European Court of Justice Decision-All Working Hours Must Be Recorded and Unpaid Overtime Ended?

Are you working excessive overtime and not getting paid? The European Court of Justice issued an interesting decision this week (14th May 2019) when it ruled that companies in the EU must set up a system to record the hours of work of their employees. All EU member states must act on foot of this decision which has direct effect in member states. (Press release of the Court of Justice of the European Union).

The Court found that member states must “must require employers to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured.”

In this case a Spanish trade union had brought a case against a local branch of Germany’s Deutsche Bank and a ruling was needed as to whether a system had to be established to record working hours.

Member states must implement the working time directive and it is impossible to do so fairly if employees’ working hours are not recorded. The Spanish court found that 53.7 % of overtime hours of Spanish workers were not recorded.

Impact in Ireland?

Will this have any practical effect in Ireland, however, given that Irish employers already have an obligation to record working time of employees pursuant to the Organisation of Working Time Act 1997 and the various organisation of working time regulations.

Has Ireland failed to properly implement the working time directive if all workers hours are not being recorded, including unpaid overtime and those workers who are paid a salary?

It is suspected that many Irish employers do not accurately record the working hours of their employees and this decision should increase the pressure on them to do so.

It is expected that the Workplace Relations Commission (WRC) will carefully consider this decision and see is there a need to increase workplace inspections to check on working time records being kept.

On the one hand it is argued that Ireland already has legislation since 1997-the Organisation of working time act 1997-to ensure employees’ hours of work are recorded; others argue that there is not enough inspections carried out by the WRC and there is a culture o f non-compliance with the existing legislation in Ireland.

Time will tell whether this European Court of Justice decision will have any practical effect in the Irish workplace or not.

Read the full decision of the European Court of Justice here.

Workplace Investigation and Disciplinary-the Danger of an Overemphasis on Looking for Imperfections in the Procedure

workplace disciplinary procedure

Dmitri was suspended from work for allegedly assaulting a colleague. Susan was suspended on pay while an investigation was being carried out into approximately half a dozen allegations of misconduct.

When they came to me for advice they were very much focused on the procedure adopted by the employer to date. Too focused, in my view.

Let me explain. They had done a bit of research online about disciplinary procedures in the workplace, the entitlement of the employee to fair procedures and natural justice, the importance of any investigation and disciplinary procedure being carried out fairly, and so on.

That’s fair enough.

But it is an easy mistake to get preoccupied with employment rights. These rights may stem from the constitution or statute or the contract of employment.

But remember the employer, too, has rights. And the right to investigate alleged wrongdoing in the workplace is one of them.

Now, Dmitri and Susan in their initial discussion with me were focused on seeking any imperfection or infirmity in how the employer had acted up to that point. I believe that was a mistake and they might have been better advised to address the substantive allegations against them.

But you must not ignore the substantive allegation against you and you must spend as much time addressing this as seeking imperfections in the procedure adopted by the employer.

Because they were so focused on finding imperfections in how the employer had acted in applying the procedure that they had overlooked the allegations against them.

Even though they have rights to fair procedures in respect of the application of the disciplinary procedure I do not believe perfection is required of the employer. Sure, it must be sound and fair and transparent and in accordance with the procedures set out in the workplace.

But the absence of perfection, or a small infirmity in the steps taken, may not be enough for an employee to ground a claim for unfair dismissal on the basis that the procedure lacked natural justice if the allegation is a serious one such as assaulting a colleague to telling a customer to stop “wrecking my head” and “do one”.

Takeaway

My advice is if you are facing serious allegations like Dmitri and Susan is not to get too preoccupied looking for flaws in the procedure adopted to the detriment of addressing the serious allegation against you.

Because employers, especially small ones with finite resources, will not be held to a level of perfection in enforcing discipline in the workplace.

Yes, you are entitled to fair procedures; yes, you are entitled to natural justice; yes, you are entitled to fair play.

Constitutionality of Workplace Relations Commission (WRC) Challenged in High Court

Labour Court Appeals

The constitutionality of the Workplace Relations Commission (WRC) and Labour Court framework for adjudicating on employment disputes is being challenged in the High Court.

The Supreme Court has decided on 20th March 2019 that the employee, Mr Zalewski, is entitled to have his challenge heard in the High Court which had previously decided he did not have the necessary locus standi.

The outcome of this case in the High Court could be seismic.

Background

Mr. Zalewski had brought claims to the WRC: one for unfair dismissal under the Unfair Dismissals Act 1977 and one for non-payment of wages under Payment of Wages Act 1991. When Mr. Zalewski attended the adjudication hearing the employer-Buywise Discount Store Limited-sought an adjournment as a witness was not available. No evidence was heard.

When Mr. Zalewski attended with his solicitor for the new hearing date on 13th December 2016 he discovered that a decision had been issued by the adjudication officer. This decision was issued on 16th December 2016.

Judicial review in the High Court

Mr. Zalewski and his solicitor were understandably shocked and disappointed and made a protective appeal to the Labour Court and commenced judicial review proceedings in the High Court.

His judicial review application sought declarations that parts of the Workplace Relations Commission Act 2015, the Unfair Dismissals Act 1977, Payment of Wages Act 1991, and the powers and functions granted to adjudication officers in the Workplace Relations  Commission were unconstitutional as these powers constituted the administration of justice and the Constitution provides certain safeguards for the administration of justice in Ireland.

The WRC then, as part of an attempt to settle these proceedings, offered a new date for the hearing of Mr. Zalewski’s claims. He refused this offer and the WRC then asked the High Court to dismiss his application on the basis that he did not have locus standi.

The High Court agreed and dismissed his judicial review. However, he appealed to the Supreme Court who found that he did have the requisite locus standi and sent it back to the High Court to be heard. That is where the case lies now and the outcome has tremendous significance for anyone involved in employment law.

The employee’s case is that his claims will be dealt with by way of a statutory scheme-the WRC system-which is inconsistent with the constitution and the administration of justice in Ireland.

The first part of the challenge is the constitutional obligation for the administration of justice to be dealt with by a court, based on articles 34 and 37 of the Constitution.

Article 34.1 of the Constitution of Ireland provides:

1 Justice shall be administered in courts established by law by judges appointed in the manner provided by this Constitution, and, save in such special and limited cases as may be prescribed by law, shall be administered in public.

Article 37.1 provides:

1 Nothing in this Constitution shall operate to invalidate the exercise of limited functions and powers of a judicial nature, in matters other than criminal matters, by any person or body of persons duly authorised by law to exercise such functions and powers, notwithstanding that such person or such body of persons is not a judge or a court appointed or established as such under this Constitution.

Article 40.3 provides

3 1° The State guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen.

The second part of his challenge is to do with the appointment of adjudication officers and the powers that are given to them, the fact that the hearings are in private, and that evidence is not taken on oath.

All of these matters go to the heart of a person’s constitutional right to fair procedures and natural/constitutional justice.

The grounds for the challenge also lie in the absence of any legal requirement of a legal qualification for an adjudication officer to be appointed, no requirement for the taking of sworn evidence during WRC hearings, the hearings being held in private, and the appeal going to a body-the Labour Court-which does not include persons required to be legally qualified.

Read the full Supreme Court decision of 20th March 2019 here.

Outcome

The outcome of this challenge has immense significance for the future of the WRC and the Labour Court and will be watched closely and carefully by employers, employees, HR professionals, and lawyers.

The Small Employer Under Pressure from a Surprising Source

Peter and Betty have a small business and never expected this. But they feel stressed and pressurised from a most unexpected source: their new employee.

They have been in business for 17 years and never had any problems with staff.

Yes, there was the occasional, infrequent dispute or argument but nothing that amounted to anything serious. They were never sued or had to face any claim from an employee-in fact, no threats were made against them, not even in the heat of the moment.

But all that changed when they took John on. John is in the job about 10 months now and his mood swings and changeable humour from one day to the next is worrying.

That’s not the biggest concern, however.

John, from an early stage in his employment, was quick to tell Peter and Betty what his employment rights were and how he could bring claims against them for all types of breach. He told them about working time records, rest breaks, public holidays, the WRC, NERA, the Labour Court, the minimum wage, his entitlement to a written contract-the list seems endless.

Peter and Betty never had to face this before and the frequent mention of the Workplace Relations Commission has them tremendously strained and anxious.

The biggest problem in all this, however, is the uncertainty and not knowing what the true situation is.

Is John right and are they ignorant, law breaking, exploitative employers, what can happen next, is John lying or exaggerating, what is the worst outcome, and most importantly: what can they do now.

Peter and Betty are typical of many small business owners up and down the island of Ireland who have successfully and happily employed many people down through the years without any problems or difficulty. They have never had to concern themselves too much with employment law and stuff like that because there were never any issues.

Their accountant made the necessary returns every month or every year and paid the appropriate tax, prsi, universal social charge, and whatever else the government decided had to be paid.

But this constant, low level hostility and implied sense of threat from an employee who is only in the workplace for 10 months and who they look after well is getting to them. It’s even putting a strain on their relationship.

What Peter and Betty needed was a bit of advice and some clarity about their obligations and entitlements and what options were open to them now. How, or was, the relationship with John going to improve in the years ahead; were they looking at this problem in perpetuity with no say as to who they could and could not employ; could they terminate now;  if so, on what grounds; are they open to a claim for redundancy; can John bring a claim for unfair or constructive dismissal.

If you are a small employer in a similar situation you may be surprised to find that your situation is not as bleak or oppressive as you think. But it will depend on the particular circumstances and a large factor in this type of situation is how long the employee has been in the employment.

Other questions to look at: is there a written contract, is there a probation period, has the employee obtained 12 months’ service? These are critical questions.

One of the biggest causes of stress is the fear of the unknown; any small employer can remove this fear by getting advice from a professional.

Getting advice from a professional will cost a few bob.

But not getting advice or getting it from an amateur is likely to cost more.

Are There Unintended Consequences Arising from New Legislation to Protect Casual Workers?

zero hours contracts

The new banded hours legislation which came into effect on 4th March 2019, it is argued, appears to be having unforeseen, unintended consequences. Dr. Juliet McMahon, for example, argues in the Irish Times this week that

“This advance may turn out to be a false dawn. Previous legislation proved toothless for zero-hours workers and this new Act looks set to change precisely nothing.”

The avowed purpose of the Employment (Miscellaneous Provisions) Act 2018 was to provide new protections for a range of employees who were working under so called ‘casual hours’ contracts.

This included employees who were engaged in bogus self-employment, workers with zero hours contracts; employees engaged in casual so called ‘precarious work’. (Read about the main provisions of this legislation here).

Zero hours contracts

Zero hours contracts were provided for in section 18 Organisation of Working Time act 1997 (read about zero hours contracts here).

A zero hours contract was one which obliged the employee to make himself available for work for a certain number of hours per week or as and when the employer required him. If the employer did not require him to work at all in a specific week then the employee was entitled to be paid for 25% of the hours they were contracted to do, or 15 hours pay-whichever was the lesser.

Note, however, that the employee was obliged to make him/herself available for work.

The new legislation, the Employment (Miscellaneous Provisions) Act 2018, attempted to improve the employee’s lot by providing the rate of compensation, in the event the employer did not require the employee to work in a particular week. was to be paid at a rate of 3 times the relevant minimum wage.

‘If and when’ versus ‘as and when’

Drawing a distinction between an ‘as and when’ contract and an ‘if and when’ contract may appear to be dancing on the head of a legal pin. But there is a vital distinction, one I have written about before in this blog post about zero hours contracts and ‘if and when’ contracts.

The typical ‘if and when’ contract has a clause in it which states that hours may be offered to the employee, but he/she does not have to accept them. Let me repeat that: the worker does not have to accept them.

This means there is no ‘mutuality of obligation’ between the parties and without mutuality of obligation there is no employer/employee relationship.

A typical provision will be “You have the right to refuse or accept hours of work offered to you.” If the worker has the right to refuse hours the relationship of master/servant, employer/employee does not exist.

And the consequences flowing from that are profound.

For if the worker is not an employee, she does not enjoy the benefit of any legislation which protects employees. Not the new legislation, not the old legislation. Not any.

None. No protection because the worker is self-employed.

Unintended consequences of new legislation

It has been suggested by Dr. MacMahon and Tony Dundon, professor of HRM and employment relations, both at the Department of Work and Employment Studies, Kemmy Business School, University of Limerick that one of the unintended consequences of the new legislation, the Employment (Miscellaneous Provisions) Act 2018, is the provision of an incentive for the employer to award ‘if and when’ contracts to certain casual workers to ensure they are not categorised as employees and enjoy the benefits of the legislation which protects employees.

However, this would only apply to new contracts as there is no reason why an employee with a contract of employment would give up his contractual entitlement to hours of work for an ‘if and when’ contract which would remove all employment law legislative protection.

Moreover, if I was an employer with a number of employees and I was seeking to rely on a clause in a contract-such as ‘you do not have to take the hours offered to you’-but all the surrounding circumstances and course of conduct pointed to a relationship of ‘employer/employee’ I would have a fear about a WRC officer finding the worker was an employee.

And if that occurred it would have significant consequences for my business as other workers would inevitably follow up with claims of being employees, in fact.

Conclusion

I believe it is premature and misconceived to argue that “Previous legislation proved toothless for zero-hours workers and this new Act looks set to change precisely nothing.”

There are significant new protections for employees arising from the new legislation, especially in relation to banded hours contracts.

The argument that a tsunami of new employment contracts will be provided by employers with unfavourable ‘non mutuality of obligation’ clauses, thereby putting the worker outside the legislation, is unlikely to hold up if employers are unable to get workers to agree to such unfavourable clauses. Moreover, existing employees are hardly going to give up what they have for contracts with clauses designed to put them outside the protection of the employment legislation net.