Collective Bargaining in Ireland: lessons for Westminster?

29 April 2015

By Michael Doherty, Professor of Law and Head of the Department of Law at Maynooth University, Ireland

The voluntarist system of employment relations that exists in Ireland is, of course, derived from that of the UK. Despite the common origins, however, a number of subtle differences have emerged, and persisted, over the years in relation to collective bargaining in the two countries. First, the statutory recognition procedure under the Employment Relations Act 1999 has no equivalent in Ireland. While the Irish Constitution protects the right of freedom of association, trade unions in Ireland enjoy no rights to be recognised for bargaining purposes by an employer. Employees are free to join a trade union, but they cannot insist their employer negotiate with that union regarding their pay and conditions. There is a framework under the Industrial Relations (Amendment) Acts 2001-2004 that allows a trade union to get a legally binding order in respect of specific member grievances, where employers refuse to bargain with the union, but this has been infrequently used since a successful Supreme Court challenge to its operation by the airline, Ryanair, in 2007.

On the other hand, however, until recently, the extension of collective agreements on a sectoral basis (‘Registered Employment Agreements’ or ‘REAs’), making legally binding the terms of the agreements on all employers in the sector, was possible and, indeed, was the method of standard setting in the construction sector, in particular. Furthermore, again until recently, Joint Labour Committees (JLCs), which approximated the old Wage Councils, and which had social partner representation, set terms and conditions in low-pay sectors (retail, catering, hotels, etc.) where unionisation levels are traditionally low. Lastly, through a process of ‘social partnership’, unions engaged in national bargaining with employers and the State (on pay and conditions, but also many more social and economic issues) for 20 years, until the process collapsed in 2009.

As is well known, the economic crash has had a devastating effect on Ireland. The period from 2008 saw a rapid deterioration in the public finances, a collapse in the housing market and construction sector, and a liquidity crisis for the banking system. In 2008, the State (endorsed by the EU) decided to guarantee all banking debt, effectively socialising the crippling debts of the national financial institutions. In November 2010, the Irish government accepted the terms of an IMF-EU rescue package, totalling approximately €85 billion. The government agreed, as a precondition for receiving bail-out funds, to the adoption of an austerity program, the exact terms of which were provided for in the December 1 2010 Memorandum of Understanding (MoU) signed with the ‘Troika’.

Compared to other countries (notably Greece) the Troika demands in terms of labour law, and collective bargaining, reform were not extensive. Ireland was required only to ‘review’ its sectoral wage-setting mechanisms, where these existed (the REA and JLC systems). These were indeed reviewed, with a recommendation that they be reformed (rather than abolished). However, two decisions of the Irish courts (in 2011 and 2013) declared both systems to be unconstitutional, for providing insufficient parliamentary oversight of the actions of the social partners and the State’s leading industrial tribunal, the Labour Court. As a result, the Troika’s desire to remove any standard-setting that goes beyond minimum standards applicable to all sectors was satisfied by the national judiciary. Indeed, the Supreme Court judgment in the REA case Court noted that the idea of binding sectoral agreements appears ‘somewhat anomalous’ today and would give rise to the ‘prospect of burdensome restraints on competition for prospective employers and intrusive paternalism for prospective employees’.

The other key development in terms of collective bargaining has been in the public sector. Reform of employment relations in the public sector has been one of the key elements in addressing the crisis in Ireland, prescribed by the Troika and implemented by two successive Irish governments. This has involved a series of pay cuts, either implemented unilaterally (as in the two budgets of 2009), dressed up as a ‘pension levy’ (in a great example of black humour, the Government webpage detailing this explicitly stated that the levy did not confer any pension entitlements- the page appears to have disappeared…) or ‘negotiated’ with the public sector unions. In 2013, having rejected by ballot such an agreement, public sector union members were asked to vote on a remodelled deal and informed that, if they refused to back it, more swingeing cuts would be introduced by link textlegislation anyway! As of yet, compulsory redundancies have been avoided. This is, arguably, the main trade union success in the negotiations of the two public service agreements since 2010, the ‘Croke Park’ and ‘Haddington Road’ agreements. Numbers have been shed through early retirements, the non-replacement of departing staff, and a tight Employment Control Framework, which sets strict limits on any public sector recruitment.

In April 2015, however, things could be looking up for both the economy and collective bargaining in Ireland. A number of developments, in different spheres, have brought issues around collective bargaining to the fore. First, the Government has explicitly recognised the value of collective bargaining in managing the hoped-for move from economic devastation to recovery. At national level, there is commitment both to engage with the public sector unions in an ‘unwinding’ of emergency austerity measures, and to open up ‘social dialogue’ with public and private sector workers. A Low Pay Commission (modelled on that of the UK) has been established, with social partner representation, to examine the suitability of current minimum wage rates. A recent strike at major Irish retailer, Dunne’s Stores, which centred on union recognition (the company is virulently anti-union) and the use of ‘zero-hours contracts’ garnered major public sympathy, and calls from across the political spectrum for the company to engage with the workers’ trade union. The Government had already promised new legislation to deal with the effects of the Ryanair judgment and to refashion the IR 2001-2004 Acts, and the dispute has intensified calls to bring this forward.

At sectoral level, we are also awaiting new laws to refashion the REA system (in a modified form), and the re-establishment of JLCs. It is notable that employer groups in sectors like Construction and Security have been pressing the Government to re-establish sectorally binding agreements, both as a mechanism to ‘take wages out of competition’ in labour-intensive sectors, and to deal with the effects of the Laval judgment, in terms of cross-border movement of services in the EU. Employers in other sectors, notably Hotels, have been much less willing to engage with the JLC process. Here, encouragingly, the Minister for Labour has suggested that preferential VAT rates for the sector, introduced in the midst of the recession, might be in jeopardy should employers maintain their antipathy to the JLC proposals. All of this suggests, after the dark years post-2008, a realisation amongst Government, in particular, but also amongst some key employer groups, that the policy value of effective and widespread collective bargaining needs to be re-emphasised and re-asserted. Might there be some lessons to take for the UK’s next Westminster Parliament….?