Guide to Labour Law

in Ireland

Corporate Banking

Ireland is a very attractive location to do business Ireland is a very attractive location to do

business, and a key strength is its highly educated, flexible and productive workforce.Ireland scores well internationally for ease of doing business. The country’s business environment supports entrepreneurship, rewards innovation, removes unnecessary regulatory costs, and increases investment in education and skills.

There is wide-ranging employment protection in place in Ireland, driven by Irish and European legislation. Companies setting up in Ireland need to take account of the legal requirements at the beginning, end and throughout the employment relationship. There are legal requirements to provide contracts of employment, have specific policies and procedures in place, and comply with various rest and leave entitlements.

This guide highlights the key foundations which employers investing in Ireland have to take into account to reduce risks, remain compliant and build an engaged workforce.

Bank of Ireland disclaimerThis guide has been prepared by Ibec for Bank of Ireland and is intended to provide a general overview of labour law in Ireland. It is provided wholly without liability or responsibility on the part of Bank of Ireland.December 2015.

ContentsContracts of Employment 1

Employment Permits 2

Atypical Working 3

Pay & Reward 4

Working Time 5

Annual Leave & Public Holidays 6

Protective Leave 7

Health & Safety 8

Employee Consultation & Trade Unions 9

Ending the Employment Relationship 10

Sources of Comparative Information 11

About the Author 12

Contracts of EmploymentUnder the Terms of Employment (Information) Act 1994 to 2012 employers must provide new employees with a written statement or contract of their terms and conditions of employment, within two months of starting employment.

The statement must include the following information:

This written statement should be signed and dated by both parties. In practice, many employers choose to include other terms, such as probationary period, confidentiality clause, flexibility clause, health and safety policy, non-compete clause and reference to key policies such as dignity at work, disciplinary and grievance policies.

A copy of this statement should be retained by the employer during the period of the employee’s employment and for a period of 1 year thereafter.

Where changes to the terms of employment are made, the employer should notify an employee in writing of the nature and date of any change no later than 1 month after the change takes effect.

Employers are also obliged, within 28 days of entering a contract of employment, to give the employee a written statement of the dismissal procedure. The procedure should, as a minimum, indicate the type of offences for which an employee may be dismissed, undertake to give verbal and/or written warnings as appropriate, and warn of disciplinary sanctions.

• full names of the employer and the employee;

• full address of the employer;• place of work;• nature of work;• commencement date of

employment;• duration of the contract, either

fixed or permanent;• rate or method of calculation of

remuneration and pay reference period;

• entitlement for certain employees to request a written statement of their average hourly rate of a given pay reference period;

• payment intervals, eg, weekly, monthly;

• annual leave and other paid leave entitlements;

• hours of work (including overtime);

• details of rest periods and breaks;

• sick leave and pension arrangements, where applicable;

• notice requirements;• reference to any collective

agreements or employment regulation order which apply and where the employee may obtain a copy of such agreement or order.

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Employment Permits

An employer does not need a permit to employ staff who have an Irish or EU passport or who are from the wider EEA area. Employment permits can be issued to employ non-EEA nationals where there are identified skills shortages and employers can demonstrate that the demand for labour cannot be met within Ireland or the EEA. These strategic skills/labour shortages are in designated occupations in key economic sectors such as healthcare, information technology and financial services.

There is currently 9 different types of employment permits however the four that are referred to here are probably most relevant. Permits are issued for two years in the first instance. The type of permit applied for currently depends on salary and occupation. Intra-company transfer permits are also available to allow for the temporary transfer of employees between affiliated foreign and Irish companies.

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There have been administrative changes to the permits process, effective from the 12th October 2015 which were brought in to streamline the process.

Salary Range Eligibility

Over €60,000 Permit available, with some exceptions where contrary to public interest or deemed ineligible(e.g. administrative or operator categories).

€30,000 to €59,999 Permit available for specific high/critical skills (listed on www.djei.ie) or where a labour market test has been carried out and an EEA candidate has not been found.

Less than €30,000 Permit granted only in exceptional circumstances.

Temporary employees• The Protection of Employees (Fixed-Term Work) Act

2003 covers all employees who have a contract of employment, where the end of the temporary contract is determined by an objective condition such as the arrival of a specific date, or completion of a specific task, or occurrence of a specific event.

• A fixed-term employee cannot, in respect of remuneration and conditions of employment, be treated in a less favourable manner than a comparable permanent employee, unless such treatment can be justified on objective grounds.

• Once a fixed-term employee has been engaged on two or more fixed-term contracts, the aggregate duration may not exceed four years.

• Where an employer proposes to renew a fixed-term contract, the employee must be informed in writing of the objective grounds justifying the renewal and explaining why a contract of indefinite duration is not being offered.

Part-time employees• The Protection of Employees (Part-

Time Work) Act 2001 covers all part-time employees, whose normal hours of work are less than those of comparable full-time employees.

• A part-time employee cannot, in respect of remuneration and conditions of employment be treated in a less favourable manner than a comparable full-time employee, unless such treatment can be justified on objective grounds. Conditions of employment are applied on a pro-rata basis.

• Employers are not required to provide employees with part-time working but are obliged to have a procedure in place to evaluate applications for part-time working.

Temporary agency employees• All temporary employees hired by an

agency and working on client sites are covered by the Protection of Employees (Temporary Agency Work) Act 2012.

• Temporary agency workers are entitled to receive the same basic working and employment conditions as those he or she would have received if recruited directly by the hirer to do similar work.

• Temporary agency workers are entitled to receive equal access to collective facilities (such as crèche, canteen and transport services) and the right to have direct employment opportunities advertised to them on the same basis as direct recruits.

Atypical WorkingIrish employment legislation protects atypical workers, for example those on fixed-term or part-time contracts or who are agency workers, guaranteeing them some comparable basic working and employment conditions as permanent full-time employees.

There is specific legislation that provides that these employees must not be treated in respect of their remuneration and conditions of employment in a less favourable manner than comparable full-time employees, solely on the basis of their employment status.

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Pay & Reward• The National Minimum Wage

Act 2000-2015 provides for a statutory minimum wage for an employee working under a contract of employment. The National minimum wage has increased to €9.15 with effect from 1st January 2016. A reduced rate may be applicable to employees under the age of 18, job entrants in their first employment after reaching 18, and to trainees these rates are as a % of the National minimum wage therefore they will also increase from 1st January 2016

• There are a limited number of EROs, which stipulate minimum terms and conditions in certain sectors.

• All employees are entitled to a written statement of earnings and employers cannot make deductions from wages without prior authorisation, except by statute.

A payslip must show:

• the gross amount of wages payable;

• any deductions from the gross amount.

• There is no legal requirement for employers in Ireland to provide sick pay, life/health insurance cover or to make pension contributions (although employees must, at a minimum, have access to Personal Retirement Savings Accounts). Many employers provide these benefits to their staff as part of their corporate reward strategy.

• The payment of income tax and levies is highly regulated in Ireland. Of particular benefit to multinational companies is the Special Assignee Relief Programme. This provides for income tax relief on a proportion of income earned by employees who are assigned by their employer to come to work in Ireland between 2015 to 2017.

Wage rates are subject to a national minimum hourly rate.

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Working Time

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In line with European Directives, working hours are regulated in Ireland under the Organisation of Working Time Act 1997, providing daily and weekly limits on hours worked.

• On a daily basis, employees should not be required to work any more than 4.5 hours without being entitled to a minimum of a 15-minute rest break, or work six hours without being entitled to a 30-minute rest break in total.

• In addition, there is a daily requirement to have 11 consecutive hours rest within every 24 hours.

• On a weekly basis, there is a requirement to have 24 consecutive hours within every 7 days, to be preceded by the 11 hour daily break.

• Maximum weekly working hours is limited by law to 48 hours. The 48 hours may be averaged over a number of months, with four months being the basic reference period for most employments.

• Further restrictions apply to the employment of young persons under 18 years of age.

Working time legislation also details the records that must be kept by an employer to show compliance in the event of an inspection. Records must include employee details, contracts, the days and hours worked in each week by each employee, evidence of paid leave, etc. Also rest/breaks and annual leave taken.

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Annual Leave & Public Holidays

Every employee has a legal entitlement to benefit from paid annual leave and public holidays under the Organisation of Working Time Act 1997. Entitlements under Irish law are comparable to European practice, and greater than US norms.

Annual leaveA full-time employee is entitled to annual leave equivalent to four working weeks, and this legal entitlement is pro-rated for part-time employees. An employee cannot be paid in lieu of their annual leave entitlement, except on termination of employment and pay for their leave has to include any regular bonus or allowance, but excludes overtime pay.

Periods that are included in the calculation of annual leave entitlement include maternity and adoptive leave, parental leave, carer’s leave (first 13 weeks) and time spent on annual leave itself. As of 1st August those on certified sick leave are entitled to accrue statutory annual leave.

Public holidaysEmployee has to have worked 40 hours in 5 weeks ending on the day of the public holiday. All employees are entitled to benefit from nine public holidays each year. These days are set out in the legislation and an employer can determine one of the following ways to provide the benefit:

• a paid day off on the day; or

• a paid day off within a month; or

• an extra day’s annual leave; or

• an additional day’s pay.

Photo courtesy Fáilte Ireland

Protective LeaveUnder Irish law there are a number of protective leaves available to eligible employees. During any period of protective leave, an employee’s statutory and contractual rights are protected, except the right to remuneration. The most common form of protective leave taken by employees is maternity leave. There is also legislation to provide for adoptive leave, parental leave, force majeure leave and carer’s leave. In Budget 2016, Government introduced paternity leave for fathers with new legislation being implemented in 2016.

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Maternity leave

Employees’ statutory and contractual rights, with the exception of remuneration, are protected under the Maternity Protection Acts 1994 and 2004. During any period of leave or time off under the Acts, an employee remains in the employment of the employer.

Under the Acts, employees are entitled to:• 26 weeks of maternity leave;

• the option to avail of up to 16 weeks additional maternity leave;

• the accrual of annual leave and public holidays occurring during maternity leave and additional maternity leave;

• paid time off to attend related medical, ante-natal and post-natal appointments and time off (both parents) to attend certain ante-natal classes. Father only has a once off entitlement to the last 2 classes before the birth;

• either breastfeeding breaks in the workplace or a reduction to working hours without loss of pay for breastfeeding mothers, for up to 26 weeks after confinement.

An employee may be entitled to a social welfare benefit during maternity leave but not during the 16 weeks additional maternity leave period. The employer is not obliged to pay the employee during maternity leave

or additional maternity leave, though a proportion of employers provide a top-up payment during or on return from maternity leave.

There are also specified notification procedures with which employees must comply. Employees are entitled to return to the same job, under the same contract of employment.

The Act also provides a right, in the case of fathers to the balance of the maternity leave or additional maternity leave where the mother dies on maternity leave or additional maternity leave.

Adoptive leaveUnder the Adoptive Leave Acts 1995 and 2005, adopting mothers and sole male adopters have similar entitlements and protections surrounding the adoption of a child to those provided under maternity legislation. The overall number of weeks leave is shorter, at 24 weeks adoptive leave and up to 16 weeks additional adoptive leave.

Carer’s leaveThe Carer’s Leave Act 2001 entitles employees to take up to 104 weeks of carer’s leave to provide fulltime care and attention to a relevant person (a care recipient who needs continual supervision / assistance). Employees must have one year’s continuous service and applications have to be made to the Department of Social Protection who decide whether the employee is entitled to carer’s leave.

Parental leaveParents may take up to 18 weeks unpaid parental leave for each child or 16 if the child has a disability or long term illness before the child reaches eight years of age under the Parental Leave Acts 1998 to 2006. The leave may be taken as one period or in two separate blocks of a minimum of six weeks each. By agreement with the employer the leave may be broken up over a period of time, into individual days, weeks or hours.

Need one years continuous service. Employee with more than 3 months service entitled to 1 week parental leave per month they have worked

There are specified notification procedures laid out for both employees and employers. Employees are entitled to return to the same job, under the same contract of employment or under conditions no less favourable than would have applied if there had been no absence from work.

Employees also have an entitlement to force majeure leave, leave with pay for urgent family reasons owing to the illness/injury of an immediate family member, where the presence of the employee is indispensable. The leave is up to a maximum of three paid days within any 12 consecutive months, or five paid days within any 36 consecutive months.

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Health & Safety

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According to the Safety, Health and Welfare at Work Act 2005 employers are required to have a safety statement, setting out their policy and the means they are taking to ensure the health and safety of employees and others affected by their operations. This is an important responsibility on which employers need expert input. There are significant penalties for breaches of health and safety legislation with up to two years in jail and/or a fine of up to €3 million.

Employers are responsible, in so far as is reasonably practicable, for:

Employers are required to identify the hazards of the workplace and to have a written risk assessment of the risks to employees’ health and safety.

The legislation places considerable emphasis on consultation and representation and provides for employees to select and appoint a safety representative. The responsibilities of employees to maintain a healthy and safe working environment are also laid out in the Act.

• providing safe premises;

• systems of work that are planned, organised, performed and maintained in a safe manner;

• safe means of access to and from the workplace;

• safe plant and equipment;

• information, training and instruction as is necessary to ensure safety and health at work;

• suitable protective clothing or equipment;

• facilities for the welfare of employees at work;

• plans to be followed in an emergency or in case of serious danger;

• a competent person charged with the responsibility of ensuring the safety and health of employees.

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Employee Consultation & Trade UnionsEmployee consultationThe Employees (Provision of Information and Consultation) Act 2006 provides a general framework for informing and consulting employees. An employer may opt to do nothing but the employer is liable under the Act if requested by a certain threshold of employees to commence negotiation on an information and consultation agreement.

In addition the Transnational Information and Consultation Act 1996 covers undertakings with at least 1,000 employees within EU Member States and a minimum of 150 employees in at least two Member States. This Act established a right for employees to be informed and consulted on the transnational affairs of the business and allows for an exchange of views on these issues.

Trade unionsUnder Irish law employees may join a trade union of their own free will and choice. Despite this, there is no corresponding mandatory obligation imposed on an employer to recognise the trade union. Nonetheless, comprehensive industrial relations machinery and third party institutions exist with the aim of facilitating the voluntarism approach to industrial relations prevalent in Ireland. The Industrial Relations Acts 1946-2015 now regulate this predominantly voluntarist system. Dispute resolution services exist in the guise of the Labour Relations Commission and, in case of escalation, the Workplace Relations Commission.

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The termination of the employment relationship is highly regulated in Ireland. Employers must comply with notice arrangements, fair discipline and dismissal procedures, and strict obligations in relation to making jobs redundant. Employees have access to the State’s third party dispute resolution institutions to seek redress if they believe they have been unfairly dismissed.

Minimum noticeThe Minimum Notice and Terms of Employment Acts 1973 to 2005 lays down the minimum period of notice to which an employee is entitled depending on his or her length of service. This starts at 1 week’s notice from 13 weeks - 2 years service and goes up to 8 weeks notice for 15 or more year’s service. Unless the employment contract has stipulated otherwise, the employer is entitled to one week’s notice from the employee.

Where a contract of employment provides for a longer period of notice than provided for under the above Acts, the parties are bound by that longer period. Both parties may exercise their right to waive the notice period or to accept payment in lieu.

RedundancyUnder the Redundancy Payments Acts 1967 - 2014 an employer must pay employees, whose positions are made redundant, a statutory lump sum once they have at least 104 weeks service. The statutory lump sum is calculated as two weeks’ pay per year of service plus one week’s pay. In calculating a week’s pay, an upper limit (currently €600 per week) is placed on weekly earnings for statutory purposes.

Under the Protection of Employment Acts 1977 to 2007 employers are required to notify the Minister for Jobs, Enterprise and Innovation of a collective redundancy and to inform and consult with employee representatives for a full 30 days before the first notice of redundancy is given.

Collective dismissals” or “collective redundancies” mean dismissals on grounds of redundancy during any period of 30 consecutive days of:

• at least five employees in an establishment normally employing 21–49 employees;

• at least 10 employees in an establishment normally employing 50–99 employees;

• at least 10% of employees in an establishment normally employing 100–299 employees;

• at least 30 employees in an establishment normally employing 300 or more employees.

• “An establishment” means an employer, a company, a subsidiary company or a company within a group of companies which can independently effect redundancies.

Discipline and dismissalThe Unfair Dismissals Acts 1977 - 2015 govern discipline and dismissals and protect employees from dismissal at will, providing for ‘fair’ and ‘unfair’ grounds for dismissal. Disciplinary procedures should be implemented in a fair and consistent way across the organisation.

Under the Acts, every employee must be given a copy of the disciplinary procedure within 28 days of starting employment. It should define the general principles of natural justice which apply (e.g. the right to know the allegation/complaint, the right to representation, the right to a fair and an objective hearing, the right to respond).

It should outline the steps of the procedure:

• the progressive steps that will be taken in disciplinary action, i.e., from counselling through to dismissal.

• the right of an employer to enter the disciplinary procedure at the appropriate step, depending on the gravity of the offence;

• the type of behaviours that will be considered to give rise to summary dismissal, with examples;

• all possible disciplinary sanctions;

• that appropriate action may be taken in cases of gross misconduct – e.g. suspension or dismissal, without resorting to warnings.

A dismissal may be deemed to be not unfair if it arises principally from reasons including:

• the capability, competence, or qualification of the employee;

• Redundancy providing selection is fair;

• A restriction imposed by statute.

Ending the Employment Relationship

Sources of Comparative Information

Labour market developments in EuropeThe European Union produces reports comparing labour market developments across the EU and euro area. It provides regular updates of unit labour costs, unemployment rates, growth rates, etc.http://ec.europa.eu/economy_finance/publications/european_economy

European Company SurveyEurofound, the EU’s labour research agency carries out the European Company Survey every four years to quantify information on company policies and practices across Europe and monitor the impact. The 2013 survey looked at workplace organisation, innovation, employee participation and social dialogue in 32 countries. As the 2013 results become available they can be accessed online on http://www.eurofound.europa.eu/surveys/ecs/2013/index.htm

European Quality of Life SurveysEurofound, the EU’s labour research agency carries out a survey of European citizens’ lives every four years. It looks at a range of issues such as employment, income, education, housing, family, health and work-life balance as well as how they perceive the quality of their societies. The Third EQLS in 2011-2012 involved research in 34 countries.

International network on leave policies and researchThe International Network on leave policies and research, supports the exchange of information about leave policies adopted in individual countries and by international organisations. Their International Review of Leave Policies and Related Research gives leave policies in different countries and is available on:http://www.leavenetwork.org/fileadmin/Leavenetwork/Annual_reviews/2015_full_review3_final_8july.pdf

Minimum wage international comparisonThis is a list of official minimum wage rates covering nearly 200 countries. The minimum wages refer to a gross amount, before deduction of taxes and social security contributions. Also excluded from calculations are regulated paid days off, including public holidays, sick pay and annual leave.http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

Terms and conditions of employment in Ireland Ibec carries out regular surveys of pay and conditions in Ireland, to provide member companies with information to benchmark their conditions and benefits. Visit www.ibec.ie for further information.http://www.ibec.ie/IBEC/DFB.nsf/vPages/Research_and_surveys~research-unit?OpenDocument

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About the Author

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Ibec84/86 Lower Baggot StreetDublin 2, Irelandt +353 1 605 1542e erinfo@ibec.iew www.ibec.ie

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Ibec represents Irish business: indigenous, multinational, big and small, spanning every sector of the economy.Ibec and its sector associations work with government and policy makers nationally and internationally to shape business conditions and drive economic growth. Our vision is to be the most influential, dynamic business representative organisation in Ireland, driving our business agenda internationally.

Ibec provides a wide range of employment law and HR advice and representation to member companies. We are delighted to work with Bank of Ireland Corporate & Treasury on this guide for international companies on what they have to consider when setting up in Ireland.

This guide is intended to provide a general overview and is not a substitute for specialist employment law advice. Employers should contact Ibec for further information and advice.