What you should know about employing people in...Ireland
Employment in Ireland is very strictly regulated and is very much not employment at will.
1. Contract of employmentHowever, there is extensive freedom of contract between employer and employee with statute only intervening in certain circumstances.
While the contract of employment does not have to be in writing, under the Terms of Employment (Information) Acts 1994 and 2001 employers are obliged to furnish employees with a statement of the main terms and conditions of their employment within 2 months of commencement of the employment.
Upon the transfer of a business or undertaking which falls within the provisions of The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, all rights and obligations arising from contracts of employment as well as any rights under collective agreements are automatically transferred to the transferee. Employees cannot be dismissed by reason of the transfer unless the dismissal is for “economic, technical or organisational reasons entailing charges in the workforce”. The Regulations also contain requirements for information and consultation for employees with a grievance.
There are 3 separate systems of labour-related tribunals:
a. The Labour Court whose principle function is to provide conciliation facilities in connection with trade union disputes but also has jurisdiction under a number of statutory provisions.
b. The Employment Appeals Tribunal which hears grievances under specific legislation such as that relating to unfair dismissals, minimum notice and redundancy.
c. The Equality Tribunal which deals with discrimination issues in employment.
Employees also have direct access to the courts e.g. for injunctive relief to restrain purported termination of contracts of employment or internal disciplinary procedures on the basis that principles of constitutional and natural justice are not being observed. It is fair to say that most courts and tribunals are very pro employee.
An employee who has worked for more than one year is entitled to rely on the Unfair Dismissals Act 1977 to 2007 to challenge a dismissal. This service is not necessary where dismissal is on grounds of pregnancy or related matters, race, age, religion or trade union activity. A dismissal is automatically deemed unfair and the onus is on the employer to establish that the dismissal is fair. Justifiable grounds include the employee’s competence, capability, conduct or redundancy. The employer must be able to show that it acted reasonably in effecting the dismissal and that fair procedures have been applied. Employers must follow any disciplinary procedures in force.
As regards periods of notice, these are set out in legislation. The remedies available for unfair dismissal are reinstatement, reengagement or compensation of up to a maximum of two years remuneration.
As stated above, redundancy is one of the substantial ground justifying dismissal. A redundancy situation generally arises where the job ceases to exist and the person is not replaced. Under the Redundancy Payment Scheme all eligible employees are entitled to a statutory redundancy lump sum payment on being made redundant. An employee is entitled to two weeks pay for every year of service, with one further week bonus added on, subject to the prevailing maximum ceiling on gross weekly pay (which at present is €600). An employee must have at least two years continuous service to qualify for statutory redundancy.
2. Discrimination lawsDiscrimination in the areas of access to and conditions of employment, training, promotion and advertising is prohibited.
Discrimination on the grounds of gender, marital status, family status, sexual orientation, religious belief, age, disability, race and membership of the Traveller community is prohibited.
Individuals must receive equal pay for “like work” unless the difference in pay is based on grounds unrelated to the employee’s gender, marital status etc.
Sexual and non sexual harassment is outlawed.
3. Employee benefitsThere is no requirement for either an employer or employee to contribute to a pension fund. However employers must offer access to a Personal Retirement Savings Account (PRSA) e.g. where the employer does not operate a private pension scheme or where there is a waiting period of over 6 months to join the scheme.
There is no obligation on employers to contribute to a voluntary health insurance scheme but many do.
Most employees are covered by the Irish Social Security System. Contributions are made by both employers and employees with contributions generally calculated with reference to salary. The system provides for benefits to cover such items as retirement, disability, sickness, maternity leave and unemployment.
An employer is not obliged to pay an employee during absence due to sickness or injury. During that time the employee must rely on social welfare benefits.
Frequently contracts of employment will provide for some level of payment during sickness or injury with the employee refunding to the employer the amount of State benefit received.
4. Wages/hours of workThe National Minimum Wage Act 2000 introduced a statutory minimum wage.
The Organisation of Working Time Act 1997 governs hours of work with the maximum average working week being 48 hours. This legislation also sets out requirements in respect of breaks and special provisions apply to night workers i.e. those who work for at least 3 hours between midnight and 7:00am and at least half of whose annual working time is night work.
As regards holidays in general employees are entitled to a minimum of 20 days. In addition there are 9 public holidays which at the discretion of the employer the employee is entitled to either:
(a) a paid day off on that day(b) a paid day off within one month(c )an additional day of annual leave(d )an additional day’s pay
The Maternity Protection Acts 1994 and 2004 as amended by the Maternity Protection Act 1994 (Extensions of Periods of Leave) Order 2006 give the right to return to work after maternity leave and the right to additional maternity leave. An employee is entitled to take up to 42 weeks maternity leave. The employee is not obliged to pay the employee during such leave (although frequently employers may do so) but the State provides a maternity allowance of 80% of the employee’s gross earnings during the first 26 weeks subject to a maximum level determined from time to time. The balance of 16 weeks is not paid for by the State and is at the employee’s expense unless her contract provides otherwise.
The Parental Leave Acts 1998 and 2006 give certain rights to unpaid leave.
5. Classification – employee/independent contractorsAs regards employees, Irish employment law does not in general distinguish between different categories of employee. Part time employees are entitled to be treated no less favourably than full time employees and fixed term employees are entitled to be treated no less favourably than permanent employees. However, a distinction exists at law between employees and independent contractors. The latter are self employed consultants and thus will not have the benefit of legislation applicable to employees. However, third parties e.g. the Revenue Commissioners and the Department of Social Welfare are entitled to look at the substance of any agreement with a person which classifies him as an independent contract to satisfy itself that the individual concerned is in fact an independent contractor.
6. Employee inventionsPatent legislation provides that an invention made by an employee in the course of employment belongs to the employer. Nevertheless it is prudent to have a written contract of employment which specifically sets this out in clear and unequivocal terms.
7. Restrictive covenantsAll employees are under an implied duty not to compete with their employer either during or outside working hours. A duty of confidentiality exists during the employment and after its termination. It is not unusual for a contract of employment, particularly of a senior employee, to contain a post termination restriction. However, such claims will only be enforced where they protect the legitimate business interests of their employer and are limited in time and geographical area.
8. Employee communications on employer equipmentIt is advisable for employers to have in place a policy which entitles the employer in certain circumstance to monitor employee communications. In doing so employers must comply with data protection legislation. Consent of employees to monitoring is not necessary provided the employee is notified that this form of monitoring may be carried out as well as the purpose for which it may be carried out and the parties to whom it may be disclosed. Guidelines have been issued by the Data Protection Commissioner. The guiding principle is that any limitation on the employee’s right to privacy should be proportionate to the employer’s legitimate interests.
9. Wage payment lawsEmployers are obliged to deduct from wages income tax under the Pay As You Earn (PAYE) scheme, social insurance contributions and amounts payable under court order. Any other deductions must be with the consent of the employee.
10. Data protectionThe data protection obligations of employers are contained in the Data Protection Acts 1988 and 2003. The obligations extend to how the employer collects, stores and uses personal data held about employees. If the data is sensitive personal data the obligations are more serious. Data must be collected and processed fairly, kept accurate and up to date and not kept for longer than necessary. Employees have the right to make an access request. The legislation also sets at the circumstances where data can be transmitted to a third party.