Social partners agree new national partnership agreement

A new national partnership agreement has been concluded between the main social partners in Ireland. The agreement provides for wage increases of 10% across the unionised sector over a period of 27 months, a range of immediate measures for enforcing labour standards, and a series of other employment and social-related measures to be implemented over the longer term.

After five and a half months of negotiations, the social partners have concluded a new draft social partnership agreement to replace the previous three-year social partnership agreement, Sustaining progress 2003–2005 (2Mb pdf). The new national agreement will pave the way for pay increases of 10% over 27 months and for the introduction of a range of measures to enhance employment standards. The pay element of the agreement will be set within a 10-year framework for social partnership, as reflected in the title of the new pact, Towards 2016 (3Mb pdf).

Other social partners to state positions

As part of the process for securing a national partnership agreement, the members of the Irish Business and Employers Confederation (IBEC), the Construction Industry Federation (CIF) and the Irish Congress of Trade Unions (ICTU) must now formally give their position on the draft agreement. Also included in this process are the country’s main farming organisations and a wide range of voluntary bodies that come under the umbrella of the ‘community pillar’.

IBEC planned to consult with its members and a decision was to be made at its national executive council in late July.

The trade unions may take longer to give their views on the new draft agreement, as some of the teacher union members are on holidays. Moreover, the month of August is a major holiday period: therefore, a final decision by all of the main actors involved could be delayed until September 2006. However, no draft partnership agreement has ever been rejected in almost 20 years of social partnership agreements, and this latest deal is expected to be endorsed.

Key elements of agreement

The key elements of the new social partnership agreement are: the pay agreement and its accompanying provisions; the agenda for public service modernisation; commitments in the area of pensions; new employment rights and compliance measures; workplace learning and partnership initiatives; and the wider social agenda, which includes healthcare and childcare elements. Some of the main provisions of these elements are outlined below.

Details of pay agreement

The pay agreement provides for a 10% wage increase over 27 months, to be paid in four phases as follows:

  1. a 3% increase in the first six months;
  2. a further 2% increase in the subsequent nine months (except for those employees who are on an hourly basic rate of €10.25 per hour or less at the start of this second phase; for such employees, a 2.5% increase would apply);
  3. a further 2.5% increase in the next six months;
  4. a 2.5% increase in the final six months.

In the private sector, the starting dates for these wage increases are likely to vary. In the public sector, the same pay conditions as above have been agreed, with the start date set for 1 December 2006.

Employers who cite an ‘inability to pay’ plea will be referred to the Labour Relations Commission (LRC). The LRC can appoint an agreed independent assessor; this process requires the full disclosure of information by the employer. If the assessor’s finding does not resolve such a dispute, then the case may be referred to the Labour Court for a final decision.

Higher costs for employers

The national pay talks strand of the social partnership negotiations was delayed for a long time, initially due to the length of time it took the negotiators to address concerns over the controversial Irish Ferries dispute in 2005 (IE0604059I). As a result, the new draft national pay agreement is perhaps more costly for employers than might originally have been envisaged; this is due to the rising inflation rates in recent months, which increased from 3% in January 2006 to 3.9% in May 2006.

It is evident that the private sector employers have paid a premium by rejecting the trade unions’ demand for the inclusion of a clause that would have allowed for local pay bargaining in addition to the basic pay deal. According to the weekly independent publication, Industrial Relations News (IRN), ‘this set the bar that bit higher when it came to the basic wage rises’.

On the public sector side, the five-month pay pause will give the government breathing space until December 2006. The most critical factor for the government will be the extent and nature of the public service modernisation agenda, particularly in the area of health. Value for money remains the key factor, with the government determined to secure as much as possible under the ‘ongoing change’ provisions attached to the basic pay deal. The government does not want the bulk of the change agenda to be contingent on the roll-out of the next public service benchmarking exercise, which is expected sometime in 2007.

The top-level social partner group, known as the National Implementation Body (NIB), is to continue in its current role of monitoring the agreement and intervening in major disputes, which it usually refers to the LRC or the Labour Court. The NIB can also make recommendations to the social partners on how to deal with particular problems by way of further procedural changes.

Pension commitments

In relation to the future of pension plans, as well as specific disputes involving employers who seek to change existing schemes, the NIB is also to play an enhanced role. The agreement states that the social partners are in agreement that pensions, both in terms of their adequacy and coverage, are to be considered ‘a priority issue’. In a key development, the agreement states that ‘industrial relations issues arising from disputes related to pension schemes may be referred to the National Implementation Body (NIB) by either party’.

The Department of Finance, Social and Family Affairs and the Department of Enterprise, Trade and Employment will also participate in a review of pension schemes, to be facilitated by the Department of the Taoiseach (Prime Minister). This will include the formulation of a social partner response to a government Green Paper on pensions policy. The Green Paper will outline the main policy choices and challenges in this area and devise a formal policy position on pensions within 12 months.

The new agreement also commits the government to transposing the optional pensions provision of the Transfer of Undertakings Directive into Irish law by the end of 2007. It stipulates that ‘the Pensions Board will be asked to develop an options paper, dealing with the technical issues that would arise. In addition, the Board will take into account the extensive existing legislation and technical standards dealing with the disaggregation and merger of pension schemes.’

Employment rights and compliance

The main social partners also reached agreement on what became known as the ‘strand one’ issues. These issues are covered under the heading ‘Employment rights and compliance’. There are two distinct elements within this employment standards strand – the first concerning the enforcement of existing laws, the second involving the more complex area of acceptable behavioural norms or standards.

In the area of compliance, there is to be a ‘major enhancement and expansion of the existing Labour Inspectorate’ with a view to increasing its effectiveness. A new statutory Office of the Director of Employment Rights Compliance (ODERC) will be established under the aegis of the Department of Enterprise, Trade and Employment. The number of labour inspectors under the ODERC will increase from the current 31 inspectors to 90 inspectors by the end of 2007.

New legislation giving effect to these changes will also allow authorised officers of the Department of Enterprise, Trade and Employment and ODERC to liaise with the Department of Social Welfare and Family Affairs and the Revenue Commissioners, so that they can ‘work together in Joint Investigation Units’.

In addition, further new legislation will be published next year ‘to provide that every employee must have an identifiable employer within the state who has a legal responsibility for compliance with all aspects of the applicable employment rights legislation’. The penalty for non-maintenance of statutory employment records will be up to €250,000 on indictment.

Action against ‘compulsory replacement’

A number of changes are planned to address the issue of employment rights, primarily in response to the Irish Ferries dispute in 2005, mentioned above. In the Irish Ferries case, the employer offered a redundancy package and replaced a majority of the jobs with lower-paid posts. The unions objected to this approach on the grounds that it represented a new form of ‘job displacement’.

The new agreement states that the possibility of the collective compulsory replacement of workers by lower paid workers from new EU Member States has, in certain circumstances, the potential to be harmful to maintaining good industrial relations.

To counteract such developments, a special Redundancy Panel is to be established to advise the Minister for Enterprise and Employment on whether a particular case should be referred to the Labour Court for a ‘binding opinion’, which could be appealed by either party through the Employment Appeals Tribunal. Specific criteria will be applied to identify such cases, as ‘normal and legitimate’ business activity must not be affected.

To avoid any confusion, it has been agreed that this special mechanism will not apply to the employment of agency workers, to situations where temporary business needs are involved, or in cases where outsourcing or the contracting out of services is being used. This means that normal business restructuring will not be affected.

Brian Sheehan, IRN Publishing

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