Owner Manager

IBEC calls for radical overhaul of wage system

10.06.2009
Employers group IBEC has called for a radical overhaul of the system that determines the pay and conditions for over 170,000 Irish workers.

According to IBEC, theJoint Labour Committee (JLC) system is out of date and totally inappropriate for the current economic circumstances.

The purpose of the JLC system is to regulate conditions of employment and set minimum rates of pay for employees in certain sectors of employment.

However, IBEC said that the rationale for the JLC system largely disappeared in 2000 with the introduction of the national minimum wage, and that the system is now acting as barrier to employment.

The organisation claimed that the JLC system sets even higher legally enforceable minimum pay and conditions in specific industries, such as catering, contract cleaning and the hotel sector.

"It is time to reform the outdated way we set pay and conditions in these industries. Some of these systems were set up in the early part of the last century and are no longer appropriate or necessary,” said IBEC director of Industrial Relations, Brendan McGinty.

"The system is not flexible enough to protect jobs and enterprise, especially in the face of the worst economic downturn since the foundation of the state. Unsustainable wage levels and unduly restrictive practices make it too difficult for us to compete with other countries.”

The UK equivalent of the JLC system, the Wage Council mechanism, was abolished in 1993 and has not been replaced, McGinty said.

"For enterprises and employees covered by JLCs, there is no provision for an employer who cannot afford the set rate of pay to obtain any exception. This is in contrast to the National Minimum Wage Act 2000, which contains a mechanism for exception from the minimum wage where the employer is in financial difficulty."

Employers who have unwittingly found themselves with a liability to implement terms and conditions set by the JLC system, often due to lack of awareness of premium payments, may also now be faced with massive bills for arrears, McGinty said.

If employers are to be persuaded to support a JLC system, there are minimum reforms that should be introduced immediately, he said.

"Firstly, there should be an established means by which an employer can apply to the Labour Court for a temporary exemption from an Employment Regulation Order on foot of financial difficulty.

"Secondly, the retrospection period for claims should be brought into line with the limitation periods under the Payment of Wages Act 1991 – namely a maximum of one year.

"Thirdly, instead of chairpersons who vote, JLCs should be ‘chaired’ by professional industrial relations officers from the Labour Relations Commission who would be non-voting and conciliate between employer and employee members to achieve true agreement, not the sort of unrealistic imposed orders we have come to expect."

IBEC is holding its Employment Law Conference in Dublin today.