Employment (Miscellaneous Provisions) Bill 2017 - a game changer for employers?
The Employment (Miscellaneous Provisions) Bill 2017 was recently passed by Dáil Éireann and, depending on progress made before Seanad Éireann in the autumn, it could be enacted by the end of the year. The Bill forms part of the Government's proposals to tackle zero hour contracts and uncertain working conditions.
The Bill's proposed changes could be a game changer for employers in sectors where the use of flexible working arrangements is widespread, such as retail, tourism and hospitality. However, as currently drafted, the Bill goes far beyond protecting employees with uncertain working conditions. For that reason, it is one that every employer needs to be aware of.
One of the most controversial aspects of the Bill is the potential for criminal liability if an employer incorrectly designates an employee as 'self-employed'. However, it remains to be seen whether this provision will survive legislative scrutiny by the Seanad.
In summary, the current draft Bill:
- requires employers to provide new hires with a written statement of core terms of employment within five days of starting employment
- bans the use of 'zero hour' contracts except in very limited circumstances
- introduces the concept of an entitlement to 'banded hours'
- provides for a right to a minimum payment where an employee is required to be available for work but is not actually called into work
- makes it a criminal offence for employers to incorrectly designate employees as 'self-employed'
Here we focus on two key elements: the banded hours provisions, and the introduction of the statutory obligation to correctly designate employees. For information on the Bill's headline provisions, read our previous alerter.
The Bill provides employees with a statutory right to assert an entitlement to a banded hours contract where their contractual working hours in the past 12 months do not reflect their actual working hours. Following such a request, an employer must place an employee on a banded hours contract within four weeks unless:
- no evidence is produced to support the request
- there have been significant adverse changes to the employer's business during or after the 12 month period and/or
- the average hours worked in the 12 month period were skewed by a temporary situation which no longer exists
The Bill provides for eight different bands, ranging from 3-6 hours per week to 36+ hours per week. Once an employee is placed on a particular band, they are entitled to work an average of those banded hours every week for the next 12 months.
While the Bill allows an employee to bring a complaint to the Workplace Relations Commission (WRC) for breach of the banded hours provision, the WRC will not have the power to award compensation in respect of such a breach. The WRC can however instruct the employer to comply with the banded hours provisions.
Designation of Employees
A particularly controversial aspect of the draft Bill is the possibility that an employer (and senior management) could be held criminally liable if they incorrectly categorise an employee as 'self-employed'. The Bill provides for fines of up to €5,000 and/or imprisonment for up to 12 months for such infringements.
Given the difficulties that the Revenue Commissioners, the Department of Employment Affairs and Social Protection and the Courts often face in correctly determining the employment status of individuals, the requirement for employers to correctly designate employees or face criminal prosecution is an extremely onerous one to say the least.
The good news is that the Bill (at least partially) recognises these difficulties and provides a defence to an employer where it can prove that it exercised due diligence and took reasonable precautions when categorising an employee's status.
Next steps for employers
The Bill provides welcome protection for employees that are employed in precarious jobs. However, certain flexible working arrangements, which can suit both employers and employees, may be the collateral damage of the Bill's enactment.
Given that this Bill is heading towards the legislative finish line, we recommend that employers take a number of pro-active steps now:
- Review recruitment processes and ensure that the written statement of the five core terms of employment can issue within five days of a new employee starting
- Where zero hours contracts are used, put a plan in place to discontinue them and assess whether there is scope to avail of the limited exceptions for using them in the future
- Audit contracts of employment and identify groups of employees who frequently work in excess of their contracted weekly working hours
- Review the factual reality of engagements with self-employed individuals and, where necessary, take professional advice on whether they are correctly classified as 'self-employed' from a legal perspective
The Bill has been the focus of significant commentary following an extensive public consultation process and input from both IBEC and ICTU. For now, the Bill remains a work in progress and we expect further amendments will be made as the Bill is debated by the Seanad in the autumn.
We will keep an eye on the progress of this Bill and keep you updated on any developments.
Date published: 26 July 2018