Irish Employment Legislation Updates and Guidance

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’.

• 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).

• 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.

• 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

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 .

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.