Ireland: SEO Me The Money: Managing The Changes Made By The Sectoral Employment Orders

Last Updated: 16 March 2018
Article by Niav O'Higgins, Karen Killoran and Mary Liz Mahony
Most Read Contributor in Ireland, October 2018

INTRODUCTION

Following the Supreme Court decision in McGowan & Ors v Labour Court Ireland & Ors which found the well established regime of registered employment agreements to be unconstitutional, there had been uncertainty regarding the level of protection for wages and benefits of workers in the construction sector.

This has been addressed somewhat by (i) the Sectoral Employment Order (Construction Sector) 2017 (the "General SEO") (announced 19 October 2017) and (ii) the Sectoral Employment Order (Mechanical Engineering Building Services Contracting Sector) 2018 (the "Mechanical SEO") (announced 9 March 2018).

Effective immediately, both SEOs provide for binding terms and conditions for employees in the construction sector in relation to rates of pay, unsocial hours, pension schemes, sick pay and a procedure for the resolution of disputes between construction workers and their employers.

This briefing looks at the key provisions of the SEOs and how their implementation is currently catered for in some of the standard form contracts in the Irish construction industry.

APPLICATION OF THE SEOS

The General SEO applies to both "Building Firms" and "Civil Engineering Firms" (both of which are very broadly defined) and categorises workers employed by those firms in five categories based on the level of skill/ experience.

The Mechanical SEO applies to the following categories of worker (directly employed or employed through an employment agency in the Mechanical Engineering Building Services Contracting Sector): Qualified Plumbers and Registered Apprentice Plumbers (Craftsperson) and Qualified Pipefitters and Registered Apprentice Pipefitters (Craftsperson) working in the Sector (which is itself broadly defined).

KEY FEATURES

The rates of pay set out in the SEOs for the various categories of worker are the base rates. Additional pay will be required for unsocial hours rising to either time and a half or double time depending on the time/day of the week.

Pension entitlements provided for in the SEOs will mirror the current Construction Workers Pension Scheme, although entitlements will begin for workers from the age of 18 (21 under the CWPS). Both SEOs set minimum contribution rates and provide for a death in service benefit scheme.

A sick pay scheme is also required by the SEO to be in line with the Construction Industry Sick Pay Scheme (CISPS) to include no less comparable benefits and contributions than the CISPS.

Dispute Resolution under the SEO provides for access to the WRC Adjudication Service (for individual disputes) and the WRC Conciliation Service (for collective disputes) where matters can not be resolved at an employer/trade union level. An appeal is available by application to the Labour Court.

While the SEOs do not include any travel allowance for workers, the General SEO specifically states that this will not affect those workers who have a contractual right to payment for travel time.

REMIT OF THE SEOS

Notably neither SEO includes the electrical sector. It is likely, however, that at some point in the short to medium term, an SEO will be put in place for this sector also.

CONTRACTUAL ARRANGEMENTS

Both SEOs (particularly the Mechanical SEO) will impact on any contracts live at the date of announcement of that SEO and contracts will need to be checked to see whether additional sums to cover off these wage increases can be claimed under the contract. But stakeholders also need to be aware of future contracts and how these would effected by a future order (e.g. in the electrical sector).

RIAI

Clause 4 (Variations Arising from Legislative Enactments) of the RIAI standard form provides that any legislative enactment after the designated date, including any affecting the cost of labour shall be at the employer's risk. This is confirmed by Clause 36 (Wages and Price Variations) which provides that any increases in the rates of wages or other emoluments, expenses and/or labour on-costs shall be added to the contract sum. However, Clause 36 is commonly deleted and often replaced by drafting which states that the contractor shall not be entitled to any increase due to changes in wages. Clause 4 can also be amended but more typically remains unamended. While it could be argued as a matter of legal interpretation that the specific wording of an amended Clause 36 trumps the general obligation in an unamended Clause 4, there is no certainty this interpretation might prevail.

Care also needs to be taken in a sub-contracting arrangement. While a main contractor may have a right to an increase in the contract sum from the employer in respect of changes, sub-contracts might not be so clear. While the RIAI form of sub-contract closely follows the main contract in rendering these a contractor risk, these subcontracts are often amended.

PUBLIC WORKS CONTRACT

In contrast to the RIAI, the Public Works Contracts place change of law for labour cost inflation as largely a contractor risk. While Clause 5.3.2 (Pay and Conditions of Employment) requires the Contractor to ensure that the rates of pay and conditions of employment comply with all applicable law (regardless of tendered rates), the two price variation mechanisms provided for under the Public Works Contract (PV1 and PV2), only allow for adjustments to the Contract Sum for an increase in wage rate after the Base Date (defined as "the first date of the 31st month after the Contract Date" under PV1 and "the first day of the 37th calendar month after the Designated Date..." under PV2).

In many instances, the contract will have completed in advance of reaching the relevant Base Date which limits the application of this provision to a narrow set of contracts.

For additional, substituted and omitted work there may be an entitlement to some uplift but only if the Employer's Representative directs that valuation of such works takes place under Clause 10.6.4 and where tendered hourly rates are less than 75% of the relevant rate in the current construction industry registered employment agreement current on the Designated Date (to be interpreted as the relevant SEO), these rates will be read as 75% of the relevant rate. This is likely to provide relief to a contractor only in very limited circumstances.

The wording in the forms of sub-contract prepared for use with the Public Works Contract (e.g. Agreement and Conditions of Sub-Contract (NN), February 2016 and Agreement and Conditions of Sub-Contract (Domestic), October 2016) largely follow the wording of the main contract but again it is very important that sub-contractors track the terms of each particular sub-contract.

CONCLUSION

Since the striking down of the registered employment agreement regime there has been a lacuna in terms of worker protection – the SEOs have sought to address this. While certainty in respect of wages and other benefits are no doubt a good thing for workers and their employers, inevitably a period of uncertainty follows while live contracts are being completed. The reality is, neither contractor, subcontractor nor employer will be enthusiastic about shouldering the burden of wage increases where they differ substantially from tendered rates and will significantly impact the price at which a construction project can be completed. Depending on the strength of the contractual terms, a collaborative approach may be required to ensure that neither party suffers unduly during this period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions