Minister Regina Doherty has described the Employment (Miscellaneous Provisions) Act 2018 (‘the Act ‘) as “one of the most significant pieces of employment legislation for a generation”. Whilst that may be overstating the impact of the Act somewhat, it certainly heralds a new era for employers in sectors where the use of casual work is an integral part of their business model. In this Insight, we will go through the main provisions of the Act and provide some practical advice for employers and HR practitioners on how to deal with the new legal obligations arising.
Essentially, the Act, which came into effect on 4 March last, addresses five areas as follows;
- Power of WRC Adjudicators to subpoena witnesses or documents.
- Core terms of employment – the Act places an obligation on employers to furnish five core terms of employment to all employees, within five days of commencement of employment. Failure to comply with this obligation is a criminal offence under the Act.
- Zero hours contracts – the Act prohibits the use of zero hours contracts except in certain circumstances which will be outlined further below.
- Minimum payments – the Act provides for minimum payments to employees on low hours contracts who work less than the hours provided for in the contract.
- Banded hours – the Act provides for banded hours contracts to be provided to employees whose actual hours of work are not reflected in their existing contract.
We will now review each of these 5 areas in more detail.
1. Power of WRC Adjudicators to subpoena witnesses or documents
The Act has amended the Unfair Dismissals Acts to address an issue that was omitted from the Workplace Relations Act, 2015. In that regard, the Act provides that a WRC Adjudicator can give notice in writing for any person to attend and give evidence at a WRC hearing or to produce any documents in the person’s possession, custody or control which relate to the proceedings. The same immunities and privileges will apply as if the person was a witness before the High Court. Failure/refusal to comply with the written notice from the WRC Adjudicator to give evidence and/or to produce documents shall be an offence.
This power is not new insofar as, prior to the introduction of the WRC, the EAT and the Equality Tribunal always had the power to subpoena witnesses and documents. However, when the new WRC system was established and commenced in 2015, this issue was overlooked in the drafting of the Workplace Relations Act, 2015, and therefore the opportunity was taken in this legislation to address that omission.
Where any HR practitioner or business owner receives a subpoena of this nature from a WRC Adjudicator, it should not be ignored and legal advice should be taken on the obligations arising. It will be interesting to see how matters develop with regard to the WRC in circumstances where the Supreme Court has recently given leave for a constitutional challenge to the WRC to proceed. Should this challenge be successful, and should the WRC consequently be deemed unconstitutional, then it may be that all employment claims will be required to be dealt with by the Courts. Watch this space!
2. Statement of 5 Core Terms
Employers are now obliged to provide employees with a Statement of five core terms in writing within 5 calendar days (not business days) of an employee commencing employment. Section 7 of the Act lists these core terms as follows;
- Names of employer and employee;
- Address of the employer;
- Expected duration of employment if a temporary contract or end date if a fixed term contract;
- Rate or method of calculation of pay and pay reference period for purposes of the National Minimum Wage Act, 2000, and;
- Number of hours which the employer reasonably expects the employee to work.
In relation to number 5 above, the number of hours, the Act does not define “reasonably expects’. It is likely in this regard that an employer will be in compliance with the Act if it provides such information as it is able to determine from the outset of the employment relationship. For employers who work off weekly rotas, our view is that it would be sufficient to state that the employee would be required to work such hours per day and such hours per week as would be determined by the employer on a week to week basis by the provision of a rota, which would be furnished to the employee in advance.
It is important for employers to note that this obligation to provide the five core terms supplements, as opposed to replaces, the existing obligations to provide employees with a Statement of Main Terms and Conditions of Employment, as set out in the Terms of Employment (Information) Act, 1994. Under that legislation, an employer must provide a written statement to an employee outlining fifteen core terms of employment, within 2 months of the commencement of the employee’s contract of employment.
From a practical perspective, it makes sense for employers to consolidate the five core terms under the Act and the fifteen terms under the 1994 legislation and send the one document to employees within 5 days of commencement of employment. Ideally, a full contract of employment should be sent to employees in advance of them commencing employment.
Often, hiring managers fail to inform HR that a new hire is commencing with the business, particularly in times of full employment, as we have now, where there is pressure to get resources in quickly. As a result, sometimes HR do not hear about a new hire until the new recruit has their feet firmly under the desk!
It is very important in this regard that internal communication about new hires and start dates is very streamlined to ensure that employers do not inadvertently fail to meet their legal obligations, particularly in circumstances where failure to provide the five core terms under the Act is a criminal offence.
In that regard, an employer who fails to provide an employee with the required statement of five core terms, within one month of the commencement of the employee’s employment, shall be guilty of an offence under the Act. An employer who deliberately provides false or misleading information or who is reckless as to whether or not such information is provided will also be guilty of an offence. Employers found guilty of such an offence shall be liable on summary conviction to a fine of up to €5000 or imprisonment for a term not exceeding 12 months or both.
The Act provides a defence whereby an error or omission regarded as a clerical mistake or made accidentally and in good faith is not a breach.
The Act also provides anti-penalisation provisions for employees who invoke their rights (existing or new) under the 1994 Act. Penalisation in this regard include suspension, layoff, dismissal, demotion, danger to terms and conditions, discipline, coercion and intimidation.
3. Zero Hours Contracts
The Act prohibits zero hours contracts, save in limited circumstances. In that regard, the Act inserts a new section 18 into the Organisation of Working Time Act 1997 and the effect of section 18 is to prohibit the use of zero hours contracts. The new section 18 describes three types of contracts as follows;
i. A contract which specifies a certain number of working hours;
ii. An “as and when required” contract where there is mutuality of obligation; or
iii. A combination of the above two contract types.
The Act sets out that the prohibition on the use of zero hours contracts does not apply to work of a casual nature. The Act does not define work of a casual nature and we will address that further below.
Furthermore, the Act sets out that, in contracts requiring a certain number of hours, the number shall be greater than zero, unless the work is done in emergency circumstances or the work consists of short-term relief work to cover routine absences for that employer. In our experience, the use of zero hours contracts was not widespread amongst employers in any event and therefore this aspect of the Act should not have a significant impact on employers.
4. Minimum Payments
The Act goes on to provide that an employee is entitled to a minimum payment in the following circumstances;
A. Where they have a certain number of hours contract and they do not do at least 25% of their contracted hours, or;
B. Where they have an “as and when required’ contract, or a mix of a certain hours contract and an “as and when required” contract, and the employee does not do at least 25% of the hours done for that employer by other employees in the same role that week.
In either A or B above, the minimum payments will be calculated as follows;
i. if the employee was not required to work at all, the pay is the lesser of either 25% of the hours (contract or whatever was done by another employee) or 15 hours;
ii. if the employee was required to work, but did not work 25% of hours or at least 15 hours, they are entitled to 25% of their contracted hours or the hours done by another employee doing the same job.
This provision is not new as this is already provided for in the Organisation of Working Time Act, 1997. However, what is new is that the Act provides for a new minimum payment which is calculated at a rate of three times the national minimum hourly rate, which is currently €9.80, or three times any ERO rate which is in place.
There is some confusion among practitioners as to whether the minimum payment is:
(a) The normal hourly rate for pay for each of the guaranteed hours, subject to a minimum payment of three hours (that is, a minimum payment of €29.40 – three hours x €9.80, which is the current minimum wage), or
(b) Whether the guaranteed hours are calculated using an hourly rate of three times the national minimum wage, which for an employee entitled to 15 hours would equate to a payment of €441.00 for the week (that is, 15 x [€9.80 x 3]).
Only time will tell as to how the WRC and courts will interpret the Act. If the latter interpretation is correct, then it means that employers will be required to pay at least €29.40 per guaranteed hour.
These minimum payment obligations do not apply in the following circumstances:
- exceptional circumstances (unforeseen);
- layoff/short time;
- genuinely casual work;
- if the employee is not available to work (for example, due to illness); or
- where an employee is on call-for emergencies or events which may not occur.
5. Banded Hours Contracts
Banded hours contracts will arise where an employee’s contract of employment does not reflect the actual number of hours worked by the employee over a reference period of 12 months, between the date of commencement of employment and the date on which the employee requests to be put in a band of hours.
The Act also provides that a continuous period of employment with the employer, which occurs immediately before the legislation was enacted, will be reckonable towards the 12 month reference period. An employee must request a banded hours contract in writing and the employer must then place the employee on the appropriate band no later than four weeks after the request is made.
The employer determines the appropriate band on the basis of the average number of hours worked by the employee per week during the reference period. The bands are set out in a table in the act as follows;
|A||3 hours||6 hours|
|B||6 hours||11 hours|
|C||11 hours||16 hours|
|D||16 hours||21 hours|
|E||21 hours||26 hours|
|F||26 hours||31 hours|
|G||31 hours||36 hours|
|H||36 hours +|
The advantage for the employee requesting a banded hours contract, and receiving one, is that they then then a guaranteed average number of working hours within a band for at least a 12 month period.
The Act provides that an employer may refuse the employee’s request to be placed on a band of hours in the following circumstances;
- Where there is no evidence to support the request, or;
- Where there have been significant adverse changes to the employer’s business within or after the reference period, or;
- Where the average hours worked by the employee were affected by a temporary situation which no longer exists.
The Act also provides that this section of the Act does not apply to banded hours arrangements entered into by agreement following collective bargaining.
The Act also provides there is no requirement on an employer to provide hours of work in a week if the employee was not expected to work and/or the employer is closed and no business is being carried out.
An employee can bring a complaint to the WRC, which can in turn issue a decision placing the employee in an appropriate band of hours, but the WRC cannot award compensation on foot of that claim.
The existing penalisation clause in the Organisation of Working Time legislation is also strengthened by the new Act. Penalisation is prohibited where the employee is doing any of the following;
- Invoking rights available to them under the legislation;
- Giving evidence in proceedings under the legislation;
- Threatening to take action under the legislation;
- Opposing an unlawful act of the employer.
There is a presumption in any penalisation claim that the employee acted in good faith.
It is also important to note that an employee is not permitted to recover for penalisation under the Organisation of Working Time legislation and the Unfair Dismissals Acts.
As outlined above, no definition has been provided for “work of a casual nature” in the Act and the Department has stated that it will be a matter for the WRC and the Labour Court to determine on a case-by-case basis whether something is genuinely casual or not. As the WRC and the Labour Court have not had an opportunity as yet to interpret what will be considered to be “genuinely casual” under the Act, it is difficult to advise definitively at the moment that any purported casual arrangement will be upheld as being casual. Many commentators have noted that, in the absence of mutuality of obligation, the work will be considered to be “genuinely casual”. However, the UK’s Employment Appeals Tribunal (“the EAT”) has examined the employment status of casual workers on many occasions and, in one case, highlighted that, even within casual working arrangements, an individual may be considered to be effectively entering into a separate contract of employment on each occasion that an assignment is accepted and in such cases, there may be sufficient mutuality of obligation between the parties to deem the relationship more than casual.
While it remains to be seen how “genuinely casual” will be interpreted by Irish fora, it is likely that they too will be influenced by the mutuality of obligation test. It is important therefore to ensure that, should a casual employee have the option to turn down work, they do not suffer any negative repercussions, for example, by moving to the end of the list or missing a subsequent opportunity to be called up.
The Employment Team in RDJ will be happy to assist you with any of your legal requirements to ensure that you are acting in full compliance with changes brought about by the Act.