Ireland: HR Matters, July

Precautionary suspension

Following a recent High Court decision on an interlocutory application for an injunction, employers may wish to review the drafting of disciplinary clauses in their contracts of employment to see whether they give employees the right to remain in situ pending appeal against an adverse disciplinary decision. The plaintiff employee in Regina Wallace v Irish Aviation Authority [2012] IEHC 178 appealed a decision to dismiss her. When the employer proposed to place her on administrative leave with full pay pending the outcome of her appeal, she sought an interlocutory injunction restraining her employer from doing so. The employment agreement provided in relation to appeals that:

The key question for the High Court was whether placing the plaintiff on administrative leave amounted to "disciplinary action". The Court regarded the distinction in caselaw between suspension as disciplinary as opposed to precautionary as of "much lesser relevance" in the case before it in view of the terms in the employee's contract of employment that no disciplinary action would be taken pending the outcome of the appeal:

Having regard to the "very special circumstances" the employee was granted an interlocutory injunction restraining the employer from placing her on administrative leave pending the outcome of her appeal.

Collective redundancies: when obligation to consult arises

The Advocate General has issued an Opinion in the important EU case of United States of America v Nolan Case C-583/10 which concerns when the employer's obligation to consult arises in the event of collective redundancies under the EU Collective Redundancies Directive 98/59/EC. Ms Nolan was one of around 200 civilians employed at a US army base in the UK. In March 2006, the US decided to close the base by the end of September 2006. On 24 April 2006, the employees were informed of the closure and, in June, their representatives were told that all employees were at risk of redundancy. Collective consultation on the redundancies began on 5 June 2006. On 30 June 2006, the US gave the employees notices of dismissal, to take effect at the end of September 2006. Ms Nolan, who represented the employees during the collective consultation, brought a claim on behalf of those employees alleging that the US had failed to comply with its collective consultation obligations by not consulting on the decision to close the base or consulting prior to 5 June 2006.

The Advocate General's opinion on the UK Court of Appeal's reference was that the EU Collective Redundancies Directive must be interpreted as meaning that the obligation on an employer to consult on collective redundancies is triggered "when a strategic or commercial decision that compels it to contemplate or plan for collective redundancies is made by a body or entity that controls the employer". It was for the Court of Appeal to identify which of the events prior to 5 June 2006 amounted to a strategic decision that exerted compelling force on the US for the purpose of giving effect to the consultation obligation, and the date on which that decision was made. It remains now to be seen whether the Court of Justice of the EU will endorse this Opinion.

TUPE: change of work location

A change of work location following a TUPE transfer can give rise to constructive dismissal. In Abellio London Ltd (Formerly Travel London Ltd) v Musse and others; Centrewest London Buses Ltd v Musse and Others UKEAT 0283/11 and 063/11 the claimant employees worked as bus drivers for Centrewest London Buses Ltd (the transferor), mostly on a bus route operated by the transferor under a contract with Transport for London (TfL). The employees were based at the transferor's garage in West London. On 21 November 2009, the TfL contract to run this route was transferred to Abellio London Ltd (the transferee). The transfer meant that the transferee would run the bus route from its garage in South-West London and thus the employees' place of work would change. The employees asserted that the change in work location was not acceptable to them and estimated that this change would extend their working day by up to an additional two hours. They claimed, amongst other things, unfair dismissal against both the transferor and transferee.

The UK EAT found that the Employment Tribunal's conclusion that an extension of the working day of around two hours, taking both travel to and from work into account, was material, and was not a conclusion the Tribunal was "disentitled to reach". The UK EAT held that the employees who resigned after being faced with a change of place of work to a different part of London because of a TUPE transfer were constructively dismissed.

The decision highlights a further point of interest in Ireland, namely, the inter-relationship between the right to object under TUPE and the right to resign as a consequence of a substantial change to an affected employee's material detriment or a repudiatory breach of contract. If an affected employee objects to a transfer then his/her employment does not transfer (this is the law in the UK and also the outcome of Symantec Ltd v Leddy & Lyons (2009 HC) in Ireland, under appeal) and the termination of the contract is not deemed to be a dismissal, meaning the employee has no rights against the former employer or proposed new employer. However, where the affected employee objects and resigns in reliance on either a substantial change to his/ her material detriment or a repudiatory breach of contract then s/he could assert unfair dismissal against the former employer as the contract will not have transferred to the new employer.

Reasonableness of dismissal

Allied Irish Banks PLC v Purcell came before the Circuit Court on appeal by the employer from a determination of the Employment Appeals Tribunal (EAT) (AC Yearbook 2011 [37.13]). The claimant was an employee of the respondent since 1993 and over a period of two days in 2008 on several occasions allegedly accessed the bank accounts of a number of his work colleagues, including his superiors. In the disciplinary process which followed, the employee accepted he had accessed these accounts but stated he had the objective of finding out whether the colleagues were paid a bonus and what bonuses they got. In the event the employee was dismissed and two appeals against dismissal failed. The EAT found that the decision to dismiss was a disproportionate response to the claimant's actions and therefore unfair. It determined he be re-engaged backdated to six months after the dismissal and paid at the same salary as he had at the date of dismissal.

Before the Circuit Court it was agreed that the only issue was the employee's accessing the accounts of his colleagues, to which he had admitted. Linnane J concluded:

The Bank's appeal against the EAT Determination was allowed.

Croke Park Agreement: Second Progress Report, June 2012

The second progress report of the Public Service Agreement 2010-2014 (the "Croke Park Agreement") drawn up by the Croke Park Agreement's Implementation Body and published on 13 June 2012, found the Croke Park Agreement continued to be an effective enabler for the implementation of required reform and change across the public sector, facilitating a significant reduction in staff numbers and allowing significant restructuring in a climate of sustained industrial relations stability and staff co-operation. The report says the Croke Park Agreement has succeeded in delivering significant Exchequer pay bill savings and non-administrative efficiency savings directly related to many of the plans implemented under it. The Implementation Body identified many examples of initiatives being taken centrally and locally across the public service which show a strong focus on extracting costs and efficiencies, increasing productivity and driving change under the framework of the Croke Park Agreement with the co-operation of staff.

Public service staff numbers were reduced by 28,000, or 8.8%, since 2008 from 320,000 to 292,000. The Exchequer pay bill was reduced by 17.7% between 2009 and 2012, from €17.5bn (Gross) to €14.4bn (net of Pension Related Deduction).

The Implementation Body referred to the work on streamlining the employment rights institutions being carried out by the Department of Jobs, Enterprise and Innovation, commenting that drafting of a Workplace Relations Bill has commenced to give effect to the new structure.

Blueprint on reform of employment rights and industrial relations bodies

On 5 April 2012 the Minister for Jobs, Enterprise and Innovation published a Blueprint detailing the proposed shape of the new workplace relations structures that will be in place from the end of 2012. The document outlines the new processes and the service standards that will apply. Reform of the State's five employment rights and industrial relations bodies is delivering real results, including the elimination of the backlog for Rights Commissioner hearings, which was at 142 days in 2010, the Minister for Jobs, Enterprise and Innovation said on 17 May 2012 as part of his opening address to the IBEC Employment Law Conference. The Minister outlined some of the tangible results delivered by the process so far:

• The new single Workplace Relations Customer Service portal is now fully operational. This replaces five separate contact points previously in place.
• A new workplace relations interim website is now in place.
• A Single Complaint Form that deals with over 100 first instance complaints has replaced the 30 forms previously in use. Over 70% of all complainants now use this form. A fully online version of the complaint form will be available later this year.
• Complaints are now acknowledged and employers notified, on average, within five working days - prior to the introduction of the single portal this was taking up to eight months.
• Delivery of the pilot Early Resolution Service has commenced.
• The backlog for Rights Commissioner hearings has been eliminated. It was 142 days in 2010.

The Minister outlined the next steps in the process as to establish the two-tier Workplace Relations structure so that from the end of this year two statutorily independent bodies will replace the current five.

The responses to the Blueprint are available on Blueprint Consultation Responses - June 2012 and will inform the drafting of the legislation, which has already commenced. The Minister proposes to engage with the Oireachtas Committee on Jobs, Enterprise and Innovation to provide them with an opportunity to input into the future design of the State's workplace relations structures.

Mediation Bill 2012

The draft scheme of the awaited Mediation Bill was published in March 2012 by the Department of Justice. The Bill, as currently drafted, aims to facilitate the potential use of mediation in solving disputes – either civil or commercial. It seeks to reduce legal costs by providing a suitable alternative in the form of mediation.

The current draft scheme of the Bill introduces a new statutory obligation on solicitors and barristers to make their clients aware of the possibility of using mediation as an alternative means of resolving the dispute. This must happen prior to any litigation taking place. Similarly, it also outlines that all communications relating to any mediation between parties will be confidential, while providing a statutory basis for courts to invite parties to consider mediation and adjourn court proceedings during this period.

The Protection of Employees (Temporary Agency Work) Act 2012

The Act is the third limb of protection for atypical workers supplementing the legislative protections in place for parttime and fixed-term employees.

Scope of the Act

The Act covers individuals who are employed by an employment agency under a contract of employment by virtue of which the individual may be assigned to work for and under the direction and supervision of a person other than the employment agency. The scope is limited and does not include:

• self employed persons or individuals who are in business on their own account via a limited liability company and who are placed by an employment agency,
• managed service arrangements,
• employees of providers of an outsourced service,
• work placement schemes administered by FÁS or the national internship scheme,
• workers placed under publicly funded vocational training, integration or retraining schemes,
• directly hired employees.

From when is the Act effective?

The required date for transposition of the EU Directive by Member States was 5 December 2011 – however the Irish Act was enacted on 16 May 2012. A previous intention to make the effective date of the legislation retrospective from 5 December 2011 has been modified by the Oireachtas. The Act now provides that the basic principle of equal pay for agency workers applies from 5 December 2011. All other provisions in the Act are operative from the date of enactment, 16 May 2012. There is no qualifying period in Ireland thus the provision of the Act will apply to agency workers from day one of their assignments.

What is the general principle?

Section 6(1) of the Act provides that: An agency worker is entitled to receive the same basic working and employment conditions as the basic working and employment conditions to which he or she would be entitled if he or she were employed by the hirer under a contract of employment to do work that is the same as, or similar to, the work that he or she is required to do under that assignment.

Is there a required comparator test?

The Act references what the agency worker would get to do the same or similar work if hired by the hirer under a contract of employment, impliedly at the same time, although this remains open for further interpretation as caselaw develops. Unlike the UK, the Act does not provide for an express comparator defence (if an end user company or agency can demonstrate that the temporary candidate was receiving the same entitlements as a relevant comparator). "Basic Working and Employment Conditions" means terms and conditions of employment required to be included in a contract of employment by virtue of any enactment or collective agreement, or any arrangement that applies generally in respect of employees, or any class of employees, of a hirer and that relate to:

• pay,
• working time,
• rest periods,
• rest breaks during the working day,
• night work,
• overtime,
• annual leave, or
• public holidays

Not included in this definition are sick pay, payments under a pension scheme or arrangements/payments under occupational social security schemes, including pension, sick pay or financial participation schemes, private health insurance or other benefits in kind.

"Pay" is defined as meaning basic pay, and any pay in excess of basic pay in respect of:

• shift work,
• piece work,
• overtime,
• unsocial hours worked, or
• hours worked on a Sunday.

Not included in this definition are contractual notice, benefits in kind, performance bonuses that are not linked to productivity or rosters, commission payments, training allowances or educational bursaries.

Other exemptions?

Section 6(2) of the Act provides for what has become knows as the Swedish Derogation model. This means that the principle of equal pay only will not apply to agency workers, who are employed by an employment agency under a permanent contract of employment, provided he or she is paid by the employment agency between assignments at least half what they were paid on the last assignment. However the Act requires the employment agency to notify the agency worker in writing of the fact that the principle of equal treatment in the Act will apply to them other than in respect of pay and this written notification must take place before he/she enters into that contract of employment with the agency.

The practical advantages of this much vaunted derogation model remain to be seen, however, and certainly initial analysis elsewhere in Europe suggests it has been popular amongst larger multinationals and retailers who have significant economies of scale. While it may well be a viable and effective exemption in the context of the legislation, it does mean for employment agencies that in the event of termination of employment subsequently, they, as the employer will bear the risks of any subsequent unfair dismissals claim and will not be able to rely on the provisions of Section 13 of the Unfair Dismissals (Amendment) Act 1993 as before (see below).

Obligations for End User Companies

There are two important statutory obligations on end user companies:

• Section 14 places an obligation on a hirer to treat agency workers no less favourably in terms of access to collective facilities and amenities at a place of work, unless there are objective grounds to do so. The Act includes canteen or other similar facilities, child care facilities and transport services.

Queries have arisen for many employers where such facilities are provided for staff, but offsite, such as subsidised gym or club membership, emergency childcare facilities, and social events such as an office party held in a nearby hotel. It is clear that for the purposes of this Act, the location of the facility/amenity is key.

• Section 15 requires end user companies to provide such information as is required by an employment agency to ensure their compliance with the Act.

This will undoubtedly mean payroll information, and other employment terms. Hirer companies need to ensure that appropriate arrangements for data protection compliance are in place. The Act contains a built in indemnity for agencies to rely on if a claim is brought against them for a contravention of the Act and the contravention is due to the failure of the hirer to provide the required information.

Is there a role for Social Partnership?

Section 8 of the Act recognises that employers or hirers and employees (or representative associations of both) may come together collectively to agree working and employment conditions that differ from the basic employment and working conditions applicable by virtue of Section 6(1) of the Act. Any party may request the Labour Court to approve the agreement, however before so doing, the Court will engage in a process of consultation and will require certain specified conditions to be satisfied before any such agreement is approved. Where the Labour Court approves such a collective agreement, it will be permitted to stand.

Can short-term assignments be used to avoid liability under the Act?

An anti-avoidance provision was inserted at the late stages of the legislative process in Section 7. This section provides that assignments forming part of the same series of assignments shall for the purposes of determination of the basic working and employment conditions of an agency worker, be treated as a single assignment unless there is a gap of three months between assignments.

Redress

Schedule 2 to the Act prescribes that claims for alleged breaches of the Act are to be directed to a Rights Commissioner at first instance, within six months of the alleged contravention of the Act. A Rights Commissioner can direct that a specific course of action is carried out to include reinstatement or re-engagement and can require that the employer pay the employee compensation of such amount that is just and equitable not exceeding two years remuneration. The Labour Court will hear appeals, and appeals thereafter will be to the High Court on a point of law.

Employment Risk

The Act specifically applies to agency workers that are: "assigned to work for and under the direction and supervision of, a person other than an employment agency." Concepts of control and direction and supervision are the traditional concepts one associates with employment relationships. By making this a feature of the definition of "agency worker" in the Act, one of the practical implications is that there is a requirement for direction and supervision between an end user company and agency worker, thus by necessity increasing the deemed employment risk, especially in the context of rolling assignments or longerterm assignments where an agency worker can become embedded in an organisation and may move from role to role with little direct input from the employment agency. Nothing in the Act changes the responsibility for unfair dismissals as provided for by Section 13 of the Unfair Dismissals (Amendment) Act 1993. Thus where an agency worker has been unfairly dismissed, the end user /hirer company will be held liable for the unfair dismissal and any redress awarded.

Ministerial Guidelines

The Minister for Jobs, Enterprise and Innovation has indicated that his Department will be publishing Guidelines to the Act in due course. It is hoped that the proposed Guidelines will assist in the interpretation of certain aspects of the Act.

Practical Issues: For End Users/Hirers

• Audit existing arrangements with employment agencies to ensure adequate written agreements are in place to include indemnification for risks.
• Establish what agency workers are on site and the duration of their assignments.
• Ensure the required information has been provided to the employment agencies.
• Ascertain whether access to collective facilities and amenities on site is being extended to agency workers. For Employment Agencies
• Audit existing arrangements with end user companies to ensure adequate written agreements are in place to include indemnification for risks.
• Ensure employment documentation is in place with individual temporary agency workers especially in respect of the Swedish derogation, if applicable.
• Request information required from end user companies re: comparators and basic working conditions to ensure compliance with the Act.

The above is intended to be a general summary of the law as at July 2012. Please do not hesitate to contact any of employment team in Arthur Cox if you require further or more specific advice on this topic.

Watching Brief

Bills planned or in progress include:

• The Competition (Penalties and Sanctions) Bill, to strengthen the effective enforcement of competition law in Ireland;
• The Industrial Relations (Amendment) Bill, to give effect to the Government's reform proposals concerning statutory wage-setting mechanisms and to address issues arising out of the recent High Court challenge to the JLC system (referred to Select Committee June 2012);
• The Mediation Bill 2012, above;
• The Human Rights and Equality Commission Bill, to replace the existing Equality Authority and Human Rights Commission with a new amalgamated structure;
• Workplace Relations (Law Reform) Bill 2012, to implement the planned reforms in employment rights and industrial relations bodies, see above.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.