The First of the SEOs - New Sectoral Employment Order for the Construction Sector
The Minister for Business, Enterprise and Innovation has signed into law a binding Sectoral Employment Order (SEO) for the construction sector. This is the first SEO signed into law since the previous regime, the Registered Employment Agreement system, was struck down as unconstitutional in 2013.

 

The Order signed by Minister Pat Breen, named the Sectoral Employment Order (Construction Sector) 2017 (the "Order"), took effect from 19 October 2017.  This Order provides for mandatory terms and conditions in the construction sector generally, including pay, pensions, and sick leave far above statutory minimums, as well as the introduction of a new dispute resolution procedure.

Background to the Order

The Order came about by means of the SEO framework which was established by the Industrial Relations (Amendment) Act 2015 (the "IR Act").  This framework was introduced to replace the previously used mechanism, the Registered Employment Agreement (REA) system.  Although the REA system had been in place since the Industrial Relations Act 1946, this system was declared unconstitutional in 2013 by the Supreme Court in the case of McGowan v The Labour Court.  

In April 2017 the Construction Industry Federation (CIF) requested that the Labour Court (the "Court") examine the terms and conditions of workers in the construction sector. The Court received submissions from the CIF itself, UNITE the Union, the Irish Congress of Trade Unions, and the Trustees of the Construction Workers Pension Scheme.  Interestingly, both CIF and the "employee unions" were in agreement on many of the aspects of the proposed SEO, and certain of the SEO provisions were copied almost exactly from the relevant Construction Industry REA.  Following discussions, the Court made a recommendation to the Minister, who in turn signed the SEO into law. 

Principal Terms under the SEO

Hourly Rates

The new minimum hourly rates of pay are as follows: 

  • New Entrant Workers: €13.77 per hour
  • General Operatives with more than 1 years' experience (Category 1 Workers): €17.04 per hour
  • Skilled General Operatives (Category 2 Workers): €18.36 per hour
  • Craft Workers: €18.93 per hour
  • First year Apprentices: 33.3% of the Craft Worker rate, to increase up to 90% for fourth year Apprentices

It is noteworthy that these rates far exceed the statutory minimum wage, and that they are approximately 10% higher than they had been under the REA. 

Unsocial Hours

The Order also provides for 'time and a half' or 'double time' payments for various unsocial hours e.g. time and a half for "Monday to Friday normal finishing time to midnight", and double time for Sunday. 

Pension Scheme and Sick Pay Scheme

The Order provides for mandatory pensions and sick pay schemes.  The Court recommended that both schemes be modelled on the respective schemes that had existed in the construction sector for many years (by virtue of the REA).  Both schemes are to be funded through a mixture of employer and employee contributions at rates set by the SEO, and the pensions scheme is to include a death in service aspect also.

Travel Allowance 

The employee unions sought the inclusion of an employee travel allowance in the SEO, which the CIF disagreed with.   The Court decided not to include a travel allowance provision in the SEO.

Dispute Resolution

Finally, the Order includes a new dispute resolution procedure.  No strike or lock-out is allowed unless and until all stated dispute resolution procedures have been exhausted.  It requires employees to raise individual disputes with their employer at local level first (with a requirement on the part of the employer to respond within 5 days), before referring it if necessary to the Workplace Relation Commission (WRC), which decision can then be appealed to the Court. 

In terms of collective disputes, the dispute should be raised with the employer first before being referred to the Conciliation Service of the WRC if necessary.  This decision can in turn be referred to the Court for investigation and recommendation. 

Who is affected by the Order? 

The SEO is legally binding on construction sector employers and its terms are enforceable in the WRC. The definition of the sector is wide and covers "Building Firms" and "Civil Engineering Firms", each of which is given a broad definition, and includes for example companies involved in the "construction, reconstruction, alteration, repair, painting, decoration and demolition of" a variety of structures.  What is crucial to note is that employers falling within the definitions are bound by the terms of the SEO, whether or not they are CIF members and whether or not they agree with the SEO and its terms.

Conclusion 

The intention behind this first SEO under the IR Act is to restore stability in the construction sector, and to promote harmonious relations between construction workers and their employers.  The Minister stated that: "This Order will bring a sense of certainty to employees and employers in the construction sector around pay and terms and conditions, particularly at a time when employers are tendering for contracts".  

Employers in the construction sector should without delay ensure that their standard terms and conditions meet the terms of the SEO.   SEOs in other sectors are now expected in due course.

Contributed: by Jeffrey Greene

 

Twitter
Follow us on Twitter @WFEmploymentLaw and @WilliamFryLaw

 

Key Contacts

Liam McCabe Partner

Jeffrey Greene Partner

Related Practice Areas

Related Industry