Damien English, Minister of State at the Department of Enterprise, Trade and Employment has formally made a sectoral employment order regarding the construction industry entitled the Sectoral Employment Order (Construction Sector) 2021 on 17 November 2021 (the Order).
The Order will come into operation on 1 February 2022. The Order amends Sectoral Employment Order (Construction Sector) 2019 (the 2019 Order) as previously reported on by William Fry (Update: New Construction Industry Sectoral Employment Order Formalised by Minister).
The Order schedules new minimum pay rates for workers in the construction sector. It also amends rates for pension and sick pay schemes. The Order follows on from a Labour Court Recommendation to the Minister to amend the 2019 Order, which was then subsequently approved by both Houses of the Oireachtas. The recommendation is the third such recommendation from the Labour Court in the construction sector. Such recommendations form part of the Sectoral Employment process is a statutory wage setting mechanism based on the principles of collective bargaining.
The new rates will apply in the sector from 1 February 2022 to 31 January 2023.
These pay increases have the potential to negatively impact the cost of a development or works. Depending on how the risk has been allocated in a development agreement or building contract, this cost increase may be borne by either the developer or a contractor. The full implications arising from the Order for those developing, funding and acquiring developments or works remains to be seen.
For more information on how this affects projects and construction contracts, or the funding, forward-sale or acquisition of developments or works, please contact Cassandra Byrne, Jarleth Heneghan, Liam McCabe or your usual William Fry contact.