Jumping on the bandwagon – New Irish law introduced to provide security and predictability of working hours for employees on insecure contracts and those working variable hours

The Act will make various changes to existing employment legislation, including the Terms of Employment (Information) Act 1994 (“the 1994 Act”), the Organisation of Working Time Act 1997 (“the OWTA”), the Unfair Dismissals Act 1977 (“the UD Act”), the Workplace Relations Act 2015 and the National Minimum Wage Act 2000. The Act’s stated aim is to stabilise working conditions by improving the “security and predictability of working hours for employees on insecure contracts and those working variable hours”. The key measures included in the Act to achieve this are summarised below.

Changes to Organisation of Working Time Act

The Act makes two significant amendments to the OWTA that will have a big impact on employers, especially those who offer flexible hours and/or zero-hour contracts. These will affect, in particular, the roster work practices operated in industries such as retail, healthcare, tourism, hospitality, education and fast food.

Prohibition of zero-hour contracts and introduction of minimum payments

Zero-hour contracts will be prohibited, except for genuine casual work, emergency cover or short-term relief absence. It remains to be seen what will be deemed as genuinely “casual” for these purposes, and it is likely this will be tested through case law.

Zero-hour contracts should be distinguished from “if and when” arrangements popular in the gig economy where there is only an expectation (rather than an obligation) to be available to work. These provisions will also not apply to employees who are required to make themselves available on an “on-call” basis and are compensated through an on-call premium.

Employers will have to pay minimum payments to employees where they are expected to be available during a particular period and are not provided with work, or where they are called into work and sent home without completing the full period they were expected to be available. If an employer fails to provide an employee with work that amounts to at least 25% of their ordinarily required working time, the employee will be entitled to the lesser of either 25% of their hours or 15 hours. Importantly, in these instances, the minimum payment is calculated at three times the national minimum hourly rate (currently €9.80).

Banded-hour contracts

Banded-hour contracts will now be available to employees whose actual hours do not reflect their contracted hours. This is assessed over a 12-month reference period between the date of commencement of employment and the date the individual requests to be put in a band of hours. Employees will be able to make a written request to be placed in a band of weekly working hours, based on their average number of hours worked per week. The employer must then place the employee in an appropriate band not later than four weeks from the date of request.

The bands are:

A - from three hours or more to less than six hours

B - from six hours or more to less than 11 hours

C - from 11 hours or more to less than 16 hours

D - from 16 hours or more to less than 21 hours

E - from 21 hours or more to less than 26 hours

F - from 26 hours or more to less than 31 hours

G - from 31 hours or more to less than 36 hours

H - 36 hours or more.

An employee placed on a band of weekly working hours will then work hours, the average of which will fall within that band, for a period of 12 months following the placement.

If an employee considers their employer has failed to place them into the correct band following a request, or that the employer has unreasonably refused their request, they can bring a complaint to the Workplace Relations Commission (“WRC”). An adjudication officer of the WRC can order that the employee be placed in the correct band, but there is no award of compensation.

An employer may refuse to place an employee into the band requested in the following circumstances:

• where there is no evidence to support the claim in relation to the hours worked in the reference period;
• where there has been significant adverse changes to the business, profession or occupation carried on by the employer during or after the reference period; or
• in circumstances where the average of the hours worked by the employee during the reference period was affected by a temporary situation that no longer exists.

Anti-penalisation

The Act includes anti penalisation provisions for employees who invoke their rights under the legislation. An employee who claims to have been penalised for invoking rights under these new provisions of the OWTA can bring a claim to the WRC and be awarded compensation of up to two years' remuneration.

Changes to Terms of Employment Act

Five core terms

Employers will be obliged to provide five core terms of employment to employees within five days of commencing employment:

• names of employer and employee
• address of employer
• expected duration of employment if a temporary contract, or end-date if a fixed-term contact
• the rate/method of calculating pay and pay reference period for the purposes of the National Minimum Wage Act 2000
• the number of hours that the employer "reasonably expects" the employee to work on a normal working day and normal working week.

This new obligation does not remove all the previous information requirements under the 1994 Act, many of which will still need to be incorporated into employment contracts and provided within two months of commencement. A practical way for employers to comply with the new obligation is to review their current offer letter and ensure the five core terms are included when issuing it to candidates. Alternatively, contracts of employment incorporating the existing information requirements under the 1994 Act and the new requirements could be issued before commencement of employment or within five days afterwards.

Employees can bring a claim to the WRC for up to four weeks’ remuneration if an employer fails to provide these core terms within five days. Failure to do so within one month or the provision of false or misleading information is a criminal offence punishable by up to 12 months imprisonment and/or a fine of up to €5,000. Where an offence is committed under the 1994 Act, liability does not stop with the employer. A director, manager, secretary or officer of the company can also face liability where they have acted with the employer’s consent or connivance.

Anti-penalisation

The Act introduces anti penalisation provisions for employees who invoke their rights under the 1994 Act. An employee who is penalised for doing so can bring a claim to the WRC and be awarded compensation of up to two years' remuneration.

Power to subpoena

Another reform under the Act is an amendment to the UD Act to create a new power for WRC adjudication officers. They will be able, upon notice, to require a person to attend the WRC to give evidence in proceedings and to produce any document in their possession, custody or control that relates to any matter to which the proceedings relate. Such witnesses will have the same immunities and privileges as witnesses in proceedings before the High Court. If a witness fails or refuses to comply with the notice, they will commit an offence and be liable to summary conviction and a fine of up to €500. 

This is an interesting addition to WRC practice and procedure for two main reasons:

• Failure to abide by current WRC practice and procedure can have little or no repercussion. There are no rules applicable to WRC hearings equivalent to those that apply in court proceedings. This means there is no consensus on rules, practices or procedures that legal practitioners should abide by, and those that are in place are often ignored.
• The non-adversarial dispute resolution forum the WRC promotes for hearings can lack procedural clarity, especially when it comes to advocacy. Advocates sometimes arrive on the day of hearing unsure whether they will have an opportunity to introduce oral evidence or cross-examine witnesses. There are no rules in relation to leading questions, or whether witnesses are permitted to sit in on the hearing before and after they provide evidence. How a hearing is run is dictated by the adjudication officer rather than any preconceived rules, which can impact on natural justice.

Any move towards greater procedural clarity, however small, is therefore welcome.

Criticism of the Act

One aspect of the Act that IBEC has criticised is its over-reliance on criminal prosecution as a means of enforcing Irish employment law - a cause of considerable concern for employers, who are providing employment yet potentially exposed to the risk of custodial sentences.

This is especially unpalatable bearing in mind that many of the Act’s reforms will impact the retail and hospitality sectors. The retail sector accounts for 14% of the Irish workforce and is already struggling on the high street with competition from online shopping retailers. The hospitality sector has recently seen an increase of their VAT rate from 9% to 13.5%. Both sectors are affected by minimum wage increases and will not welcome the increased costs of wages for employees who were not required to attend work. Moreover, due to the seasonal requirements of these sectors, neither will welcome the restrictions on employers’ ability to use flexible working arrangements where to do so could attract significant payments to employees who are not ultimately required to work.

Tips for employers jumping on the bandwagon

In the time remaining before the Act commences, employers should consider the following:

• Review procedures for new hires. Offer letters should be reviewed and amended to include the five core terms or, alternatively, contracts of employment should be issued within five days of commencement to include the five core terms. (This will depend on the employer’s on-boarding procedures and administrative resources.)
• Begin planning to ensure current practices comply with the Act in relation to casual workers. Audit current use of casual workers and identify high-risk areas.
• Review contractual arrangements and form a view as to whether zero-hour contracts can be justified or practices need to be changed.
• Ensure that time-keeping records and rosters keep adequate and comprehensive details of hours worked by employees, in case of any requests to move to banded-hour contracts in accordance with the Act. In addition, make an assessment of whether contractual hours match actual hours worked.

Síobhra Rush and Linda Hynes of Lewis Silkin Ireland will be discussing the new Act at an event hosted by Legal Island on 27 February 2019.