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Labour legislation and collective bargaining: ‘For smaller, less well-resourced employers, it can all be very difficult to manage’

A report suggested the various measures would add about 19 per cent to costs in the hospitality sector by 2026 and about 15 per cent in retail

Ictu argues that a lack of targeting means all businesses will benefit from supports that may in part be funded using money taken in one way or another from low-paid workers. Photograph: Nick Bradshaw

The volume of work-related legislation coming down the tracks at Irish businesses has led to a large battle between employers and trade unions in recent months over the costs involved for firms amid a cost-of-living crisis versus improvements in worker rights in a modern economy.

“I qualified in 2001 and I haven’t seen anything like the last five years,” says Síobhra Rush, a partner specialising in employment law at the Dublin office of law firm Lewis Silkin.

“There have been some important developments over the past 20 years but it has been quite piecemeal whereas I would describe recent developments in employment law as more of a tidal wave.

“Covid obviously prompted changes on remote working. But [we’re] seeing much more at the moment in terms [of] pensions auto-enrolment, the right to request flexible working, gender pay gap reporting and the pay transparency directive, which is due to be fully transposed by 2026.”


Larger employers are coping well, particularly where they are in the multinational space, have a HR director and in-house legal… they are very aware of what is coming down the line

—  Síobhra Rush - Lewis Silkin

Throw in the introduction of statutory sick pay, domestic violence leave, the ongoing move towards a living wage, a Supreme Court judgment, then a directive on platform-working, and a mix of both legislative changes and another Supreme Court decision on retirement age policies and the amount of change employers are having to cope with, she says, is clearly challenging.

“A lot of it is just tied up with resourcing,” she says. “Larger employers are coping well, particularly where they are in the multinational space, have a HR director and in-house legal ... they are very aware of what is coming down the line. But for smaller, less well-resourced employers, it can all be very difficult to manage.”

In January, The Irish Times reported that employers group Ibec has written to then taoiseach Leo Varadkar calling for a pause on further increases in the national minimum wage and other labour policy measures planned by the Government that it claimed would add more than €4 billion to the annual wage bill of Irish companies and risk “employment and business viability”.

In response, Owen Reidy, general secretary of the Irish Congress of Trade Unions (Ictu), said Ibec’s proposals were “short-termist” and “quite nasty”, given that wages have failed to keep pace with inflation in recent years.

Since a Government-commissioned assessment of the cumulative impact on business costs was published at the start of March, it is the employers who seem to be having more success setting the political agenda.

The report suggested the various measures adopted or in the pipeline would add about 19 per cent to costs in the hospitality sector by 2026 and about 15 per cent in retail. In many other sectors, like ICT, legal and construction, the projected impact was negligible or actually zero because the prevailing pay and conditions made the majority of measures all but irrelevant.

Many of Isme’s members are in those most affected sectors, according to the organisation’s chief executive Neil McDonnell, and he has been pushing hard to make the most of the political shift witnessed in recent months.

Persistent lobbying by the organisation along with pressure from the hospitality sector trade groups and Ibec appear to have played a significant part in the recent announcement by senior Ministers of a package of business supports. This was a key policy measures promised by Taoiseach Simon Harris on taking office in early April.

As well as tax changes and grants there has been the promise of a review of ESRI research on statutory sick pay before the scheme is further expanded, as it was due to be at the start of next year, and reassessments of the changes to the minimum salaries required for the granting of work permits for particular sectors and the pace at which the move to a living wage is to be achieved.

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Broadly speaking, McDonnell has two related concerns, the increased costs directly imposed on members through measures like the increased national minimum wage, and statutory sick pay and the administrative burden of the various legislative obligations.

On the pay front, he says, the Government’s original target of putting in place a living wage set at 60 per cent of the median hourly rate is flawed because the rate is skewed here by the large numbers of people working for multinationals, in well-paid sectors like tech and pharma, or the public service.

“The small guys can’t afford to be benchmarked against them,” he says. “That’s the problem.”

On the regulation front, he says, “I’ve been asked to do media on proposals to introduce pet bereavement leave, menstrual leave, menopause leave. What we are saying is, you can make a really good case for all of these things but we actually have a force majeure architecture, we have other categories of leave so do you have to become so granular in relation to so many different measures because in the real world, small employers are managing this all the time anyway.”

Ictu argues that a lack of targeting means all businesses, even those that are doing well and have no particular issues with the measures, will benefit from supports that may in part be funded using money taken in one way or another from low-paid workers.

“The economy is thriving and we have never had more people at work,” says Ictu’s head of social policy and employment affairs Laura Bambrick. “We’re seeing jobs growth across a whole range of sectors but especially in hospitality and retail, the two sectors that we are told are the most stressed.”

At some point, we have to ask ourselves here, if not now, then when is a good time to bring workers’ rights into line with what we see in other countries

—  Laura Bambrick - Ictu head of social policy and employment affairs

About a third of the 90,000 additional jobs recorded by the CSO in the final quarter of 2023 when compared with a year earlier were in these two sectors, she says “and yet the employers are running a campaign that’s supposed to be about saving jobs”.

“At some point, we have to ask ourselves here, if not now, then when is a good time to bring workers’ rights into line with what we see in other countries.”

McDonnell counters that the restoration of the higher VAT rate in hospitality only happened towards the end of 2023 and has not been felt yet in the CSO figures, while the increase in the minimum wage from €11.30 to €12.70 only came into effect on January 1st.

“Businesses are closing down because they cannot pass on the increased costs, we are not making that up,” he says.

Bambrick doesn’t entirely disagree with that but is sceptical about the sense of crisis being generated, suggesting some of the closures are simply cyclical while, in any case, far more businesses are being established.

In the meantime, she says, companies with low-paid workers will benefit from the PRSI increases, including ones that don’t need the tax break.

“That will cost about €60 million, which is just about exactly what the 0.1 per cent increase to employer and employee PRSI due later in the year was supposed to raise. That was being done because the social insurance fund was said to under pressure, now it looks as though the money is going to employers, many of whom don’t need it.”

“It’s not a zero-sum game,” recently appointed Minister for Enterprise and Employment Peter Burke, said in an interview last week. “What’s good for the worker doesn’t have to be bad for the employer.”

Not everyone seems so convinced.

With the Government having granted the business representatives some of what they wanted and hinted at there being more to come, there will be some important calls to be made later in the year.

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Legislation intended to allow private sector workers stay on until they turn 66, more flexible State pension arrangements and pay-related social protection payments have been generally well received by unions but if the move to the living wage is still going ahead as scheduled then another significant increase to the national minimum wage would be expected in this year’s budget. The Low Pay Commission’s recommendation is due to go to Government next month but if that does not lead to further movement on the minimum wage then engagement with the unions on issues like the Adequate Minimum Wage directive is likely to become a good deal frostier.

Notwithstanding Ictu’s contention this week that the Government should immediately implement the Low Pat Commission’s recommendation to abolish the sub-minimum wage for younger workers because it will be illegal under the terms of the directive, the more generally contentious aspects of the directive actually relate to the provisions regarding the promotion of collective bargaining across the economy.

Unions have set huge store by this, seeing the 80 per cent coverage threshold contained in the directive as requiring significant change to the current landscape and having the potential to revitalise the movement in the private sector where density (the percentage of workers in membership) is down to about 20 per cent.

However, Ibec, whose director of employer relations Maeve McElwee appeared before an Oireachtas committee hearing on the subject earlier this year, has suggested no legislative change at all is required.

Ibec director of employer relations Maeve McElwee. Photograph: Nick Bradshaw

The department’s position is that it is still assessing what will be required to transpose the directive.

Burke has said the Government would be guided in the approach it takes by a subcommittee of the Labour Employer Economic Forum established to consider the issue. But Maynooth University’s Prof Michael Doherty, who chaired the original Leef High Level Working Group’s considerations of the subject and oversaw the production of a report that proposed a system of “good faith engagement” says there does seem to be a sense that the welcome for that idea is not as warm as it was.

“When we were tasked with doing the high-level group, and remember it was Ictu and Ibec that asked for it, and then the Government set it up, and one of the big things was this sense that the directive was coming down the line and the group was a way of starting to get ready for that.

“But it’s coming on two years now, since we published that report. It was widely welcomed at the time, by Leo Varadkar who was Tánaiste, and Micheál Martin who was Taoiseach. Everybody was welcoming it but two years down the line nothing has happened.

“The Ibec position, which is a totally defensible, is ‘look, what we have to do by the end of next year, 2025, is come up with some kind of action plan but right now, we really don’t have to do very much’.

“Setting aside my role in the group and commenting on this as an academic, I would quibble with that a little because I really don’t think the existing Irish kind of framework meets a lot of what’s in the directive in terms of promoting collective bargaining.”

Sinn Féin and Labour, both of whom have former trade union officials, Louise O’Reilly and Marie Sherlock respectively, in the enterprise, trade and employment brief, each say they would legislate if in a position to do so.

In the meantime, Doherty suggests, the recent changes witnessed to the wider landscape have been driven by European leaders who, with the far right gaining strength, were concerned the austerity era had alienated workers and moved to address the issue with a relatively free hand because, post-Brexit, the UK was no longer there to resist workplace legislation.

“I think there was this feeling at the EU level, and domestically as well, among politicians and policymakers that this needs to be rebalanced a little bit. Now, some of the employers are saying it has gone too far although for the multinationals a lot of what is being argued about here is chicken feed. They could be doing 10 times more at their bases in France and Germany.”

Rush agrees with regard to the impact of Brexit and believes the presence of so many European workers here is also a factor. The Government may view anything approaching mandatory union recognition as something that would upset multinational employers but a growing number of employees in these sectors come from environment where “they have collective bargaining agreements or works councils and”, she says, “I think we are going to see a working population that is more focused on ensuring they are represented in some way”.