Monday 18 December 2017

Government to allow bosses to undercut minimum wage

Legislation for 'inability to pay'

Aine Kerr and  Shane Hickey

LOW-PAID workers will soon be asked to accept wage cuts as their bosses plead an "inability to pay" in court under new legislation.

Struggling employers will be able to apply for an exemption from wage agreements under the new law being introduced by the Government.

However, they will need the consent of the majority of workers before they can cut hourly pay rates under proposals being brought by Junior Minister for Labour Affairs Dara Calleary.

Once this is done, the court will inspect accounts for evidence of "financial difficulties" before making a decision on rates and granting an exemption for a period of up to 12 months.

Bosses in the agriculture, retail, catering, hotel and retail sectors, which are governed by separate Registered Employment Agreements (REAs) to the minimum wage legislation, will shortly be able to access an inability to pay clause in the Labour Court.

This clause already exists in relation to the national minimum wage of €8.65 but is now being extended to the sectors covered by REAs, where workers receive an average of 60c more per hour than the minimum wage rate.

Previously, workers covered by REAs were liable to simply lose their jobs rather than suffer pay cuts because there was no flexibility in the legislation.

Last night, Mr Calleary stressed that the introduction of the clause was not a "free pass" for employers as it would only be temporary in nature.

"It's not a free pass. . . It's only going to be for around 12 months," he said. "We've come across situations where companies had agreements with their workers to pay lower rates but couldn't pay them because there was no flexibility in the law to do this. What they then had to do was lay people off in order to make the bills add up."

The introduction of the law would make REAs consistent with minimum wage legislation, Mr Calleary added. However, the move will increase tensions between the Government and unions.


The Irish Congress of Trade Unions (ICTU) has accused the Government of implementing an agenda to "drive down wages across all sectors". They claimed attempts to extend the inability to pay clause takes the Fianna Fail-led Government another step closer to tackling minimum wage levels.

But Tanaiste Mary Coughlan last night stressed the minimum wage was before the Labour Court and must be differentiated from the inability to pay clauses.

"That matter is presently with the Labour Court and has not been brought to me for adjudication. I cannot pre-empt what they are going to say because I will have to be independent in the decision that I will make," she said.

Ms Coughlan further claimed the introduction of the clause was not a "diktat" from employers and would have to be negotiated with workers.

"This will not be a situation whereby employers would insist that people take a reduction in their salary. It is a safeguard, most particularly on the basis of trying to keep people in employment as opposed to people losing their jobs," she said.

SIPTU's Jack O'Connor claimed the Government was intent on "crucifying" the lowest paid in the country, having already slashed public spending by imposing hefty wage cuts.

His stance is at odds with that of business groups such as IBEC, the Restaurants Association of Ireland and the Quick Service Food Alliance, which have argued that, given the current economic problems, an inability to pay clause was urgently required if jobs were to be saved.

Irish Independent

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