The Contract Cleaning JLC published its draft Employment Regulation Order (ERO) for the industry on Wednesday 25 March 2015 and will be inviting submissions on same from interested parties up to and including 15 April 2015. Employers in this industry are strongly advised to make their positions known on the ERO because once it is introduced it will bind any employer that falls within its remit. Peninsula Business Services will be entering its own submission on the ERO and if you wish for Peninsula to put forward your views on your behalf then you may email your views/submission to alan.hickey@peninsula-ie.com.

Background

The area of EROs and REAs has been quite contentious in Ireland in the last number of years with both being rendered unconstitutional in July 2011 and May 2013 respectively. Importantly, it was only those EROs and REAs that were drafted in accordance with the Industrial Relations Act 1946 that were rendered unconstitutional which means that any ERO introduced under the Industrial Relations Act 2012 in respect of any particular industry will be valid and will bind all employers within those industries.

Quick to Act

The Contract Cleaning Industry has always been extremely proactive in respect of JLC discussions and indeed were one of the first industries to meet to discuss a new ERO under the 2012 Act and are the second industry (after Security) to publish a draft ERO. Indeed, when EROs were rendered unconstitutional in July 2011, the Industry was a long way towards formalizing an industry wide REA but this stalled due to the constitutional challenge to those REA agreements also.

Draft Contract Cleaning ERO Review

The new ERO is broadly similar to the previous EROs that were in place up to 2011. There are only two new policies and all other policies have been retained with few changes. The ERO contains the following proposals:

Definitions & Application

• The most obvious change is that the geographical distinction has been removed. Under the previous system there used to be one JLC/ERO for Dublin and a separate JLC/ERO for the rest of Ireland. This was one of the more heavily criticised elements of the old JLC system and indeed was deemed unconstitutional by the High Court in the 2011 case where it was stated that it amounted to “fixing wage rates and conditions of employment … in an arbitrary manner in that certain rates were set out for a geographical area when significantly different and more restrictive rates and conditions of employment applied in an immediate adjoining area without there being any identifiable basis for such discrimination.”

As such, this ERO, if introduced will apply across Ireland.

• The draft ERO is cited as applying to ”the cleaning of premises by companies engaged in whole or in part on the provision of cleaning and janitorial services in establishments such as hospitals, offices, factories, shops, stores, apartment buildings, hotels, airports and similar establishments on a contract basis.”

This is a broader definition than that of the previous ERO which made no reference to apartment buildings, hotels, airports. This extended definition will likely ensure that the ERO applies to a broader range of companies and clarifies any potential grey areas that may have existed under the previous system.

Pay Rates & Holiday Entitlements

• All employees will be entitled to receive minimum remuneration of €9.50 per hour from the date the ERO comes into force with an additional increase to €9.75 per hour from 1^st October 2015. This rate of €9.75 will then remain in force for 12 months, presumably until 30 September 2015.

This rate is in keeping with the previous ERO rate of €9.50 at the time of their demise. The draft ERO is then proposing an increase of €0.25, or 2.6%, as of 1 October 2015. Employers should be cautious with the 12 month time frame however as the ERO is quite vague as to what this means and it does not necessarily mean that the employer can pay less to new employees at that point in time.

• There have been significant changes to the Overtime policy when compared to the previous ERO. Whereas the previous ERO require overtime rates to be paid after 39 hours work, the new ERO provides that employees will only be entitled to overtime rates after 44 hours.

The actual premium overtime rate remains largely unchanged from the previous ERO in that employees will get time and a half for the first four hours overtime (up to 44 hours) and double time thereafter. However, the additional Saturday premium that existed under the old ERO has been removed and as such the above will apply from Monday to Saturday. Employers should be conscious that the maximum weekly working week is 48 hours and as such if employees are regularly attracting double time overtime rates then there is a strong possibility that the employee is regularly working 48 hours or more. This should be closely monitored. That being said, the ERO specifically states that working overtime hours will be deemed voluntary and employees may legitimately opt out of doing so. This would seem to be an example of negotiating give and take as whilst overtime is voluntary, if employees opt to work overtime then they will receive the basic rate of pay up to 44 hours per week. Similar to the previous ERO, there is an additional premium for overtime worked on a Sunday whereby Sunday overtime will be at double time for all hours.

• The annual leave entitlements remain unchanged in terms of normal leave accrual and are as per the old ERO. This approach makes sense as it simply draws on the national minimum requirements. Thus, the proposed ERO is not requiring the employer to afford more additional leave entitlements to employees than they otherwise would have attracted under the Organisation of Working Time Act if there were no ERO in place.

Employers are encouraged to ensure they are applying the correct annual leave entitlement to employees as it is one of those areas where employers can consistently afford the incorrect leave and pay entitlements to employees, which can prove costly should an employee pursue an Organisation of Working Time Act claim.

• There are some changes in respect of Good Friday and Public Holidays Under the old ERO employees were entitled to a day’s holiday or double time or a day off in lieu in respect of Good Friday. Under the proposed ERO, it appears that employees will be entitled to public holiday terms in respect of Good Friday provided (a) they were employed prior to 02^nd August 2012, and/or (b) they are entitled to such a rate in their contract of employment. However, for all other employees Good Friday will just be deemed a normal working day.

In respect of Public Holidays there is one subtle change. Under the old ERO, employees were entitled to public holidays in line with the Organisation of Working Time Act “exclusive of any qualifying number of hours required in that Act”. This latter sentence has been removed from the new ERO in respect of public holidays which now means, for example, that part time employees will be required to have worked 40 hours in the previous 5 weeks in order to attract public holiday rates.

Trade Unions

Similar to the previous ERO, the proposed ERO contains a lot of references to trade unions and protections in respect of same.

• The Deduction of Union Dues policy has also been retained whereby an employer will be required to deduct union dues from an employee’s wages when requested.
• The new ERO contains a brand new provision on Representation Rights. The new ERO states that, where appropriate, an employment contract must outline the name of the recognised trade union. This would not mean that each employer must recognise a trade union but where one is recognised then this must be stated in the employment contract.
• The new ERO makes specific reference to the Bullying / Harassment / Grievance / Disciplinary Procedures which goes a long way towards providing employers with a point of reference for such matters. The ERO also makes reference to the more recent 2012 Harassment Order which ensures that this ERO is current and moving in accordance with legislative developments.

Disciplinary & Grievance Procedures

However, do be mindful that the Code provides guidance only and advices should be sought on any disciplinary or grievance matter.

• The new ERO continues to refer to required Dismissal procedures, and that warning levels will be required but may be bypassed where circumstances require. The ERO also notes that appropriate trade union or fellow employee representation is required at any stage of the disciplinary procedure.

Loss of Site / Potential Redundancies

The proposed ERO contains a lot of policies in the eventuality that an employer anticipates making employees redundant or where the employer is losing a site.

• In respect of losing cleaning contracts, or having to make redundancies, the new ERO has retained a number of important policies. Firstly, the Protection of Employment policy has been retained whereby employers will be required to give all reasonable notice of impending redundancies to the workers concerned. The policy cites the applicable legislation also. It is noted here that employers may face difficulty under the ERO if they know about potential redundancies for some time but fail to inform staff. In such circumstances, an employer may subsequently engage in a fair and legitimate consultation process but the initial failure to inform staff promptly may result in the process being deemed unfair.
• The ERO has also retained an expanded version of the Disclosure of Information Under this, employers are required to provide employees, and their representatives, with advance information of the date that a cleaning contract will be terminated. This information must provided not later than 30 days before the transfer/loss of the contract and this would appear to make sense as it is in keeping with the TUPE Regulations.
• Under the new ERO, employees will “be entitled to request and receive from his/her employer a certificate of service showing the period of their employment and the accrued length of his/her service, once per annum”. This is a brand new provisions that did not exist under the old ERO.

The wording is unclear as to whether the certificate must be requested before the employee can receive it or whether the employer muse give one annually anyway regardless of a specific request being received from the employee. However, it would seem the employees must actually request same. The ERO goes on to state that in the event of employees transferring from an outgoing contractor to an incoming contractor, the outgoing contractor must provide a certificate of service.

Contracts of Employment & Related Terms

• The new ERO, like the previous one, still requires an employer to give specific terms of employment to employees within one month of the commencement of employment. This is more onerous on employers who only have to do so within two months in other industries.

Employers are advised that the terms of employment outlined in the ERO do not meet the requirements of the Terms of Employment (Information) Act, 1994. Thus, if you only give an employee a contract containing the terms set out in the ERO then you are in susceptible to claim from employees under the 1994 Act. As such, employers are encouraged to ensure that their contracts of employment are complaint with the 1994 Act and if they are then you will also have met the requirements of the ERO.

• The new ERO remains unchanged in terms of Minimum Notice and provides no greater entitlement than those set out in primary legislation. However, in respect of fixed term workers, the new ERO does make additional reference to the notice entitlements needing to be in accordance with Fixed Term Worker legislation.
• The new ERO has retained the old policy whereby an employer must notify staff of any change of the company name or address at least five days before the change takes effect.

The ERO provides an additional protection for employers, when compared to the old ERO, in that employees will also be obliged to provide two weeks’ notice of any change in their own personal address.

• The new ERO has retained the Contributions to Revenue policy whereby employers must provide evidence of payments made to Revenue or the Department of Social Protection when requested by the employee.

Additional Benefits

• The Sick Pay Scheme remains unchanged from the previous ERO. Employees will still be required to submit a medical certificate upon the 3^rd day of absence and then on a weekly basis thereafter. Employees will not be entitled to any sick pay benefits for the first 5 days of absence and indeed employees will only receive sick benefits when they submit medical certificates.

Sick benefit remains at 20% of the employee’s basic rate and this will be for 6 weeks in any 12 month rolling period. Employees can opt into this sick pay scheme and if they do so they will be expected to contribute 0.5% of their basic pay rate to the scheme. Employees can choose to opt in or out of the scheme in January of each year.

• The new ERO terms in respect of Maternity Leave remain largely unchanged from the previous system. Employees will not be entitled to any maternity payment and leave entitlements will be in accordance with maternity legislation.

However, under the old ERO employers were obliged to return employees to work “on the same site”. The new ERO provides more flexibility in that it will allow employers to move employees to a different site upon their return from maternity leave where it is not possible to return them to the same site.

• The Death in Service Benefit remains largely unchanged in general. Employees must still have 2 years qualifying service to be entitled to the benefit which remains at €5,000. The only different is that it now applies to all employees up to the age the State pension becomes payable to the employee, whereas previously it was only payable up to the point that the employee turned 65.

It is suggested that this development is fair in the circumstances given the increasingly difficult process of trying to justify retirement policies in general under age discrimination law in addition to the fact that the State pension age is incrementally increasing.

Conclusion

It is noted that the draft ERO is broadly similar to the ERO system that had been in place up to 2011. The only new policies are the Certificate of Service and the Representation Rights policies and as such the ERO will likely be palatable for the majority of employers and employee bodies. The only real major developments are the minimum remuneration rate, which is a 2.6% increase on the 2011 rate, and the overtime rate. All other financial terms remain effectively the same which would lead one to believe that this ERO is offsetting a 2.6% pay increase against a requirement for employees to work up to 44 hours before they can attract overtime rates. Indeed, the majority of policies are very similar to the previous ERO and are simply expanded in some form. Employers are again reminded that the Labour Court are inviting submissions on the ERO from interested parties up to and including 15 April 2015. Employers in this industry are strongly advised to make their positions known on the ERO because once it is introduced it will bind any employer that falls within its remit. Peninsula Business Services will be entering its own submission on the ERO and if you wish for Peninsula to put forward your views on your behalf then you may email your views/submission to alan.hickey@peninsula-ie.com.