Collective bargaining in Ireland

Collective bargaining in the private sector currently occurs at enterprise/local level. National-level bargaining in the private sector was abandoned in 2009 after the breakdown of social partnership, yet the social partners annually agree on a protocol (covering the private sector) for conducting collective bargaining. In the public sector, two major cost reduction agreements – the Croke Park Agreement (2010) and the Haddington Road Agreement (2013) – and four pay increase agreements – the Lansdowne Road Agreement (2015) and the Public Services Stability Agreement (2018–2020), Building Momentum (2021–2022) and the revised Building Momentum agreement (2021–2023) – were reached followed negotiations between the Public Services Committee of the ICTU and government representatives.

Collective agreements in the private sector accord with the voluntarist approach to industrial relations in Ireland, in that they are not strictly legally binding or enforceable. However, disregard for collective agreements is consistently and strongly advised against by the Labour Court. Non-adherence to agreement terms could give rise to industrial action or disciplinary measures.

The public sector agreements, similarly, are not legally enforceable. However, workers have generally accepted them as preferable to the more severe, legally enforceable agreements that apply to those groups of workers who choose to remain outside public service agreements. The less favourable terms were enforced through the emergency financial measures in the 2009–2015 public interest laws.

Wage bargaining coverage in the private sector, although not calculated specifically, will be higher than trade union density, given that collective bargaining can be conducted without union involvement. However, gathering data on non-union company-level bargaining is difficult, and a recent national-level survey of such scope is not in place.

Wage bargaining in the public sector covers the entire sector.

Collective wage bargaining coverage of employees

Sources: Eurofound, European Company Survey 2013/2019 (including private sector companies with establishments with more than 10 employees (Nomenclature of Economic Activities codes B–S), with multiple responses possible); Eurostat [earn_ses10_01], [earn_ses14_01], [earn_ses18_01] (including companies with more than 10 employees (Nomenclature of Economic Activities codes B–S, excluding O), with a single response for each local unit); OECD and AIAS (2021).

Collective bargaining in the private sector at present mainly occurs at local level. However, the early stages of reformed sectoral bargaining are well under way, following the ministerial orders to re-establish JLCs in early 2014. A new sectoral employment order (SEO) covering rates of pay, sick pay and pensions across the construction sector was signed into legislation on 19 October 2017, following acceptance by the Minister for Jobs, Enterprise and Innovation of a recommendation from the Labour Court. The SEO places a legally binding floor on rates and obligations in the construction sector throughout the country. A further SEO application for about 10,000 mechanical craft workers was brought to the Labour Court in October 2017. In other sectors, such as hotels, there is stronger resistance to SEOs. Two other sectors, electrical contracting and mechanical engineering building services, have experienced more resistance from smaller, non-signatory employer groups.

In the public sector, since 2010 successive major agreements have provided the national framework for industrial relations for the whole of the public sector: the Croke Park Agreement (2010), the Haddington Road Agreement (2013), the Lansdowne Road agreements (2015 and 2017), the Public Service Stability Agreement (2018) and the Building Momentum agreements (2021 and 2022).

In the private sector, only local/enterprise-level bargaining is in play, although, there is sectoral bargaining in some sectors, such as construction, security and contract cleaning.

In the public sector, bargaining on public sector agreements was conducted at national level (involving the relevant government department and the Public Services Committee of the ICTU).

Levels of collective bargaining, 2022

As there are no national wage agreements in force in the private sector, there are no bargaining rounds. Company-level agreements cover periods of between one and three years.

In the public sector, each national bilateral agreement normally lasts approximately three years.

The largest union, the Services, Industrial, Professional and Technical Union (SIPTU), had used a moderate but steady 2–3% per annum pay increase strategy in local bargaining in its manufacturing division. This approach is not rigid and depends on other localised factors. Other unions, such as the retail union Mandate, seek the same measures across different types of employment, namely banded hours arrangements (this is where part-time workers can gain access to a greater number of minimum working hours with longer service). As inflation rose significantly in 2022, there was pressure to seek and agree higher per annum pay increases. The average per annum pay increase in 2022 was above 3%. The ICTU’s private sector pay guidance for 2023 outlined a per annum range of between 4% and 7.5%.

Ibec and other employer representative bodies continue to provide advice to members in respect of local bargaining, following the collapse of national social partnership agreements, from which Ibec withdrew in 2009.

The Industrial Relations (Amendment) Act 2015 reformed the existing JLC wage-setting mechanisms. The act provides for the Labour Court to adopt employment regulation orders (EROs) drawn up by JLCs. These orders set out minimum legally binding terms and conditions for the relevant sector and are extended beyond the bargaining parties to all employees/employers in the sector. The ERO is then given statutory effect by the Minister for Enterprise, Trade and Employment. The act’s provisions include the following.

1. JLCs have the power to set a basic adult wage rate and two additional higher rates.

2. Companies may seek exemption from paying ERO rates owing to financial difficulty.

3. JLCs can no longer set Sunday premium rates. A new statutory code of practice on Sunday working is to be prepared by the Workplace Relations Commission.

4. When setting wage rates, JLCs will have to take into account factors such as competitiveness and rates of employment and unemployment.

New EROs in the security and contract cleaning sectors have been established since the 2015 legislation was introduced. The Industrial Relations (Amendment) Act 2015 also provides for REAs on pay and conditions of employment in individual enterprises. The effect of registering an REA with the Labour Court is to make its provisions binding.

Under the reformed sectoral wage-setting system, a detailed process is established by which individual employers can seek temporary derogation from the sector-level minimum pay and conditions set by both SEOs and EROs, on grounds of financial difficulty.

The derogation provisions are identical for both EROs (which cover low-paid sectors) and SEOs (which cover more skilled workers and tend to have higher pay rates). An exemption is to be for a maximum of 24 months and a minimum of 3 months, with employers barred from seeking exemptions if they have already been granted an exemption for the same workers in the previous five years.

An exemption can be sought not only if the employer has entered into an agreement with the majority of its workers or their representatives, but also without agreement if the Labour Court is satisfied that the employer cannot maintain the terms of the ERO/SEO and compliance would result in considerable lay-offs and adverse effects on the survival of the employer’s business.

Trade unions have argued consistently that such individual exemptions undermine EROs/REAs, by creating an uneven playing field and allowing employers with exemptions to undercut their competitors who are bound by the ERO/SEO norms.

To guard against this, the Industrial Relations (Amendment) Act 2015 requires the Labour Court to consider whether an exemption would have an adverse effect on employment levels and distort competition in the sector to the detriment of other employers. The court also has to have regard for the implications of an exemption for the long-term sustainability of the employer’s business.

In addition, exemptions cannot allow an hourly wage that is less than the national minimum wage and must not reduce the pension contributions paid by the employer.

Currently, three EROs and two SEOs exist, so derogation mechanisms are not widely used.

In practice, generally, terms of a collective agreement continue to apply after they have expired until the a new agreement starts. Regarding wage bargaining in between pay deals, the parties may agree on a pay freeze or a pay pause.

During the social partnership era, a number of peace clauses were incorporated in national wage agreements, and many industrial relations observers associated them with relatively high levels of industrial peace. In the public sector, the public service stability agreements contain industrial peace clauses. They stipulate that the maintenance of industrial peace is an essential requirement of the agreements. Accordingly, all forms of industrial action are precluded in respect of any matters covered by the agreements, where the employer, trade union or staff association are acting in accordance with the provisions of the agreements. An oversight body oversees the compliance of these groups with industrial peace requirements across sectors, in conjunction with sectoral oversight bodies. The oversight body is responsible for proactively addressing matters of implementation and interpretation of an agreements during its period of validity, including:

• addressing any anomalies that may arise under the agreement

• addressing any major disputes that arise

• making the final decision on whether a dispute should be resolved in accordance with the procedures set out in the agreement

• deciding on any matter associated with the correct operation of dispute resolution procedures, including the issue of timelines, cooperation with a disputed change, etc.

• determining the correct operation of those procedures in any case where that matter is disputed

• adjudicating in the event of a dispute regarding compliance with the outsourcing provisions of the agreement

At local level, some company-level collective agreements contain explicit peace clauses. However, they are not very common at this decentralised level.

Since the start of this century, a number of collective agreements have focused on reforming company pension schemes. Many schemes have switched from defined benefit to defined contribution, usually for new entrants and/or future service, while those with defined contribution schemes sometimes increase the level of employer contributions. Other fringe benefits agreed as part of local pay agreements include improvements in sick pay, private health insurance benefit, annual leave (often related to length of service) and tax-efficient vouchers (vouchers up to €500 per annum are tax free).

In the retail industry, which is marked by a high prevalence of part-time working hours, successful company–union negotiations have resulted in banded hours arrangements. This requires employees to be guaranteed more weekly working hours, depending on their length of service. It reduces the potential for inconsistency in working hours. Examples of companies that have agreed on these arrangements include Tesco, Penneys and Marks & Spencer. These deals have been largely negotiated by the Mandate Trade Union and the Services Industrial Professional Technical Union. Banded hours became a statutory right in 2019.