standard PRSA for all ‘excluded employees’.

What are ‘excluded employees’? Employees are considered to be ‘excluded employees’ if:

• their employer does not offer a pension scheme, or
• they are included in a pension scheme for death-in-service benefits only, or

• they are not eligible to join the company’s pension scheme or will not become eligible to join the pension scheme within six months from the date they began working there, or
• they are included in a pension scheme that does not permit the payment of additional voluntary contributions (AVCs).

    Even if there is only one ‘excluded employee’, an employer must:

• enter into a contract with a PRSA provider (there is no charge for doing this)
• provide employees with access to a Standard PRSA
• allow reasonable paid leave of absence, subject to work requirements, so that excluded employees can set up a  Standard PRSA
• make deductions from payroll if required
• advise employees in writing (normally on their payslip) at least once a month of their total contribution, including employer’s contribution, if any.

What an Employer is NOT responsible for:

• You’re not obliged to give any advice to employees in relation to PRSAs, but you must allow your PRSA provider or intermediary reasonable access to your employees to brief them on PRSAs.

• You don’t have to contribute to PRSAs on behalf of your employees, but if you decide to do so, your contributions must be paid to the PRSA provider within 21 days of the end of the month in which the employer contributions are due. And please note that you cannot make any deductions from this payment.

• You are not responsible for the investment performance of PRSAs

What are the consequences of non-compliance? Be aware that there are significant penalties for failing to discharge your obligations.  The Pensions Board will issue on-the-spot fines and prosecute any employers found in breach of theobligations, so it pays to get it right. As an Employer you may be subject to an on-the-spot fine if: (a)     You fail to respond to a request by The Pensions Board to furnish information about their provision of access to a Standard PRSA for ‘excluded employees’ and (b)     You do not provide at least a monthly statement to employees showing contributions deducted and employer contributions paid in the previous month. The bottom line is that this is not an issue that you can afford to get wrong. To find out more about your obligations, there’s a very helpful booklet on the Pension Board’s website.

IFG have many years of experience of providing Pension Scheme Design & Risk Advisory services to Irish companies. They would be delighted to answer any and all of your pension queries if you would like to find out more www.ifg.ie .

The Budget 2014 announcement that Maternity Benefit is to be capped at €230 per week has significant implications for numerous employees and employers alike. The current upper rate of €262 per week is an entitlement enjoyed by the vast majority of women in Ireland claiming Maternity Benefit. The reduction by €32 per week, which will be effective for new Maternity Benefit claims from January 2014, may discourage women from having children. Alternatively, it may force mothers to avail of shorter periods of Maternity Leave than they would like because they simply cannot afford to remain out of the workplace for the full 6 month period. The reduction of €32 per week over 6 months will see many new mothers lose out on €832 in Maternity Benefit. Some employers pay the difference between the Department of Social Protection Maternity Benefit figure and the employee’s regular salary (a "top-up" amount) as a gesture to employees so that they do not suffer major financial implications while on Maternity Leave. The Budget 2014 decision to reduce the amount paid by the State means that employers who cover the difference between Maternity Benefit and an employee's regular salary will now have to find an additional €832 per employee over the 6 month period in order to maintain the same level of maternity pay for employees while they are availing of maternity leave.             Click the image below to download your guide to Public holiday Entitlements

Sick pay from employers is not a statutory entitlement. It is up to the employer to decide whether or not to pay employees while they are out of work sick (once all employees are treated equally). Employers are obliged to provide details of their sick pay policy in employment contracts.   During times of incapacity or illness the employee can apply to the Department of Social Protection for Illness Benefit (once the employee has paid enough in PRSI contributions he or she should be entitled to Illness Benefit). If it is Company policy to continue to pay employees while they are ill or incapacitated, the employer often requires that the employee signs over any State Illness Benefit received to the Company.   A Budget 2014 announcement confirmed today (15^th October, 2013) that the number of “waiting days” for Illness Benefit will be increased from 3 days to 6 days from 1^st January 2014. What this means is that an employee will not be entitled to receive Illness Benefit for the first 6 days of any period of incapacity for work. This is more than one full working-week.   This has the potential to significantly affect a large number of people - employees and employers alike. The extension, which is said to save the state €22million, will negatively impact employees who work for companies that do not pay for sick leave – doubling the number of days that must elapse before they are entitled to receive any income. The decision will also have an impact on companies who continue to pay employees during periods of illness or incapacity but recover some of the costs of doing so by forcing employees to sign over any State Illness Benefit received as, from January of next year, the employer will not now receive any refund for the first 6 days of absence.    

Employment references for prospective employees can be great indicators of employee skills or characteristics and they should always be thoroughly vetted. However, for various reasons, they may not always give a true and present reflection of the candidate or they may reflect what the employee’s capabilities were at a different time and this may not necessarily match their current skills. References can also depict suitability for a role that is dissimilar to the one being filled. For this reason it is advisable for employers to engage new members based on multiple evaluations to protect themselves and to ensure not to waste any time or resources on someone who is not adequately equipped for the role. An applicant’s cover letter and curriculum vitae, as well as the resulting interview(s), can tell an employer a lot about the potential new employee - it is not uncommon, however, to ask shortlisted candidates to perform competency-based assessments or aptitude tests so that the employer can acquire a full picture of the candidate’s abilities and determine whether or not he or she is the right fit for the vacancy. It is customary for employers to hire new members on a probationary period of 6 months or a term not dissimilar to this. This probationary period does not prejudice the Company’s right to dismiss in accordance with the notice provisions contained in the employee’s individual statement of main terms of employment, or without notice for reasons of gross misconduct, should this be necessary. This period should be used by the employer to fully assess the employee’s work performance and establish suitability. If the work performance is not up to the required standard or the employee is considered to be unsuitable the employer should either take swift remedial action or terminate the employment, without recourse to the disciplinary procedure. At the end of the probationary period the employee should again be reassessed. If he or she has not reached the required standard the employer should, at their discretion, either extend the probationary period in order that remedial action can be taken or terminate the contract of employment. The probationary period should not in any case exceed eleven months in total.  The employee should receive notice of the Company’s intention to extend the probationary period before or at the end of the initial 6 month probationary period. A clause should allow that any continuous period of absence of four weeks or more would suspend the probationary period until the employee’s return to work. To avoid any risk of discrimination, policies (like the probationary period outlined above) should be fair and consistent and should apply to all new employees throughout the Company.  In disciplinary proceedings, when dealing with employees on probationary periods, progressive steps can be skipped but it is a common misconception that fair procedures and natural justice need not be adhered to during the probationary period. The Unfair Dismissals Acts 1997-2007 will not apply to the dismissal of an employee during a period at the beginning of employment when he/she is on probation or undergoing training provided that: •the contract of employment is in writing •the duration of probation or training is one year or less (including annual leave) and is specified in the contract It is important to bear in mind that this exclusion from the Acts will not apply if the dismissal results from trade union membership or activity, pregnancy related matters, or entitlements under the maternity protection, parental leave, adoptive leave and carer's leave legislation.

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