What are Joint Labour Committees (JLCs), Employment Regulation Orders (EROs) and Registered Employment Agreements (REAs)?

Prior to the decision in John Grace Fried Chicken Ltd & Ors v Catering JLC & Ors, thirteen JLCs were responsible for regulating terms and conditions of employment, and setting minimum rates of pay in certain industries. The industries covered by JLCs included catering, contract cleaning, hairdressing, hotel and retail, among others. JLCs comprised of equal numbers of worker and employer representatives together with an independent chairperson appointed by the Minister for Enterprise, Trade and Employment. In carrying out its function, a JLC formulated proposals to be considered by the Labour Court which decided whether to give effect to the proposal by making an ERO. An ERO set certain legally enforceable minimum rates of pay and terms and conditions of employment which were automatically applicable to all workers covered by it.

REAs are agreements made between worker and employer representatives, related to the pay and conditions of employment in a certain industry. There are approximately 70 REAs registered with the Labour Court, including five sector wide REAs covering industries such as construction, electrical and printing. As with EROs, once registered, an REA becomes legally binding on all employers and workers in the industry to which it is expressed to apply.

The John Grace Fried Chicken Decision

On 7 July 2011, the High Court delivered its judgment in the case of John Grace Fried Chicken Ltd & Ors v Catering JLC & Ors. The High Court found the JLC wage setting mechanisms to be unconstitutional.

As a result of the decision, all seventeen EROs in place at the time ceased to have statutory effect and could not be enforced. Where prosecutions for non-compliance with an ERO had commenced, these had to be withdrawn and no further prosecutions could be initiated in relation to compliance with EROs that were in place prior to 7 July 2011.

While the decision is good news for employers, it does not mean that existing terms and conditions of employment can be unilaterally changed without an employee’s consent. Any contractual entitlements of workers enjoyed prior to 7 July 2011 remain protected by law. The pay and conditions of employees who commenced work after that date are now governed by existing employment legislation such as the National Minimum Wage Act 2000, as well as by contracts of employment.

While REAs were not directly affected by the John Grace Fried Chicken decision, they are the subject of separate court proceedings in which their constitutionality will be challenged on a similar basis. Minister Bruton has pre-empted the outcome of this case by addressing REAs in his proposals for reform.

Proposals for Reform

Minister for Jobs, Enterprise and Innovation, Richard Bruton, published the Industrial Relations (Amendment) (No. 3) Bill 2011 on 22 December 2011. The main purpose of the Bill is to reform the existing system for the making of EROs and REAs, and to provide for their continued effective operation.

In relation to JLCs and their power to make EROs, the Bill proposes the following measures:

• JLCs will have the power to set a basic adult rate and two additional higher rates, based on length of service as well as the standards and skills recognised in the sector
• JLCs will no longer set Sunday premium rates. Instead, a statutory Code of Practice will be prepared by the Labour Relations Commission (LRC). Of course employers will also have to remain mindful of their obligations under the Organisation of Working Time Act
• A review of the scope of each JLC will be undertaken every five years
• JLCs will have to take into account a series of economic and industrial relations factors in the setting of wage rates
• There will be ministerial involvement in the supervision of JLCs and the making of orders to vary or revoke EROs
• The burden of compliance and record keeping requirements for employers in these sectors will be reduced. Again obligations under the Organisation of Working Time Act will remain

The following provisions are proposed in relation to REAs:

• Establishment of a time-bound process by which the terms of an REA may be varied by the Labour Court without obtaining the consent of all parties to the REA
• Introduction of more flexible mechanisms to enable REAs to be reviewed, challenged or cancelled
• Introduction of a clearer definition of “substantially representative parties” in the context of being entitled to make and maintain REAs
• Clarification as to the circumstances in which an REA may be cancelled

The proposed measures also permit companies to derogate from EROs and REAs in the event of financial difficulty. However, the Labour Court must satisfy itself that specified criteria have been met. The derogation will be granted for a limited period only and following consultation with employees.