Employment law in Ireland

December 2017 | EXPERT BRIEFING | LABOUR & EMPLOYMENT

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Brexit planning is underway for many organisations. There are various factors to assess in determining whether and where to relocate, including the question of how employment is regulated in each potential new location. This guide is intended to serve as a high level overview of Irish employment law.

Pre-employment checks

As in the UK, an employer is prohibited from discriminating on specified grounds at all stages of recruitment. While pre-employment checking of references is standard, employers in Ireland have moved away from giving appraisal or character references.

Prospective employees cannot be required to disclose spent convictions. Criminal background checks are possible in respect of limited categories of employee only (for example, for those who work with children or vulnerable adults) and otherwise are not compatible with Irish law.

Medical screening is permissible but, as in the UK, should be managed carefully having regard to relevant data privacy and equality legal principles.

Credit reports can be obtained only by the credit subject. Enforced access to credit reports should be justifiable by reference to the particular role.

Performance of designated ‘controlled functions’ in the regulated financial services sector is subject to a dedicated ‘fit and proper’ regime.

Contracts

An employee must be provided with a written statement of terms containing prescribed details.

As well as these mandatory terms, a contract should include protections for the employer. The courts in Ireland, in assessing the enforceability of post-termination restrictions and other proprietary terms, take a similar approach to that taken in the UK.

While not obligatory, it is best practice to implement workplace policies. A UK-law compliant handbook should require insubstantial revision to be consistent with Irish law.

Minimum wage

The national minimum hourly rate of pay is currently €9.25 per hour for experienced adult workers (the rate is due to increase to €9.55 per hour from 1 January 2018). A lower minimum wage applies for minors and adults in their first two years of employment.

Working time

The average weekly working time limit is generally 48 hours. As well as prescribed rest breaks during the working day, minimum daily (11 consecutive hours) and weekly (24 consecutive hours) rest breaks apply.

An employee required to work on Sundays is entitled to a premium if the employer has not set pay at a rate which takes Sunday work into account.

Annual leave

An employee in Ireland is entitled to a minimum of four working weeks of paid annual leave. More generous arrangements are common in some sectors. Senior executives would generally expect in the region of 25 days of paid annual leave. In addition, there are nine annual paid public holidays in Ireland.

Probation

Customarily, employers impose a period of probation (typically six months). A careful approach to probation reduces the risk associated with a dismissal implemented during or at the end of that period.

With or without provision for probation, generally an employee is not protected under statutory dismissal law for the first year of employment.

Equal treatment

Discrimination (less favourable treatment in terms of access to work, working conditions or progression at work) on any one of nine specified grounds (gender, age, civil status, family status, disability, race, nationality or ethnic origin, religious belief, sexual orientation and membership of the traveller community) is prohibited by employment equality legislation.

The statutory dispute resolution body can award: up to two years’ pay for discriminatory treatment; up to two years’ pay for discriminatory dismissal; and up to two years’ pay for victimisation (where an employee is penalised for speaking up about discrimination). The award is lower (capped at €13,000) for a claim by a non-employee (for example, an unsuccessful candidate).

Part-time workers must not be treated less favourably than full-time colleagues performing comparable work.

Family leave

Legislation provides for periods of maternity, parental, paternity, adoptive and carer’s leave (‘family leaves’). Employment is protected during a period of family leave, but an employer is not obliged to pay the employee while absent. In many sectors in Ireland, however, as part of an overall benefits package, employers continue to pay salary, or a proportion thereof, during family leave. Many employers impose a qualifying service period in this regard and clawback arrangements are not uncommon.

Sick leave

Under Irish law, an employer is not obliged to pay an employee who is absent because of illness. However, many companies do have a paid sick leave scheme whereby an employee can (sometimes subject to a qualifying service period) be paid for a limited number of sick days.

Unlike in the UK, statutory illness benefit is payable to the employee directly by the state.

Employee benefits

In many sectors, provision by the employer of private health insurance, death-in-service benefit and long-term disability cover is standard. There is no legal obligation to provide any of these. Any employers new to Ireland are best advised to undertake some market research to determine what is standard in the relevant sector.

There is a minimum legal requirement in relation to pension. It is mandatory to offer access to a Personal Retirement Savings Account (PRSA), unless all employees have access to an occupational pension scheme after six months’ service. Either way, an employer is not obliged to contribute.

Agency workers

For agency workers, certain basic terms must be equivalent to those applicable to employees hired directly by the end-user.

Unfair dismissal legislation treats the end-user as the employer. A user seeking to avoid termination or other liabilities will need to secure appropriate contractual protection from the agency.

Fixed-term workers

If specific language is used in a fixed-term or specified-project contract, the employer can exclude liability for termination of employment by reason of the expiry of the term.

Temporary workers should not be treated less favourably than ‘permanent’ employees doing comparable work.

Industrial relations

Employers in Ireland are generally not obliged to formally recognise or bargain with trade unions.

Termination of employment

Minimum statutory notice periods depend on an employee’s service at the relevant time and range from one week (for employees with up to two years’ service) to eight weeks (for employees with over 15 years’ service). These notice periods may be (and often are) contractually augmented.

Market standard for many sectors would be provision for a one-month reciprocal notice period for mid-level staff and notice of three months and above for management and executive level employees.

Apart from complying with applicable notice obligations, an employer may be required to justify a dismissal as a matter of statutory law. A dismissal will generally be lawful if it is based on some objective ground recognised by law as fair (for example, redundancy or misconduct) and if fair procedures are observed in implementing it.

With limited exceptions, statutory dismissal protection applies only after 12 months of service. An employee is protected from discriminatory dismissal and dismissal for making a protected disclosure from day one of employment.

If the statutory dispute resolution body decides that a dismissal was unfair (for example, it occurred without a lawful cause or it was procedurally flawed) or discriminatory, an employee can be awarded up to two years’ pay. There is much focus in practice on pre-dismissal procedural fairness and the observance of due process. An employee who is determined to have been dismissed as a result of a protected disclosure (i.e., for whistleblowing) can be awarded up to five years’ pay.

In certain circumstances (very broadly speaking, involving dismissal in breach of contract or the company’s constitutional requirements), an employee can seek to temporarily restrain his or her dismissal by applying to the Civil Courts for an injunction.

Most employers in the professional services sector in Ireland make contractual provision for gardening leave and payment in lieu of notice.

Retirement

There is no statutory mandatory retirement age in Ireland, save in respect of certain types of employment by the state.

Employers may set and enforce retirement ages. An employer who opts to set a specified retirement age must be prepared to objectively justify that policy by reference to a legitimate aim (such as incentivising staff by providing succession opportunities).

Redundancy

Employees become eligible for statutory redundancy payments after two years’ continuous service. An eligible employee’s minimum payment will amount to two weeks’ pay per year of service plus one additional week’s pay. Weekly earnings over €600 are disregarded for the purpose of this calculation.

In the absence of a contractual commitment to do so, or a sufficiently established custom and practice in an organisation, there is no legal obligation to enhance statutory redundancy pay.

As in the UK, large scale, or collective redundancy events trigger specific procedural obligations, including employee engagement. Collective redundancy thresholds differ slightly between the two jurisdictions.

TUPE

Transfer of undertakings law (TUPE) protects employees dedicated to the transferring ‘undertaking’ in a business or asset sale or an outsourced service provider appointment changeover. TUPE applies in broadly the same circumstances in which it does in the UK.

While there is some divergence in procedural requirements and the principles applicable to outsourcing or service provision changeover, the fundamental principles of TUPE are largely similar in Ireland and the UK.

Contractors

A person engaged as a contractor or consultant can be deemed to have an employment relationship with the recipient of his or her services in certain circumstances, depending on factors such as supervision and control, integration into the recipient’s business, dedication and exclusivity. The Irish Revenue Commissioners (or, if a person classified as a contractor asserts employee status, the relevant deciding body) will look at the practical reality of a working arrangement in determining whether an employment relationship exists. In this context, the contractual framework or label used for the arrangement is not conclusive.

Catherine O’Flynn is a partner and Louise Harrison is a senior associate at William Fry. Ms O’Flynn can be contacted on +353 (0)1 639 5136 or by email: catherine.oflynn@williamfry.com. Ms Harrison can be contacted on +353 (0)1 489 6580 or by email: louise.harrison@williamfry.com.

Catherine O’Flynn and Louise Harrison

William Fry