Travelling Time for Employees

The recent decision by the European Court in C266/4 Tyco said that travel for workers without a fixed place of work from home to a client site, and back again is classified as “working-time”.  This is working time as the workers are at the disposal of their employer. Tyco is a business in Spain which closed down its regional office and the business was then conducted from its head office. It requires certain employees to travel directly from their homes to client offices throughout their territory, then returning to their home. Employees travel time could be up to 3 hours per day each way.
Under European law employees working-time is subject to a 48 hour maximum hourly working week which can be averaged over 4-6 months, or over a period of up to 12 months  where there is a collective agreement, in order to protect the health and safety of workers under European law.

 

Where does this leave employers in Ireland?

The National Minimum Wage Act 2000 does not specify that travel time is working-time and that time spent travelling must be paid in accordance with the national minimum wage.

This decision applies immediately in the public sector. At the moment, the decision does not require private sector employers to pay employees for travel time as the National Minimum Wage Act does not require this, but this Act is now out of date and the Courts will interpret Irish law in light of this new ruling. There is now a risk of disputes on minimum wage by employees and Trade Unions.

 

How can an employer best deal with this?

Employees working hours and travel time should be monitored to ensure they keep within an average of the maximum 48 hour working week. Employers should consider how travel time for mobile staff can be minimised, the scheduling of appointments, and whether travel from the workplace is best. Employees must have a rest period of 11 hours between the end of one working day and the next working day under European law to protect their health and safety.

 

If you have any comments on the above or would like any further information please contact Davnet O’Driscoll at Davnet@amoryssolicitors.com, tel 01 213 59 40.

 

This is a summary of recent legal changes and specific advice should be obtained.

Employment Law Conference the Irish Centre for European Law

Davnet O’Driscoll was invited to speak at the Employment Law Conference of the Irish Centre for European Law on 11 December 2015 on the implications of the new General Data Protection Regulation on the employment relationship.

The feedback was:

the delegates appreciated the creative way which you tackled a complex legal issue”.

 

http://www.icel.ie/Employment2015

New Paternity Leave for Fathers

The Budget for 2016 will provide for 2 weeks paid Paternity Leave for fathers of children born from September 2016 onwards. 

At the moment, fathers are not entitled to a set period of leave (paternity leave) on the birth of their children nor payment for leave in the Republic of Ireland. The Budget for 2016 will provide for 2 weeks paid Paternity Leave for fathers of children born from September 2016 onwards. The state payment to fathers will be at the same rate as maternity leave benefit of €230 per week, subject to PRSI entitlements. Further information will be available in the coming weeks on the arrangements for this.

If you have any queries in relation to leave issues, please do not hesitate to contactDavnet@amoryssolicitors.com.

New Employment Law Changes in Workplace Relations Act 2015

The Workplace Relations Act 2015 comes into force on 1 October 2015 and it changes the way in which employment claims are made, the procedures to deal with claims, and standardises the time-limits for claims and appeals.

  • The hearings will be in private with one Adjudication Officer inquiring into the claims. The parties will make submissions and evidence will not be taken on oath from witnesses.
  • The Adjudication Officer can summons witnesses and order production of documents for the hearing.
  • Claims must be lodged within 6 months of the breach of employment legislation, and the time period for making a claim can be extended to 12 months where there is reasonable cause. The time-limits for making all statutory employment claims have been standardised to provide for this in the Act.
  • Decisions of the Adjudication Officers will be anonymised and published on the Workplace Relations website.
  • The enforcement powers of NERA Inspectors have been greatly extended to allow:-
  1.  Inspectors to enter into a place of employment, to take and remove documents, and require    any person to answer questions. It is a criminal offence to obstruct or interfere with an Inspector or Garda exercising their powers or to make a declaration or give information that is false or misleading in any material respect.
  2. Inspectors can serve Compliance Notices on employers outlining an employment breach where they are satisfied there is a breach, requiring the employer to take action or refrain from taking action within a specific period. Failure of an employer to comply with a Compliance Notice by the date outlined is a criminal offence.
  3. There is a right of appeal for an employer against the Compliance Notice within 42 days to the Labour Court.
  4. An Inspector can issue an on the spot fine or “fixed payment notice” of a maximum of 2,000 euro to an employer in relation to breaches of:

a.      The consultation requirements for collective redundancies

b.      Failure to give a written payslip to an employee setting out gross wages and

deductions
c.      Failure to comply with an employee’s request to furnish a statement of the

employee’s average hourly rate over a pay reference period during the previous 6-12

month period under the National Minimum Wage Act 2000.

  • Where compensation is awarded by an Adjudication Officer, it is offence for an employer to fail to pay the compensation awarded to an employee, and the employer risks a Class A fine or up to 6 months in prison or both. However, there is a defence open to an employer that the employer is unable to comply with the award due to financial circumstances.
  • All of an employee’s claims under different legislation will now be heard by one Adjudication Officer at the hearing.
  • When a decision has been made by an Adjudication Officer, there is a right of appeal to the Labour Court within a period of 42 days and the appeal time-limits have been standardised across all of the statutory employment legislation.
  • There is a right of appeal to the High Court on a point of law from the decision of the Labour Court on appeal within 42 days.

This is a summary of recent changes now enacted in the Workplace Relations Act 2015, and legal advice should be obtained in specific instances. If you have any queries in relation to these changes, please contact Davnet@amoryssolicitors.com

 

Illegal Migrants’ Right to Pay

The Supreme Court in Hussein –v-Labour Court & Younis [2015] IESC 58 has upheld the order of the Labour Court entitling Mr. Younis (whose employment permit had lapsed and was working in Ireland illegally) to the national minimum wage of €86,134.42 for his claims of working for 2 and a half years at 11 hours a day without proper pay and accommodation, and €5,000 for breach of the working time regulations.

Mr. Hussein claimed that his cousin Mr. Younis worked with him as a member of family, had no specific job and was not an employee. Mr Younis brought a number of different claims against his cousin, firstly that he had not received any written terms and conditions of employment under the Terms of Employment (Information) Act, 1994-2004, secondly that his working hours were not recorded in accordance with the Working Time Directive and claiming he did not receive holidays, Sunday pay, proper breaks and thirdly, that he was due the national minimum wage for work done. The Rights Commissioner determined he should be paid an award of €91,134.42 but this was never appealed nor paid. Then Mr. Younis obtained an order from the Labour Court directing payment of the unpaid award.

The decision of the Labour Court directing payment of the monies due was judicially reviewed by the employer, who sought to challenge the basis upon which the decision was made. The High Court found that Mr. Younis did not have an employment permit so was not eligible to work in Ireland, and as such could not enforce his contract of employment which was illegal. This caused huge concern for foreign workers in Ireland and led to a change in the law to allow illegal migrants (who through no fault of their own had become illegal) to sue their employers to recover monies due, to prevent employers from taking advantage of foreign staff and breaching employment law. These changes were implemented in the Employment Permits (Amendment) Act 2014.

The Supreme Court has now found that the judgement of the High Court was incorrect. The question of the illegality of the contract between Mr. Younis and Mr. Hussein was not something which the High Court was entitled to consider as a judicial review is limited to assessing the decision making powers of the Labour Court to enforce payment of the award  or not. The Labour Court correctly did not consider the merits of the Rights Commissioners determination and this could not be re-opened by the High Court.

In addition, the High Court relied on an old case Martin –v- Galbraith Limited [1942] I.R.37 which says that an illegal contract cannot be enforced by a Court.  However, the Supreme Court have now said that statements in older cases in particular may have to be reviewed or nuanced in light of the modern regulatory environment and applied with the principle of proportionality in mind. This is helpful as the view of the Supreme Court is that the Courts should look at employment situations in their current context in society and may not be bound to follow this ruling as long as the illegal conduct being performed is not immoral or contrary to public policy.

 

This is a short summary of recent developments and specific legal advice should be obtained. If you would like any further information in relation to the above, please contact Davnet@amoryssolicitors.com

, ,

Employees in Clerys Liquidation

When a provisional liquidator was appointed to Clerys, that evening employees were informed that the store was being closed. As the business is being liquidated where does this leave the employees?

When a business is being liquidated, the employees are automatically dismissed when a Court order is made to wind up the company. The employees become preferential creditors under Section 621 of the 2014 Companies Act. This means the employees rank behind any secured charge holders (normally banks) who have a first charge over the property and assets of the company. Where there are sufficient funds to pay the secured charge holders fully, there may be funds left to pay the preferential creditors who will then receive some or all of the monies owed. The Companies Act provides for payment of arrears of wages or salary for employees for a period of 4 months before the date of appointment of a liquidator, provides for payment of holiday pay, payments to an employee who is ill and the payment of the company’s and employee pension contributions which cannot exceed more than €10,000 in a case of any one claim. Payments to preferential creditors will be reduced pro-rata where there are insufficient funds left to pay all of the preferential creditors.

If there are funds left for the preferential creditors, Clerys staff can seek to recover the payments set out above.

However, if there are no funds or limited funds for preferential creditors the Protection of Employees (Employer’s Insolvency) Acts 1984-2004 apply to protect employees (who are insurable under the Social Welfare Acts) in the event of an employer’s insolvency. The Insolvency Payments Scheme provides for limited payments for qualifying employees from the Social Insurance Fund, and it covers payments due to employees in liquidations, receiverships, bankruptcies and employees in Ireland working for employers who become insolvent within the EU. There is a loophole in the legislation in that it does not cover companies which cease trading and are insolvent but are never formally wound up.

 

The Social Insurance Fund will pay:

  • Up to 8 weeks arrears of salary limited to €600 per week.
  • Maximum 8 weeks statutory notice pay
  • Maximum 8 weeks holiday pay
  • Statutory redundancy pay for employees with over 2 years continuous service
  • Payments in respect of employment rights, claims for unfair dismissal, discrimination, and other claims relating to a period of 18 months prior to insolvency. The remuneration recovered is however limited.

 

TUPE or the EC Protection of Employees (Transfer of Undertakings) Regulations 2003  

Media reports indicate that there were a number of bidders for Clearys at the time of its sale and that some of these planned to keep the store open and trading for a further 12 months, with scaled down retail activity within the store. If another option had been taken up, the employees may have benefited from TUPE.

TUPE applies if a business or part of a business is sold and transferred to a new owner and retains its identity. In such circumstances all employees of the business automatically transfer with the business to the new entity and are protected against dismissal. Furthermore the terms and conditions of their employment are preserved on the transfer except for their pension rights. The new owner may make redundancies among staff after the transfer due to economic, technical and organisational reasons under the regulations, however, this exception will be carefully scrutinised by the tribunals. If a new employer is making staff that transferred redundant under this exception, the new employer is bound to pay the employees being made redundant their statutory redundancy, salary/wages for the contractual notice period and any ex-gratia redundancy payment which may become payable through a collective agreement or custom and practice. Usually on a sale of a business the parties provide for arrangements between the transferor and transferee to apportion liability for payment of staff redundancy and notice.

Cleary’s staff may be paid their legal entitlements by the company or by the Minister for Social Welfare under the Redundancy Payment Scheme. TUPE does not apply in an insolvency or bankruptcy situation unless the sole or main reason for bankruptcy or insolvency of the Transferor is the evasion of employers’ legal obligations to staff under TUPE.

 

This is a summary of recent developments and specific legal advice should be obtained. If you would like to discuss any aspect of this further, please contact Davnet@amoryssolicitors.com.

Collective Redundancy Consultation

What are the pitfalls for business?

The high profile collapse of the Woolworths and Ethel Austin Stores in the UK when the companies went into administration meant the loss of thousands of jobs.  The European Collective Redundancies Directive consultation requirements apply where there are large scale redundancies in businesses and at least 5 employees from an “establishment” of 21 employees upwards are made redundant during a 30 day period.  Where the consultation requirements apply the “establishment” or business must enter into a 30 day consultation period with employees in advance of giving notice of  redundancy to try to mitigate their impact on employees.

The employees’ trade union, USDAW, challenged the consultation process entered into by Woolworths and Ethel Austin who did not consult with employees at retail units of less than 20 employees. The Union believed it was unfair that employees from larger retail units only were allowed consult with the companies. They argued that Woolworths should have aggregated the amount of employees being made redundant for the entire business in the period for consultation purposes and not just considered each retail store individually. The European Court considered the consultation requirements and found these do not have to be aggregated within the group for the period.  This means businesses or retail stores with less than 20 staff do not have to consult with employees for 30 days in advance of large scale redundancies across the group.

 

This is significant for employers as breach of the consultation requirements has serious financial implications. Where there is a breach of the 30 day consultation requirement by an employer, each employee may be entitled to compensation for the breach of up to 4 weeks’ remuneration.

In addition if a notice of redundancy is issued to an employee during the 30 day consultation period in breach of the Directive a fine of €250,000 may be levied against an employer.

This is helpful clarity for employers entering into a countrywide or cross-jurisdictional restructuring programme.

 

If you have any queries on the collective redundancy consultation process and how this should be managed, please contact Davnet@amoryssolicitors.com.

Non-Compete Clauses in Employment Contracts – What’s the law and how are they enforced?

Written by Deirdre Farrell

 

Clauses which prevent an employee from taking up employment with a competitor within a certain timeframe (usually 6 or 12 months) after termination are included in many contracts of employment.  

If enforceable, a non-compete clause would provide an effective mechanism for an employer to protect its business interests however it would also mean the ex-employee’s right to earn a livelihood enshrined in our constitution has been restricted.  The employer’s business interests may be safeguarded for some time but the ex-employee might be without income for several months.

Below is a brief summary of the current law in this area and how the Courts have balanced the above competing rights.

 

The Law

In general the law acknowledges that competition is good and that restraint of trade is bad.  A non-compete clause will be enforceable if it a) protects a deserving legitimate proprietary interest of the employer and b) is considered reasonable in the interests of the parties and in the interests of the public.  More specifically a non-compete clause will be upheld if it satisfies the following strict criteria:-

i.          there is a legitimate interest to be upheld ; and

ii.         the restriction is reasonable between the parties in respect of

a.         duration;

b.         geographical location; and

c.         subject matter.

 

What is considered a legitimate proprietary interest of an employer?

The following are considered proprietary interests that an employer may legitimately seek to protect in a non-compete clause in an employment contract:-

  1. Continuity of its employees;
  2. Its Goodwill ; and
  3. Its confidential information.

 

An employer is entitled to protect itself against the spectre of valuable employees being poached by a former employee who establishes business in competition with it.  Goodwill is considered to comprise the employer’s customer base, customer lists and reputation.  What is confidential information is always difficult to define and is outside the scope of this article.  Knowledge and skill acquired during the course of employment is not considered confidential information.

An employer is not permitted to prohibit all competition by a former employee but is entitled to prevent that employee from using his knowledge of the employer’s trade secrets or customer base to the detriment of the employer’s legitimate proprietary interests as referred to above.

 

What is considered reasonable?

The easiest question is not always the easiest to answer. The reasonableness of the restricted period, location and subject matter would depend on the circumstances of each particular case and would be determined in light of the particular legitimate interest to be protected. For example, a non-compete clause preventing a former employee stockbroker from taking up employment with a competitor might be considered unreasonable if for a period of in excess of 3 months.  However a non-compete clause preventing a former software developer employee in a niche area of say, alarm systems programming for example, from taking up employment with a competitor might be considered reasonable if the restricted period was for in excess of 6 or even 12 months.

Where a non-solicitation or a confidentiality clause would adequately protect the employer’s legitimate interest, a non-compete clause is likely to be considered to go further than is reasonably necessary and could be deemed unenforceable and void by a Court.

 

How are non-compete clauses enforced against former employees?

If a former employee and/or his “new” employer refuse to be bound by the terms of a non-compete clause voluntarily, the former employer must apply to the court to obtain an injunction seeking an order preventing the former employee taking up employment with the “new” employer.  Such applications for obvious reasons have to be made as a matter of urgency and as a rule therefore they are very costly.

In order to succeed in an injunction application a court must be satisfied that:-

i.          There is a serious issue to be tried;

ii.         Damages would not be an adequate remedy; and

iii.         The balance of convenience lies in favour of granting an injunction.

 

A court does not decide the substantive issue between the parties i.e. whether the non-compete clause is valid and enforceable at an injunctive application stage.  It only decides the issue based on the above three criteria.

In general injunction applications in relation to non-compete clauses in employment contracts fall to be considered under the second and third criterion: whether damages would be an adequate remedy and whether the balance of convenience lies in favour of granting an injunction. If damages are an adequate remedy and/or the balance of convenience lies in favour of granting an injunction the applicant will not be entitled to the injunction.

In the recent case of Hernandez v. Vodafone Ireland Limited (February 2013) the court held that damages would not be an adequate remedy even though the loss to the former employee would be no more than €20,000 because he was able to demonstrate to the court that he needed an income of that amount or thereabouts to support his family. In that case, the employee agreed to be bound by a 6 month non-solicitation clause and a confidentiality clause but refused to be prevented from taking up employment with O2, his former employer’s competitor for 3 months from the date of termination of his employment which was in December 2013.  The employee successfully argued that it was crucial that he had a continuous stream of income to fund his liabilities.

 

It is important to note that this case was unique in that it was the employee who applied for the injunction.  Usually it is an employer who seeks to enforce a non-compete clause.

 

Summary 

In summary, there is a growing trend of judicial caution towards enforcing non-compete clauses. It is often very difficult to determine whether or not a court will uphold a non-compete clause and it is therefore imperative for en employer to include non-solicitation and confidentiality clauses in its employment contracts in order to protect its legitimate interests.  An employee should appreciate the significance of a non-compete clause and should not agree to its inclusion if he does not intend to be bound by its terms.  Whilst a non-compete clause might be unenforceable or unreasonable it is ultimately for a court to decide on the issue which, if the circumstances transpire, involve expensive litigation.  It is therefore important that such non-compete clauses are clear and precise and outline exactly the legitimate interest they seek to protect.

Prevention is better than cure.  Expert legal advice before contracts are signed can save both employer and employee considerable expense not to mention the stress and inconvenience involved in an expensive injunction application.

© April 2014

 

For further information in relation to the above please contact Deirdre Farrell, Solicitor, BCL and AITI Chartered Tax Adviser (CTA), Suite 10, The Mall, Beacon Court, Sandyford, Dublin 18 Tel: 01 213 59 40