John Dunne and Georgina Kabemba1

I INTRODUCTION

The employment relationship in Ireland is regulated by an extensive statutory framework, much of which finds its origin in European Community law. The Irish Constitution, the law of equity and the common law remain relevant, however, particularly in relation to applications for injunctions to restrain dismissals and actions for breach of contract.

The main (although not exhaustive) legislation in the employment law area in Ireland includes the following statutes:

a the Industrial Relations Acts 1946-2012;

b the Redundancy Payments Acts 1967-2007;

c the Protection of Employment Act 1977;

d the Minimum Notice and Terms of Employment Acts 1973-2001;

e the Unfair Dismissals Acts 1977-2007;

f the Terms of Employment (Information) Acts 1994 and 2001;

g the Maternity Protection Acts 1994 and 2004;

h the Organisation of Working Time Act 1997;

i the Employment Equality Acts 1998-2008;

j the National Minimum Wage Act 2000;

k the Protection of Employees (Part-Time Work) Act 2001;

l the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003;

m the Protection of Employees (Fixed-Term Work) Act 2003;

n the Safety, Health and Welfare at Work Act 2005;

o the Employees (Provision of Information and Consultation) Act 2006;

p the Employment Permits Acts 2003 and 2006;

q the Safety, Health and Welfare at Work (General Application) Regulations 2007; and

r the Protection of Employees (Temporary Agency Work) Act 2012.

Employment rights under Irish law can be enforced by any one of a variety of statutory tribunals and bodies, depending on the nature of the particular claim, or by the civil courts in appropriate cases. The process of determining which body or court will have jurisdiction in a particular case will depend on the legislation under which the claim is being pursued (or whether or not it is being pursued at common law), although employees will frequently have a choice of forum.

In general terms, employer's liability (i.e., personal injury) claims and claims of breach of contract are dealt with in the civil courts, as are applications for injunctive relief in relation to employment matters, whereas statutory claims (i.e., those made, for example, under the Unfair Dismissals Acts 1977 to 2007 or the Organisation of Working Time Act 1997) are heard by any one of the various bodies outlined below.

i Civil courts

The civil judicial system in Ireland is tiered, based on the monetary value of particular claims. At the lowest level, the District Court deals with claims not exceeding €6,350 and this court rarely hears employment-related disputes. Also the District Court has no equitable jurisdiction, and cannot therefore hear applications for injunctive relief. The next level is the Circuit Court, the jurisdiction of which is generally limited to awards up to €38,092, although in circumstances where a case has been appealed to the Circuit Court from the Employment Appeals Tribunal ('the EAT'), it has jurisdiction to exceed this limit and make awards up to the jurisdictional level of the EAT. The Circuit Court also has potentially unlimited jurisdiction in relation to gender equality cases. Where the sums involved in a contractual claim exceed €38,092, the action must be brought in the High Court, which has unlimited jurisdiction. Only the Circuit and High Courts can hear applications for injunctive relief.

ii Labour Court

The Labour Court is principally involved in the resolution of industrial disputes involving groups of employees but also has jurisdiction to hear certain individual claims relating to equality, organisation of working time, national minimum wage entitlements, part-time work and fixed-term work. The Labour Court generally only has an appellate jurisdiction and will not, other than in certain limited circumstances, hear a dispute until it has received a report from the Labour Relations Commission, stating that the body cannot resolve the matter and that the parties require the Labour Court's assistance. The Labour Court, having investigated a trade dispute, may make a recommendation setting out its opinions on the merits of the dispute and the terms on which it should be settled. The Court's recommendation is not legally binding on either party, except in cases referred to it under the Industrial Relations (Amendment) Act 2001 where the employer concerned does not engage in collective bargaining.

In relation to the individual claims referred to above, a determination of the Labour Court is legally binding on the parties, such as an award of compensation or reinstatement.

iii Rights Commissioner Service

The Rights Commissioner Service is housed within the Labour Relations Commission. Rights Commissioners are empowered to investigate disputes, grievances and claims that individuals or small groups of employees refer under various employment rights legislation. Rights Commissioners issue their findings in the form of recommendations or decisions, which are binding or non-binding depending on the statutory provision under which the claim was referred in the first instance. A dissatisfied party may, however, appeal to the Labour Court, or in some cases the EAT, against a Rights Commissioner's recommendation or decision. The decision of the Labour Court or the EAT in relation to such appeals is binding on the parties.

iv The Employment Appeals Tribunal

The EAT is the main forum for a number of statutory claims, including those in respect of minimum notice, unfair dismissal and redundancy payments. The EAT investigates unfair dismissal cases where the parties object to the claim being heard by a Rights Commissioner or where the decision of a Rights Commissioner is being appealed. The EAT's decision is called a 'determination' and is legally binding. In unfair dismissal cases a full appeal to the Circuit Court on the facts is available to either of the parties. In most other cases, the EAT's determination may be appealed to the High Court, but only on a point of law. The Minister for Jobs, Enterprise and Innovation can also refer a point of law to the High Court at the request of the EAT.

v Equality Tribunal

The Equality Tribunal is the forum of first instance for the investigation and adjudication of all complaints of discrimination in relation to terms and conditions of employment and occupational pension schemes. The Equality Tribunal can also attempt to mediate such disputes at the option of the parties. In particular, the Equality Tribunal has jurisdiction to hear claims concerning any of the nine grounds upon which discrimination is prohibited under the Employment Equality Acts 1998-2004. In practical terms, an Equality Officer will consider submissions from both parties in advance, before arranging a hearing of the case, to enable him or her to reach a decision that is binding on the parties. The decision may be appealed to the Labour Court.

vi Labour Inspectorate of the National Employment Rights Authority

The Labour Inspectorate has responsibility for the enforcement of employers' obligations in relation to the rights of employees as provided for by the Organisation of Working Time Act 1997, the National Minimum Wage Act 2000, the Industrial Relations Acts 1946-2001, the Protection of Young Persons (Employment) Act 1996 and the Payment of Wages Act 1991. It also has a role in relation to record inspections and information gathering for other sections of the Department of Jobs, Enterprise, and Innovation, and for the Department of Justice, Equality and Law Reform.

vii The National Employment Rights Authority

As part of the government's agreement with the Irish Congress of Trade Unions ('ICTU') in the last round of national partnership talks, the Office of the Director for Employment Rights Compliance was established, later renamed the National Employment Rights Authority ('NERA'). NERA's primary purpose is to promote a national culture of employment rights compliance in the labour market and to assume responsibility for the enforcement of employees' rights. Once it is put on a statutory footing, employees will be able, inter alia, to make complaints regarding non-compliance in a general way to NERA, provided such complaints are made in good faith, which will then be able to prosecute defaulting employers. NERA will also assume responsibility for the Labour Inspectorate units who will investigate non-compliance in a range of areas including annual leave, wages, working hours, notice, redundancy and dismissal. As an alternative to prosecution, and as currently envisaged, NERA may inform the employer and affected employees of any breaches identified and may also inform the latter of their options for redress, including the rectification of the matter in the workplace and the option of seeking a hearing before a Rights Commissioner. While it had been expected that NERA would be given statutory recognition in early 2012, the Employment Law Compliance Bill, through which this was to be achieved, has made no further progress through the legislature and does not appear to be high on the new government's list of priorities.

The government recently announced its intention to restructure the specialist fora in which employment disputes are litigated, as a result of which it is widely expected that those listed above (subsections ii to vii) will be replaced by a more streamlined system over the next 12 to 24 months.

II YEAR IN REVIEW

As has been the case in recent years, 2012 was a difficult year for the Irish economy, although it has proven itself to be resilient in very difficult circumstances, with the export sector in particular performing well. The unemployment rate remains stubbornly high, however, in relative terms, and stood at 14.8 per cent by the end of the second quarter of the year. Ireland's annual migration figures in September 2012 stood at around 34,400. This is a startling figure when compared with 2008, when there was a net migration of 40,000 people into the country. Thus, as in previous years, emigration has acted as something of a safety valve for the Irish economy.

There have been a number of developments in the statutory employment law framework recently. On 1 January 2012, the Redundancy Payments Acts 1967-2007 were amended, whereby the rebate available to employers from the Department of Jobs, Enterprise and Innovation against statutory redundancy payments was drastically reduced from 60 per cent to 15 per cent. This has significantly increased the cost of redundancy for employers, particularly in the case of collective redundancies. At the time of writing, the government has proposed to abolish the rebate entirely in early 2013.

The Protection of Employees (Temporary Agency Work) Act 2012 was signed into law on 16 May 2012. A number of the Act's provisions were deemed to have come into effect retrospectively on 5 December 2011 in line with the deadline for the implementation of the European Temporary Agency Worker's Directive, with the remainder coming into effect on 17 May 2012. The Act provides for equal treatment in terms of basic working and employment conditions for temporary agency workers as if they were recruited directly by the hirer to the same job. Guidance notes on the Protection of Employees (Temporary Agency Work) Act 2012 were published by the Department of Enterprise, Jobs and Innovation on 31 August 2012. The notes are intended to assist agency workers, hirers of agency workers and employment agencies to better understand the provisions of the Act, which give agency workers an entitlement to the same treatment as comparable employees with respect to basic employment and working conditions (subject to some limitations), had they been employed by the hirer under a contract at the same time.

Broadly, the guidance notes clarify the entitlements conferred by the 2012 Act and the obligations and responsibilities for the parties involved, and, in particular, confirm to whom the Act does not apply (including independent contractors, placement services and managed service contracts); what is included in the definition of pay; and what constitutes collective facilities in the workplace. They also refer to the grounds on which a hirer has objective justification to deny an agency worker access to such facilities.

The Employment Equality Act 1998 (Code of Practice) (Harassment) Order 2012 ('the Code of Practice') was published in June. Prepared by the Equality Authority, the Code of Practice aims to give practical advice to employers and employees on what is meant by sexual harassment and harassment in the workplace, how it may be prevented, and what procedures to follow in dealing with the problem and to prevent its reoccurrence. This Code of Practice updates the Employment Equality Acts 1998 (Code of Practice) (Harassment) Order 2002, and primarily addresses a number of anomalies and procedural matters. The main changes include a broadening of the definitions of 'harassment' and 'sexual harassment'; the amendment of the original discriminatory ground of 'marital status' to 'civil status' to incorporate a civil partnership as outlined under the Rights and Obligations of Co-habitants Act 2010; the inclusion of the provision that 'it is essential that the principles of natural justice be adhered to', in relation to investigations of complaints; a provision that 'external assistance may be necessary to deal with complaints in circumstances so as to ensure impartiality, objectivity and fairness in any investigation; a provision requiring employers to ensure that staff have access to equality policies, including by means of certain measures 'to provide, where necessary, for the translation of policies and procedures into languages other than English as appropriate with provision of interpreters'; and an amendment of the maximum remedy from 104 weeks' pay to 104 weeks' pay or €40,000, whichever is more.

The Industrial Relations (Amendment) Act 2012 was signed into law on 1 August 2012. The main provisions of the Act implement the programme for the government's reform of the joint labour committee ('JLC') system and rectify deficiencies in the legal framework highlighted in last year's High Court judgment in the case of John Grace Fried Chicken Limited, John Grace and Quick Service Food Alliance Limited v. The Catering Joint Labour Committee, The Labour Court, Ireland and the Attorney General. The High Court ruled that the JLC system was unconstitutional, as the provisions of the Industrial Relations Acts, which establish JLCs, permit an excessive delegation of lawmaking power from the Dáil (the Irish parliament) to them, and to the Labour Court. The Act sets stricter conditions for the establishment and variation of employment regulation orders (EROs) and registered employment agreements (REAs).

On 12 October, in further reforms to the JLC system, three JLCs (namely the Aerated Waters & Wholesale Bottling JLC, the Clothing JLC and the Provender Milling JLC) were abolished by order of the Labour Court under Section 40 of the Industrial Relations Act 1946.

In reaction to, inter alia, the banking scandals that have emerged over the past few years, the Central Bank Reform Act 2010 introduced new Regulations and Standards of Fitness and Probity ('the Standards') for persons occupying certain positions in financial institutions and other related industries. The Act created the concept of 'controlled functions' ('CFs') and 'pre-approval controlled functions' ('PCFs'), which are subject to much stricter control and input from the Irish Central Bank. The Act also empowers the Central Bank to approve or veto the appointment of people to certain positions, to investigate and where appropriate remove or prohibit certain position holders, and to set statutory standards of fitness and probity across the financial services sector.

The Regulations came into operation on 1 December 2011 and the Standards were applied on a phased basis, initially to just persons occupying PCF roles. From 1 March 2012 the Standards were also applied to persons newly appointed to CF roles. The final phase was 1 December 2012, whereby the Standards now apply to all persons occupying CF roles.

III SIGNIFICANT CASES

i Fixed-term workers

In February 2012, in the case of University College Cork v. Bushin,2 the High Court upheld the rulings of both the Rights Commissioner and the Labour Court, that an ex gratia redundancy payment was a condition of employment, and that a fixed-term worker was entitled to the same ex gratia redundancy payment as a comparable permanent employee. Of significance in this case is the fact that the comparable permanent employee(s) were not employed by the complainant's employer, but by another employer in the same sector.

Dr Bushin brought a complaint pursuant to the Protection of Employees (Fixed- Term Work) Act 2003 to a Rights Commissioner claiming that a 'comparable' employee with a permanent employment contract would have received an additional ex gratia redundancy payment. The comparator did not work at the University but with another university. University College Cork argued that there were comparable permanent employees within its employment who should have been used as comparators, which would have resulted in the Labour Court determining that as the university had never made a redundancy payment to a comparable permanent employee, there could be no issue of less favourable treatment.

This decision gives rise to the perverse situation that a fixed-term employee may have a greater legal entitlement to an ex gratia payment than a permanent employee in the undertaking concerned as, strictly speaking, a permanent employee has no legal right to force an employer to make an ex gratia payment at all (save where provided for contractually).

ii Employment of non-nationals

In August 2012, in the case of Hussein v. The Labour Court and Younis,3 the High Court quashed a €92,000 award made by the Labour Court to a non-national in relation to employment law breaches because his employment was unlawful, as he did not have a work permit.

The Labour Court had previously ordered that Mr Hussein pay €1,500 under the Terms of Employment Information Act 1994; €5,000 for various breaches of the Organisation of Working Time Act 1997; and €86,132.42 in respect of back pay in accordance with the National Minimum Wage Act 2000. Mr Hussein sought and was granted a judicial review of the Labour Court's decision on the grounds that Mr Younis had no legal standing to invoke the protection of Irish employment legislation as his contract of employment, in the absence of an employment permit, was illegal.

In deciding the case, the High Court stated that the Employment Permits Act 2003 prohibits a non-national from being employed without the appropriate employment permit, and that this prohibition applies to both employer and employee. However, while an employer can defend criminal proceedings on grounds that it took all reasonable steps to comply with the 2003 Act, no such defence is available to the employee.

The High Court further held that neither the Rights Commissioner nor the Labour Court could lawfully entertain an application for relief in respect of an employment contract that was illegal as a result of the employee to whom it related not holding a work permit. The decision of the Labour Court could therefore not be allowed to stand. Notwithstanding the decision it felt obliged to make, the High Court accepted that were Mr Younis' version of events correct, he had been the victim of appalling exploitation in respect of which he had no effective recourse.

The Court made it clear that, while it felt compelled to apply the 2003 Act, there must be concern that that law creates unintended consequences, including that undocumented workers can be deprived of the benefits and the protections afforded to workers by Irish employment law. Accordingly, the Court felt it appropriate to send a copy of its decision to the Minister for Jobs, Enterprise and Innovation for consideration of policy. The government has confirmed that it will review the decision and determine what action is to be taken.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

Under the Terms of Employment (Information) Act 1994, all employers in Ireland are obliged, within two months of the commencement of employment, to provide their employees with a written statement setting out certain fundamental terms of their employment as follows:

a date of commencement of employment;

b full name and address of employer and name of employee;

c the employee's place of work;

d the job title or a description of the nature of the work;

e if a temporary or fixed-term contract, the expiry date;

f details of pay including overtime, commission and bonus and methods of calculating these;

g whether pay is to be weekly, monthly or otherwise;

h the pay reference period;

i terms and conditions relating to hours of work and overtime;

j holiday or other paid leave entitlement;

k notice requirement;

l details of rest periods and breaks;

m details regarding sickness and sick pay;

n details of pensions and pension schemes; and

o reference to any applicable collective agreements.

The statement must be signed by or on behalf of the employer and must be retained by the employer during the employment and for one year after the employee's employment has ceased. Any change to the statutory particulars must be notified to the employee, in writing, within one month.

In addition to this, however, it is recommended that employers consider whatever other terms might be necessary and appropriate and prepare comprehensive contracts. Other relevant terms will depend on the seniority of the employee in question, and will range from intellectual property and exclusivity of service provisions, to post-termination restrictive covenants. Any changes or amendments to the employment contract of a material nature can only be implemented, generally speaking, with the agreement of both parties.

ii Probationary periods

There is no Irish legislation that expressly deals with probationary periods. As a matter of contract law, a probationary period will only be effective if expressly provided for in the employment contract. The terms of the probationary period, including duration, the length of notice applicable during the period, and whether or not the employer has discretion to extend it, should also be set out in the contract.

While there is no statutory limit on how long an employee can be retained on probation, he or she will be covered by the Unfair Dismissals Acts 1977-2007 once 12 months' continuous service is accrued, which will include any period of notice of termination. Accordingly, the right to protection against unfair dismissal will apply once the 12-month service threshold has been reached, even if the employee is still on probation. Employers will therefore usually seek to conclude the probationary period before the employee acquires 12 months' service, as there is little to be gained from extending it beyond this point. In considering the maximum length of a probationary period, employers should ensure that the aggregate of this period when added to the period of notice to which the employee is entitled is less than 12 months.

iii Establishing a presence

There is no specific requirement for an employer to be registered as an entity or otherwise based in Ireland. In practice, and for varying tax and regulatory reasons, a large number of Irish employees across all sectors are employed by and report to foreign entities based outside Ireland.

A foreign employer will, however, be required to register for pay-as-you-earn ('PAYE') income tax in Ireland where the income of its employees is within the scope of the Irish PAYE system. In addition to registration, the employer must deduct the amount of income tax due from the employees directly, and remit such amounts to the Revenue Commissioners. Income from non-Irish employment that is attributable to the performance in Ireland of the duties of that employment is also chargeable to Irish income tax and is within the scope of the PAYE system.

V RESTRICTIVE COVENANTS

The Competition Act 2002 prohibits agreements between undertakings that prevent, restrict or distort competition. Since employees are considered to be part of an undertaking and are not undertakings themselves, the Competition Authority (which enforces competition law in Ireland) considers that employment agreements are not covered by the competition rules. However, once an employee leaves an employer and sets up his or her own business, he or she will then be regarded as an undertaking. The Competition Authority has set out guidelines as to what types of non-compete provisions, in particular, will be acceptable in such situations. Generally, they must be reasonable in subject matter, geographical scope and duration.

The common law is also of relevance to the issue of restrictive covenants. The basic position applied by the courts in this regard is that such covenants are, prima facie, unenforceable for being unduly in restraint of trade, unless the party seeking to rely on them can demonstrate that the restrictions in question are no more than what is strictly necessary to protect a legitimate business interest and are not otherwise contrary to the public interest.

VI WAGES

i Working time

The Organisation of Working Time Act 1997 ('the OWTA') deals with maximum working hours and other matters relating to working time. Pursuant to the OWTA an employer may not permit an employee to work for more than an average of 48 hours per week, although this can generally be averaged over a period of four months. Working time should only take account of time spent working (i.e., it should exclude rest and meal breaks). The averaging period for night workers is two months; for employees working in agriculture and tourism, six months; and it can be up to 12 months for employees covered by an approved collective agreement.

Employees cannot opt out of the 48-hour average working week, as in other countries such as the UK. The legislation does, however, provide a particular exemption for senior or specialist employees, who can be said to determine their own working time, such that they are not subject to the restriction. The contracts of such employees should generally provide expressly that they are exempt from this part of the OWTA.

ii Overtime

Generally speaking, there is no statutory entitlement to overtime under Irish law, or to payment for overtime. In certain cases, however, specific categories of workers may be entitled to overtime pay if covered by a registered employment agreement ('REA') or employment regulation order ('ERO'). REAs and EROs are essentially industry-specific collective agreements that are registered in the Labour Court, and bind all employers and employees in that industry or sector.

For those employees not covered by either REAs or EROs, they will only be entitled to paid overtime if such an entitlement is contained in their employment contract or has been established by custom and practice in the employment concerned. Section 14 of the OWTA provides that employers that require employees to work on Sundays must pay them a premium for so doing (the level of which is not defined).

VII FOREIGN WORKERS

EEA nationals do not require employment permits to work in Ireland. Bulgarian and Romanian nationals have been granted limited access to the Irish market. Nationals of Switzerland are also exempt from any requirement to obtain an employment permit to work in Ireland. An employment permit will not be granted where to do so would result in more than 50 per cent of a company's employees being non-EEA nationals. This rule does not apply, however, where the employee, rather than the employer, makes the application. There are different types of permits available depending on the circumstances.

Intra-company transfer permits can be granted to senior executives, key personnel or employees engaged in a training programme. Green cards can be granted to individuals earning €60,000 or more, or in limited circumstances between €30,000 and €59,999. Work permits are also available in limited circumstances. The Employment Permits Acts 2003 and 2006 apply significant penalties for employing non-EEA nationals without a valid employment permit. The maximum penalty for such an offence is a fine of up to a maximum of €250,000 or up to 10 years' imprisonment or both.

Footnotes

1 John Dunne is a partner and Georgina Kabemba is a professional support lawyer at Matheson.

2 [2012] IEHC 76.

3 [2012] IEHC 364.

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