LEEF Working Group Report on ‘Collective Bargaining’
Will Pose New Challenges for Private Sector Employers
In 2021, the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar set up the High-Level Group on Collective Bargaining under the auspices of the Labour Employer Economic Forum (LEEF) to review collective bargaining and the industrial relations (IR) landscape in Ireland. At Stratis we welcome the significant effort that has been made by all parties to address some key issues arising from the current collective bargaining and IR landscape. We fully appreciate that reforms in this sensitive area are difficult and complex, and it is notoriously challenging to achieve the right balance which will please all constituencies.
However, it is clear that on this occasion trade unions will be much happier with the outcome, given the new opportunities which the Report recommendations will provide. Many non-union employers, including the majority with progressive and best practice people management practices may wonder why the Irish system of industrial relations is to allow a further front for trade union ‘activism’ through ‘good faith’ engagement, without any concessions on wider systemic reforms?
The final report of the Review Group has a primary focus on issues around collective bargaining in the private sector alone and on efforts to boost collective bargaining coverage through sectoral agreements such as the Joint Labour Committee’s (JLC’s). The voluntarist approach to industrial relations in Ireland, is foundational, and at its core is the premise that the State does not seek to impose a solution on the parties to a dispute but will, where appropriate, assist them in arriving at a solution. Whilst the evolution of individual employment rights and jurisprudence has chipped away at its edifice, the voluntarist ethos has served all parties well for many years.
The Report of the Review Group and its recommendations, should they be legislated for, provide significant new opportunities for trade unions to advance their interests at enterprise and sector levels and will further curtail ‘voluntarism,’ in at least two key respects. It appears that these concessions are to be made available to trade unions without any obvious trade-offs, including on much needed wider reforms of the industrial relations system.
Joint Labour Committees
The first, in relation to the operation of Joint Labour Committees (JLC’s), in the absence of employer nominees to participate in a JLC, will allow the Labour Court to proceed to still draft an Employment Regulation Order (ERO) for consideration by the Minister. It is also proposed that where a JLC fails to adopt proposals following a Labour Court recommendation that additional opportunities be given to employer representatives in the sector to participate and to have the right to be heard.
The operation of the JLC’s and successive reform initiatives has failed to secure the greater involvement of all within these sectors. Whilst we note the range of measures proposed to improve the functioning of JLC’s, the future role and relevance of the JLCs and the capacity to engender employer support for them has also been eroded given the extent of other labour regulation introduced, or pending, which includes paid Statutory Sick Leave and the possible introduction of a Living Wage and Pensions Auto-enrolment.
Against this background, the continued relevance of JLC’s is questionable as the traditional space occupied by JLC’s is being filled by changes in labour market regulation and the adoption of new enforceable rights and labour standards. We can reasonably predict that even if the reforms recommended by the Review Group are introduced, trade unions will still pressure at sectoral level through JLC’s to allow for better terms to be agreed and applied in excess of these new legal minima.
‘Good Faith’ Engagement Will Create New Challenges
The second, in relation to cases where a trade union has organised members in an enterprise, but where the employer does not engage in collective bargaining, proposes the introduction of ‘good faith’ engagement, as an obligation, with enabling procedures which will provide trade unions a recourse to the Labour Court and the opportunity to seek enforcement in the Circuit Court.
The proposal for the introduction of ‘good faith’ engagement is additional to the existing procedural options open to trade unions and their members where they wish to pursue matters of interest to them at the level of the enterprise, where the employer does not engage in collective bargaining, being:
(a) to seek a Labour Court recommendation under S.20 of the Industrial Relations Act, 1969 or,
(b) to invoke the procedures under the Industrial Relations (Amendment) Acts 2002-2015 under the so called ‘right to bargain’ legislation.
The LEEF Report helpfully concentrates its efforts on means to facilitate and promote good faith ‘engagement’ rather than ‘bargaining’ whilst at the same time will not compel collective bargaining on the employer or require the parties to reach any outcomes or agreement.
Yet in employment relations the phrase “good faith” is often linked to the word “bargaining” and indeed to obligations on employers to engage with Trade Unions or to facilitate employees having access to external representatives. It leads to an articulation of the circumstances when ‘good faith’ must be practiced, where good faith is required and the consequences of non-compliance with ‘good faith obligations.
The Report has not acknowledged that the pursuit of collective bargaining for a minority or even a small group of workers impacts everyone in the workforce and the view of the totality of non-union workers are all too often not properly considered in any voluntary engagement or dispute resolution process, particularly where they are a majority of the workforce as a whole or even as part of the grade, group, or category of workers at issue but where only a minority have chosen to pursue issues. Similar issues are likely to arise in the context of ‘good faith’ engagement.
This shift towards ‘good faith’ engagement would in our view have been best supported by way of non-statutory guidance to the parties through the development of a voluntary code of practice on the issue for this purpose developed with the support of the WRC. An early articulation of such guidance has helpfully been set out in the LEEF Report. However, to give effect to the Group’s recommendation, given the prospect for a determination by the Labour Court and an enforcement order by the Circuit Court, it will instead require primary legislation.
The direction of travel now being contemplated based on these design principles, suggest that voluntarism is increasingly for one side of industry and in its eroded state only applies in the public sector. However, we should not be adding to the obligations on employers in the private sector and to have these as ‘add-ons’ to an otherwise ‘voluntarist’ IR system where trade unions remain free to pursue issues in other parts of the private and public sectors without effective oversight or compliance and under outdated rules on the conduct of industrial relations and industrial action.
Noting the important distinction between ‘engagement’ and ‘bargaining’ one might also speculate as to whether the introduction of ‘good faith engagement’ will in time be seen as a staging post in the pursuit by trade unions of additional commitments around ‘good faith bargaining’?
We are now seeing changes being considered to collective bargaining which will increase the level of compulsion on employers who practice direct engagement in the private sector and to have these bolted on to an otherwise ‘voluntarist’ IR system. These matters cannot be disconnected from how our dispute resolution bodies function and how trade disputes are regulated which unfortunately the Group has not addressed.
Whilst the Group has noted the modest thresholds under the Employees (Information and Consultation) Act 2006, the Group has avoided setting a strict percentage or numerical threshold for the level of membership required to trigger such an obligation but suggests this could be one that is ‘meaningful’ with the Labour Court having a role through its recommendations can determine the issue or give guidance. It seems likely that in the context of the introduction and enablement of ‘good faith’ engagement, a low bar will be set which will be a real concern to employers.
Part of the rationale for the proposed adoption of this ‘good faith’ principle arises from the Draft EU Directive on Adequate Minimum Wages which will force Member States to provide a framework for collective bargaining and establish an action plan to promote collective bargaining, if, as would be the case in Ireland, at least 80% of workers are not covered by collective agreements. It would appear that the reforms being contemplated to the JLC system are designed to significantly boost collective bargaining coverage with this objective in mind.
However, it is our understanding that the percentage (80%) of collective bargaining coverage is not an objective, but a threshold which would trigger the obligation to provide for a framework of enabling conditions and an action plan to promote collective bargaining. The Report acknowledges that any action plan “should set out a clear timeline and concrete measures to progressively increase the rate of collective bargaining coverage”. Whilst the LEEF Report may be intended to form an important and significant input to that ‘action plan’, there is still the prospect that in finalising that plan, that further ‘concrete measures’ in this sensitive area could be considered.
It is concerning that the principle of subsidiarity and the autonomy of collective bargaining arrangements is being tested as the EU has no competence to introduce a binding legal instrument on minimum wage levels or on collective bargaining and the representation of workers and employers’ interests.
It is also striking that the measures being proposed in the LEEF Report is drawing on the requirements of the Draft EU Directive on Adequate Minimum Wages to justify systemic changes to “improve the functioning of collective bargaining” generally with implications for all employers and not just in respect of “minimum wages”.
The mechanism of achieving further EU regulation through the focus on adequacy of minimum wages by ensuring commitments on the promotion of collective bargaining is intended to bring about an outcome where such regulation would supersede the Irish Constitution.
In Ireland, we have many examples of multinational employers who have a direct engagement model and are market leaders in their approach to remuneration. Whilst those multinationals, may have little to fear from any policy objective of ensuring minimum wage adequacy, they do have concerns arising from the draft Directive about efforts to promote collective bargaining generally. These will be heightened given the outcome to the LEEF Review, and the practical implications of the proposal to introduce ‘good faith’ engagement which could have significant implications for our IR system and the operation of some direct engagement models.
Notwithstanding the recommendations of the LEEF Review, a challenging legislative process lies ahead to give effect to the necessary changes which have been outlined. These will be followed carefully by all parties as the detail of many ‘implementation’ issues arise to be considered.
Diversity of Engagement Models Must be Respected
The important role and function of trade unions in society and at enterprise level is fully acknowledged through voluntary collective bargaining. However, our workplace relations system needs to acknowledge that where employers are implementing progressive HR practices with market based and competitive remuneration, they should not face a default outcome from third party processes to adopt a collective model of representation. There is real concern that unless there are proper safeguards for employers, the introduction of ‘good faith’ engagement as a new procedural option for trade unions could be abused and lead to a significant dislocation of sophisticated direct engagement models including many in the FDI sector which have been a cornerstone of enabling investment in Ireland, building confidence, and creating certainty in a sites ability to deliver on its commitments to customers.
The form of engagement at enterprise level must continue to reflect the diversity of requirements, culture and structures that already exist, whether through information and consultation mechanisms that are determined locally or through voluntarily agreed collective bargaining arrangements between employers and employees and trade unions where they represent such employees.
Current developments suggest that trade unions wish to continue to practice ‘voluntarism’ in areas where they are strongest and create a highly regulated space in areas of the private sector where employers could be compelled to engage in collective bargaining and now to engage in ‘good faith’ with a trade union, even in the absence of collective bargaining.
Wider IR Reforms are Needed.
The Group has made a number of welcome proposals for training supports in the practice of collective bargaining, has recommended the development of a Code of Best Practice on Enterprise Collective Bargaining, and has noted that its recommendations “should not be considered as the end of the process, but as one element of what will be ongoing efforts to improve the system of industrial relations in Ireland…”.
However, one of the most striking features of the final report of the Group published on 05.10.22, is the absence of any concrete reforms of the wider industrial relations system. These include ensuring respect for diverse models of engagement, a need to update the rules on balloting & industrial action, the status of pre-entry closed shops, the status of Labour Court Recommendations, and disputes in essential services, amongst others.
At Stratis, we believe that much more work remains to be done, building on the work of the LEEF Report, which it acknowledges “should not be considered as the end of the process”, to show to employers, that we are finally making progress to produce a balanced outcome which will ensure that our IR system is more reflective of the modern needs of employers and workers.
Note: A more detailed analysis of the strategic employment relations implications arising from the ‘Report of the High-Level Working Group on Collective Bargaining’ is available on a strictly confidential basis to Stratis clients.
Brendan McGinty | Managing Partner
‘Strategic Employment Relations’
T: +353 (0) 1 2166302
M: +353 (0) 87 2433038
Disclaimer: The information in this article is for practical guidance only and does not constitute legal or case specific advice. The answers to specific situations will vary depending on the circumstances of each case. This is not a substitute for specific professional advice relevant to individual circumstances facing your business.