Serbian workers’ wage claim faces legal obstacles

Claims for wage arrears are being made on behalf of at least 96 Serbian workers who were employed by a contractor on a €3 billion network renewal programme undertaken by the state electricity company, ESB. However, while the Serbian workers are fully entitled to the arrears, there may be ‘significant practical difficulties’ in exercising their rights, according to a legal expert for the workers’ trade union.

A dispute over wage arrears for at least 96 Serbian workers, which made national headlines in Ireland at the end of March 2006, involves the Technical Engineering and Electrical Union (TEEU), a major contractor, Laing O’Rourke Utilities, for the state-owned electricity company, ESB, and a Serbian contractor, Energo Projekt, based in Belgrade.

The TEEU claims that the Serbian workers employed by the Belgrade subcontractor are owed a significant amount of wages in arrears. The case has been investigated by the Labour Inspectorate, which is to submit its report to the Labour Relations Commission (LRC) for assessment.

When the case first came to public attention, the ESB’s Networks Division stated that it had received written confirmation from Laing O’Rourke Utilities that both they and Energo Projekt were in compliance with all relevant legislation. Moreover, Laing O’Rourke insisted that the workers concerned had always been paid the correct wages.

Laing O’Rourke and the TEEU agreed that industry wage rates were applied correctly since October 2005, when the engineering union and Energo signed an agreement. However, the union insists that considerable arrears are owed for the period prior to that, and these have not been paid.

Modest offer made

The contract between ESB Networks and Laing O’Rourke, which is for just over three years, commenced in 2003 and was due to end in April/May 2006.

The Serbian company offered to pay a modest sum of €1,000 to each of the workers involved in the claim to deal with outstanding issues, but the TEEU responded that it could not conduct a ballot due to alleged intimidation. Laing O’Rourke insisted that there was no evidence to support this allegation.

Recent legal opinion, which the union received from a Labour Party counsellor and barrister, Oisin Quinn, suggests that claiming back money owed to the workers, who are mainly from Serbia, would be extremely difficult.

As part of a redundancy deal concluded between ESB and its trade unions some years ago, a provision was included whereby all electricians employed by subcontractors working for ESB (or their contractors) would be paid in accordance with the terms of the relevant Registered Employment Agreement (REA). These REAs are legally enforceable under Irish law.

Mr Quinn explained how the recent case had come to the union’s attention. He said that a TEEU shop steward discovered by accident that a significant number of Serbian electricians employed by Energo were being paid US $4.11 per hour (approximately €3.21 at current exchange rates). In addition, they were only receiving an extra 35% for working overtime, which only became payable when they worked more than 176 hours per month.

By comparison, the REA at the time required payments of €18.97 per hour (currently €20.00 per hour), plus time and a half for overtime up to midday on Saturday and, thereafter, double time on Saturday and Sunday. ‘What had drawn the shop steward’s attention to the workers originally was the fact that they were working in large numbers on a Sunday doing routine work (there had been no storm or other emergency),’ according to Mr Quinn.

Employing non-EU labour

As Serbia is not in the EU, an employer usually needs a work permit to employ a Serbian national in Ireland and must pass stringent tests to establish that EU workers were unavailable or did not have the skills required.

According to Mr Quinn, ‘In this case, the Department of Enterprise, Trade and Employment seems to have operated a policy that, if a non-EU company has won a contract to perform services or to carry out work in Ireland, then it can obtain work permits for all of its staff irrespective of whether EU workers are available, willing and able to do the work.’

However, domestic employment legislation still applies to any person employed in Ireland, regardless of whether that person is an EU citizen or not.

Contract terms of the Serbian workers

The Serbian workers all appear to have been employed pursuant to a standard contract of employment, which they had secured in Serbia. Irish employment legislation provides a minimum floor of statutory rights below which employees cannot agree terms to form a contract, he stated.

The Serbian contracts were found to infringe Irish employment legislation in a number of ways: violation of the Organisation of Working Time Act, 1997 and the Unfair Dismissals Act, 1977–1993; violation of the Payment of Wages Act, 1991; violation of both the REA and the statutory minimum wage contrary to the National Minimum Wage Act, 2000; and failure to provide all of the written information required by the Terms of Employment (Information) Act, 1994.

In addition, the penalty clauses contained in the contracts breach the Payment of Wages Act of 1991 as they would allow the employer, in conjunction with the delayed salary payment, to make a deduction from an employee’s salary as a measure of damages.

Conclusion

Mr Quinn suggested that, while the Serbian workers were entitled to be paid their wage arrears, ‘unfortunately, significant practical difficulties may exist’. Many workers may have already returned to Serbia, he said. Those remaining who take legal action and are successful may encounter difficulties in enforcing an Irish award in Serbia, he concluded.

‘In light of the foregoing, both ESB and Laing O’Rourke – by virtue of the departure from the REA rates of pay and the agreement with the TEEU in the case of ESB – and the government – by virtue of facilitating these arrangement through its work permit policy – should take all possible steps to ensure that the Serbian workers are paid their proper wages,’ the union’s legal advisor concluded.

Brian Sheehan, IRN Publishing