Irish Employment Law - Good Intentions Gone Bad!

Prepared by Simon Mac Rory - CEO Graphite HRM Limited - April 2009

Four years ago I spoke at the National Recruitment Federation annual conference about my concerns on employment law and regulation, as both a SME employer and an expert on the application and implication of Employment Law in practice. At that time I stated that Irish Employment Law lacked any coherent strategy, was bureaucratic in the extreme, lacked balance and reasonableness. I stated then, and continue to believe now, that it failed to protect the rights of employers, particularly small and medium sized employers, and that in due course its imposition in its current framework would cost jobs as the inevitable economic downturn was realised. Unfortunately that is now the case. There is an urgent need for a national debate to develop a coherent strategy to bring balance to this body of law and ensure that employee rights do not undermine the individual's right to employment. The concerns of business, particularly those of the SME sector must be reflected in any new strategy.

Our Government has been aware for many years of the lack of any coherent or sensible strategy in this area and in particular the complete failure of the institutions and bodies created to mediate and protect both employer and employee.

In April of 2003 the Government received the results of a secret report it had commissioned into the impact and practice of employment law. It was subsequently and inevitably leaked. The following is a direct quotation from the Irish Examiner in October 2004.

"State Bodies charged with protecting employment rights are so ineffectual; the entire system is completely dysfunctional, complex, and legalistic according to a confidential Government report."

In addition to the above comments it was also reported that 70% of cases at the Labour Court and 67% of cases at the Equality Tribunal had legal representation. These bodies were formed to support both employer and employee alike in the mediation of disputes and were originally designed to operate without the need for legal representation. The ever-increasing complexity and regulation attached to employment law has made these original aims redundant as the above comments and figures demonstrate. If the experts have difficulty, what hope then for the lay person? Clearly this is a failed strategy that lacks coherence.

Since the receipt of that report I do not believe that any meaningful action has been taken by the Government to improve the situation. No national debate has taken place and the pace of legislative change has continued unabated. The last 20 years have seen in excess of 65 employment Acts of the Oireachtas, 200 European Directives on social issues and this is aside from Statutory Instruments (i.e. secondary pieces of legislation that follow the acts providing instruction on implementation) and 'Codes of Practice' which have been issued on everything from bullying to working time to health and safety. 'Strike One' against evidence of any coherent strategy.

I am not suggesting that there was no need to improve our body of employment law. It is not so long ago that women in the public sector had to give up their jobs when they got married and it was considered appropriate to pay a woman less than a man for the same work. The Trade Disputes Act of 1906 was well due an overhaul by the time our former Taoiseach Bertie Ahern and Ruairi Quinn began their reforms in the 1980's as then Ministers for Labour. The work of both these men and the legislation of the 1970's and 1980's (culminating in the Safety, Health and Welfare at Work Act 1989) was introduced with due consideration to the rights of employees and the needs of business. In fact I will go as far as to say that one cannot under estimate the contribution these men made to creating one of the major foundations that made the Celtic Tiger possible in the years that followed.

But what happened then? From a balanced and considered approach based on an interpretative and conciliatory framework we moved to a highly regulated framework - one that seems to be only concerned with Employee Rights and seems to have forgotten that Employers have rights too. Our body of legislation has been framed and developed against the backdrop of the 'big business' and 'government' employer perspective. It fails to appreciate the ability of the small and medium sized enterprise to cope with its demands. In many cases it is overly complex and bureaucratic, for example the working time act and counter productive such as the provisions for maternity leave.

It lacks any clear strategy and therefore remains incomprehensible to many employers who view the impositions of this law with ever increasing levels of incredulity. Most sinister in all of this however, is the fundamental change in an employer's constitutional right to the presumption of innocence until proven guilty! In most cases an employer must prove they did not do it! They must prove their innocence. The issue of dismissal alone demonstrates this issue with alarming clarity - all dismissals shall be deemed unfair until proven otherwise.

One would think that with the urgency our legislators attached to the passing of laws that there would have been an equal concern with the dissemination of information to employers. To ensure fairness and an employer's subsequent ability to implement and manage this vast body of regulation a comprehensive programme of information dissemination would seem appropriate. The lack of communication in this area contrasts sharply with the intensity of the communication campaigns surrounding tax changes for example, or the highly visible and excellent campaign around the switch over to kilometres from miles. Not so with employment law. The level of communication in this area has been, at very best, negligent and employers have been left to find out for themselves the impositions they face. For the SME employer this is very often an experiential learning in that they find out when a claim is taken by an employee or they receive a NERA (National Employment Rights Authority) inspection.

Government will claim that they made this information available through various websites etc. Not good enough in my view, particularly when you will get differing directions from Government Departments. Following an enquiry to a Government Body on a particularly difficult and complex issue I was told "Unfortunately, we cannot give specific legal advice to employers as there maybe a conflict of interest". This lack of clear and unambiguous information coupled with the failure of Government Departments and Bodies to agree on interpretation is without question 'Strike Two' against any evidence of a coherent strategy.

Let me substantiate my concerns by addressing the following examples of equality legislation in terms of a lack of coherent strategy, using maternity provisions as an example of counter productive legislation and the working time act as an example of bureaucracy gone mad.

Our equality legislation originates in the 1970's with the Anti Discrimination Pay Act 1974 and the Employment Equality 1977 Act. These Acts established the basis for equality in the workplace in Ireland. They were concerned with equal pay and the prohibition of discrimination on the grounds of gender and marital status. In the modern Ireland of the Celtic Tiger there was a need to strengthen our equality legislation and this duly arrived in the form of the Employment Equality Act 1998. It is important to point out, however, that this initiative was in response to a social directive from the European Union and not from the perspective of an official recognition within Ireland of any need. So rather than a strategic and proactive approach to the very important issues of equality we reacted to a European Directive. What followed can only be described as a piecemeal approach. Between 1998 and 2008 there have been four amendments to the original Act of which we are still waiting to hear, in April 2009, the implications of the most recent changes in 2008. In addition to the Act and the four subsequent amendments there have been seven Statutory Instruments issued in relation to the Act (now referred to as the Employment Equality Acts 1998-2008). This is apart form other legislation which impinges on this area including the Pensions Act 1990 -2004 part VII, the Health and Safety and Welfare at Work Act 2005 and of course the code of practice on the prevention of workplace bullying. As a SME employer without any expertise in this area, one is expected to be aware and familiar with this legislation and keep up with the piecemeal changes as they happen, but in an information vacuum. As we can see from the above it can take months for a change to be explained and then there is no focused and pragmatic process to communicate this to employers.

The government will tell us that equality is a very important issue as evidenced by their commitment to enact all (quantity over quality) this legislation. To emphasise the total lack of coherence in this area (if the above described piecemeal and reactive approach is not sufficient evidence) the 2009 budget saw the Equality Authority's funding slashed by 43% prompting them to issue a press release stating that "Budget 2009 may render the Equality Authority unable to carry out the full range of its core functions". Despite the legislation this action clearly underscores the lack of importance attributed to equality in modern Ireland. Equality is fine in the good times but does not seem to matter in the bad times. This disastrous and ill timed budget cut resulted in Niall Crowley the CEO of the Authority resigning his position in protest. The Authority budget was cut from €5.9 million to €3.3 million. Meanwhile NERA were awarded a budget of €9.7 million to carry on investigations, recover arrears (in many cases arrears where employers were completely unaware of their legal liability) and ensure compliance with a body of legislation that the vast majority of employers are unsure of, find difficult to understand and in some cases comprehend.

If there is a coherent and thought-through strategy regarding equality legislation I fail to perceive even a glimmer of one. 'Strike Three'.

Maternity provisions are an extremely emotive subject and one that many people feel unable to discuss or criticise. It is for all intents and purposes a taboo subject. However, let us look at this legislation in the context of a counter-productive piece of legislation.

At present in Ireland an expectant Mother is entitled to 26 weeks paid leave, a further optional 16 weeks unpaid following on and 14 weeks unpaid parental leave once the baby is born. If taken in total the leave equates to 13 months during which time the women's full employment rights are protected and she is entitled to return to the role she left or a role of similar status. Statutory maternity benefit for the first 6 months paid by Social Welfare is capped at 80% of the woman's weekly gross pay or €280 per week, which ever is lower.

Maternity leave is a clear example of a lack of strategy or joined up thinking. To begin with it assumes and reinforces the belief that child care is the sole responsibility of the mother. Ireland does not allow for any paternity leave and in doing so is discriminatory towards men. The current length of leave is problematic for the SME employer and potentially very costly to an unsustainable point in some cases. Equally the lack of affordable child care in many instances forces women to take all available leave and in many cases they are unable to return to work because the economic equation does not make sense thus undermining their career options. To be absent from the work place for such a time also impinges on the woman's promotional and career development opportunities. No employer can admit to this but it is a reality. The length of leave entitlement is having the unintended consequence of discrimination against women as employers' weigh up the cost of taking them on during child bearing years. A study in March of this year in the UK found that 50% of businesses admitted that the age of prospective female employees was a factor in deciding whom to hire and that 80% would ask them what their plans were for a family if it were not illegal. I have ample anecdotal evidence that the same situation prevails in Ireland. Working with a group of SME CEOs recently I was not overly surprised when detailing the regulations for child care related leave one woman, who was six months pregnant, stated "I wouldn't employ me".

A coherent strategy in this area would recognise the role of the father in child rearing. I believe that this leave should be re-named 'Child Care Leave' and should be available to both parents and be paid at 80% of salary without cap and funded by the State. Leave per child should be limited to one year and divided equally between both the father and the mother with each entitled to six months maximum and not transferable. It would be a case of "take it or lose it". The strategy should go further and take into consideration child care facilities. We have a vast number of school buildings which close in the early afternoon and lie idle until the next day. Surely within this infrastructure and with some innovative thinking we can develop a comprehensive child care programme that will bring real equality and opportunity to working parents?

Whilst well-intentioned, our maternity leave legislation is discriminatory towards both women and men, lacks any coherent strategy and in my view does not act in the best interests of the child by squeezing the father out of the early months of development. For the SME employer it is unsustainable and forces them to discriminate. 'Strike Four'.

The Working Time Act was introduced in 1997 and was heralded as unique and forward thinking legislation which would improve the quality of working life. It is a complex and detailed piece of legislation and yet again the degree of explanation and provision of information to employers was deplorable. Twelve years later many employers are unaware of their obligations and many employers are in breech of the requirements set down. The Act covers the maximum working week at 48 hours, daily rest provisions, weekly rest provisions, break entitlements, night workers, Sunday working, double employment, annual leave and public holidays, exemptions and most importantly record keeping regulations. The fines for failure to keep the correct records are substantial at €1,900.00 per record and €635.00 per record per day of contravention thereafter. This Act has placed an enormous bureaucratic burden upon employers and there is no doubt that the SME in particular is struggling to be compliant. For example, an employer must keep for each individual, at their place of work and available for inspection, a weekly record of their hours worked, any holidays taken in that week, and the monies paid in respect of the holiday time. Payslips are expected to show separately any monies paid in respect of holiday time. Furthermore holiday pay is to be calculated on the average of the preceding 13 weeks earnings for all employees. This means for a salaried employee in receipt of 12 or 13 equal instalments of their salary, any bonus paid to them in respect of commission or performance related award must be calculated into the average of holiday pay if they received such a payment at any time in 13 weeks preceding their holiday time. Under the legislation the employer has the right to determine the timing of holidays with due regard to personal and family circumstances. This could lead to some individuals receiving a greater level of pay than others simply due to the timing of holidays.

Working time, one would assume, applies to everyone but not so in this legislation. There are many exemptions and indeed exclusions. The Act does not apply to those who are deemed to control their own working time for example, the self employed. The Army and Garda are also excluded and Doctors in training and Fishermen at sea are exempted from numerous provisions including breaks. In effect the Act applies to about 60% of the workforce. As an individual subject to a contract of employment you are not allowed by law to work more than 48 hours per week on average, even if you want to. If you have two jobs because you want to do well by your family or improve your lot in life and you exceed 48 hours you are breaking the law! It is the employer, by the way, who will be fined and in the case of double jobbing the employee and both employers are liable. This is despite the fact that the employers have no other connection than a shared employee which neither may have known about. What kind of nonsense is it when half the workforce can work as long as they like and the other half cannot? Is this advanced thinking that improves the quality of working life or bureaucracy gone mad? 'Strike Five'.

Our employment law is poorly thought through. I can assure the reader that our State institutions equally struggle with the impositions of this body of law. I have consulted with many State Organisations and have observed first hand the difficulties they experience. It would be very interesting to see the result of a NERA inspection on a Government Body or State Organisation in terms of their compliance levels with the Working Time Act or indeed the manner in which they interpret the provisions of the Protection of Employees (Fixed-term work) Act, 2003 as they attempt to deal with permanent headcount quotas. As far as I am aware no NERA inspection has taken place in the Government arena and certainly not in any of the flag ship State Organisations or Government Departments.

Our employment law is in need of a radical overhaul. I have touched on only a few issues to make my point. There are many more examples of confusion and unnecessary bureaucracy in many other aspects of our employment law. This is costing jobs at the very time we can ill afford to lose any employment. Some of our legislation is discriminatory and counter productive, albeit unintentionally. The time has come to re-think this unfortunate mess and develop an integrated approach that has equal concern for employee rights, the right to employment and protects and recognises the rights of the employer and the needs of business.

I suggest the following:

  1. A national debate that acknowledges the failures of the current system and seeks to establish a representative solution. Admit to the mistakes, well intentioned as they were, and deal with them.
  2. Consideration of the establishment of thresholds for compliance for small business as has been done under financial regulation. What a small business can afford to do is not the same as a large employer.
  3. NERA is, as part of its remit, responsible for the dissemination of information which will lead to a greater level of compliance. Stop all inspections for an agreed period and let NERA properly inform Irish business as to its obligations. Inform Business and then by all means enforce.
  4. We do not need to react to every directive from the European Union to the letter of the directive; the UK for example has enjoyed derogation from the madness of the working time directive for the last 12 years. We can devise a strategy that meets the needs of Ireland and still honours the intent of the European Union social charter.
  5. If we are to continue with enforcement and compliance for what can only be defined in many instances as dysfunctional law can the Government please lead by example and open themselves to inspection first and foremost and demonstrate their compliance.

Employee rights are impinging on the right to employment. The complexity and attendant bureaucracy of our current body of employment law are a result of a lack of any coherent strategy. Conceived in the detached and isolated halls of Europe and designed on the basis of what the government and large employer can accommodate has, in my view, a total disregard for the SME employer. In some cases the opposite effect of the intent is being delivered and some regulation can only be described as complete nonsense. The time has come to revisit this body of law and improve it with due consideration for all. I call for a national debate with the following words from Machiavelli;

"Good examples are borne out of good education, which is the outcome of good legislation; and good legislation is borne out of those uprisings which are unduly dammed by so many people" (Machiavelli, 1469-1527)

SME employers let's have our uprising!

Simon Mac Rory,
CEO,
Graphite HRM Limited
April 2009

About Graphite HRM Limited

Graphite HRM was founded in Ireland in 1993. In that time we have built up a substantial client base and expanded our operations to the United Kingdom with offices in London, and a Client base in USA. Today we support 1500 customers both nationally and internationally.

Our focus is to support our customers to "Align Their Employees to the Strategic Intent of Their Business". We do this through two distinct but integrated operating disciplines - Organisational Development and HR Policy and Compliance.

Organisational Development

Through our patented organisational diagnostic instruments we bring a rigorous and established philosophical and academically proven methodology to the concepts of organisational development. In particular we support our client organisations to develop high performing cultures that add to the bottom line.

HR Policy and Compliance

Graphite is a major supplier of HR compliance information with over 1000 customers licensed to our products in Ireland alone. Through our expertise we support our client organisations to develop and implement effective HR strategy and policy, designed to support the realisation of employee potential and deliver an improved return on the Human capital investment.

We can be contacted as follows:

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Tel: +353 - 1- 6627099 		United Kingdom:
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