Sponsored by Supported by Kevin Duffy Chairman, The Labour Court Variable and Personalised Pay Determination Systems

Overview  Disputes concerning variable pay / performance pay/ marked based pay rarely come before the Court  Court is generally concerned with disputes in employments in which collective bargaining takes place  Variable pay systems are not a common feature of collective agreements

Normal Position in IR Disputes  Normally the services offered by the Court in Industrial Relations disputes are voluntary  Parties are not obliged to submit disputes to the Court  The Court makes recommendations that the parties are free to accept or reject  Referral of disputes to conciliation and the Court is part of the process of collective bargaining

An Exception  An important exception to the principle of voluntarism was introduced by the Industrial Relations (Amendment) Act 2001  The underlying rationale for the Act was to provide a mechanism by which the fairness of the pay and conditions of workers who do not have access to collective bargaining could be assessed

How it Works  The Act only applies where it is not the practice of the employer to engage in collective bargaining  Where workers join a trade union the union can process a claim for improvements in pay and conditions  Internal procedures must first be used  WRC Advisory Service becomes involved

Court Investigation  The Court hears the parties and issues recommendations  The Court cannot recommend arrangements for recognition / collective bargaining  Court can recommend improvements in pay and conditions  If the Court’s recommendations are not accepted the Court can issue a determination  A determination is legally enforceable

Background to the Changes  Ireland is out of line with many developed economies in not providing any mechanism by which workers can assert a right to be represented by (as opposed to joining) a trade union  The Act of 2001 was intended to address demands by trade unions to counteract unfairness / exploitation  It was seen as an acceptable alternative to compulsory recognition

Two Important Superior Court Decisions  There were two important decisions on the operation of the Act  Ashford Castle v SIPTU [2006] E.L.R 214 Here the High Court held that in making recommendation under the Act the Labour Court should have regard to collectively bargained rates in comparable employments  Ryanair v Labour Court [2007] 4 IR 199 Here the Supreme Court made a number of findings on how the Labour Court should conduct hearing under the Act and on the need for evidence as to who is party to the dispute It also decided:  That the notion of collective bargaining in non-union employments should not be equated with what occurs in unionised employment  That an internal body established by the employer can be regarded as an excepted body capable of conducting collective bargaining

The Changes  In effect the principal decisions in both Ashford Castle and in Ryanair have been reversed  The Court cannot recommend improvements in pay and conditions unless it is satisfied that existing terms and conditions are out of line with those of comparable workers in similar employments (not just collectively bargained rates and conditions)

Collective Bargaining / Excepted Bodies  Collective Bargaining is now defined as: -  voluntary engagements or negotiations between any employer or employers' organisation on the one hand and a trade union of workers or excepted body to which this Act applies on the other, with the object of reaching agreement regarding working conditions or terms of employment, or non-employment, of workers  An excepted body to which the Act applies is defined as: -  a body that is independent and not under the domination and control of an employer or trade union of employers, all the members of which body are employed by the same employer and which carries on engagements or negotiations with the object of reaching agreement

Establishing the Extent of Trade Union Membership  The Court cannot conduct an investigation under the Act where the number of workers who are party to the dispute is insignificant relative to the total number employed  The number of workers concerned can be established by way of a Statutory Declaration by the Chief Officer of the Union  The veracity of the Statutory Declaration can be verified but the identify of the workers concerned cannot be revealed

Impact of Changes  Ad hoc or employer controlled internal consultation structures are unlikely to be accepted as constituting collective bargaining  A body which is not fully independent of the employer is unlikely to be regarded as an excepted body that can lawfully engage in collective bargaining

Impact of Changes cont..  The Court is no longer required to confine its consideration of claims by reference to collectively bargained rates and conditions  The Court must look at the totality of rates and conditions across similar employments, whether unionised or not  The language of the Act, as amended, suggests that it is only where there is a deviation from the norm that the Court can intervene  Where variable pay systems are the norm in similar employments claimants will be faced with a difficulty in advocating a change in those arrangements

What then of Variable Pay Systems?  Previously these systems were vulnerable because of the requirement to have regard to collectively negotiated arrangements  Under the amended Act it is a condition precedent to the Court’s jurisdiction that: -  “the totality of the remuneration and conditions of employment of the workers concerned provides a lesser benefit to the workers concerned having regard to the totality of remuneration and conditions of employment of comparable workers employed in similar employments”

Questions  Some questions that the Court must now address: -  How is it to be assessed if terms and conditions are out of line?  What are “comparable workers”?  What is “similar employment”?