Construction Industry Pensions
A new legislative mechanism has been created for the making of Sectoral Employment Orders (SEO) by the relevant minister to replace the older registered employment agreements (REAs), which were deemed unconstitutional by the Supreme Court in 2013.
Sectoral Employment Order for the Construction Sector : The Industrial Relations (Amendment) Act 2015 set up the new SEO mechanism. This mechanism permits a party to apply to the Labour Court to carry out an examination of rates of pay, pensions and sick pay in a sector with a view to making a recommendation to the Minister to set legally binding remuneration, pensions and sick pay in the sector.
The Sectoral Employment Order (Construction Sector) 2017 (the “Order”) was signed by Minister Pat Breen, and 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.
Principal Terms: 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 previous Registered Employment Agreement (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. Employers in the construction sector should ensure that their standard terms and conditions meet the terms of the SEO.