Government approves priority drafting of legislation to affect zero and low hours contracts

The Government has proposed draft legislation that would significantly affect the operation of zero hours and low hours contracts in Ireland. The proposals would prohibit zero hours contracts, except in cases of genuine casual work or emergency cover or short-term relief work for an employer. The proposals would affect any employee on low hour contracts who consistently works more hours each week than is provided for in his or her contract of employment.

Currently the law does not prohibit any contract of employment that requires an employee to be available for work for a certain number of hours each week but that does not require the employer to make a corresponding commitment to provide work to the employee during those hours. Neither does the law prohibit any contract in which an employee is obliged to be available for work as and when required to work by the employer. The law protects such employees by requiring the employer to pay the employee for a specified number of hours’ work. The employer must pay the employee for the specified number even in weeks during which the employee works less than the specified number of hours. The specified number of hours for which the employee must be paid varies with context, but is typically 25% of the maximum contracted hours or 25% of the typical working week, subject to a maximum of 15 hours’ work per week.  

Under the draft proposals, an employer will no longer be able to engage an employee on a contract in which the employee does not have an entitlement to work any hours, unless the work is genuinely casual work, emergency cover or short-term relief work for the employer. 

The proposals also provide for the creation of a new right for an employee whose contract of employment does not reflect the reality of the hours worked by him or her on a consistent basis. If an employee can establish, using a reference period of 18 months, that his or her contracted hours are not a true reflection of hours actually worked, the Government proposes that the employee will have the right to be placed in a band of hours that better reflects the actual hours worked over that reference period.

According to The Department of Jobs, Enterprise and Innovation, this proposal will “provide greater certainty and a truer reflection of their hours of work and level of earnings, thereby addressing, in particular, difficulties employees may have accessing financial credit, including mortgages”. It is intended that the Workplace Relations Commission (WRC) will have responsibility for enforcing this proposed right. An employee will be able to seek redress through the WRC but redress will be limited to the placement of the employee in an appropriate band of hours. The proposals do, however, provide some potential defences for an employer facing a claim before the WRC of this nature. For example, an employer will have a defence if it can demonstrate that significant adverse changes have affected its business (such as the loss of an important contract) and those changes justify the continuation of the hours stated in the employee’s contract.

The Government also proposes to increase the obligations placed on each employer to provide information to each employee at the commencement of the employment relationship. It proposes that, within five days of commencement of employment relationship, five core terms of the employment relationship must be disclosed to the employee. These terms will include the employer’s reasonable expectation of the normal length of the employee's working day and week. Where an employer breaches the proposed legislation, it will be guilty of a criminal offence, though the precise sanctions have not yet been disclosed.

The legislation will now be drafted in the Attorney General’s office and will have to pass through the Oireachtas before being enacted. It may be some time before the proposals become law and they may change significantly in the meantime. For businesses that operate zero hours or low hours employment contracts these proposals could mean a complete overhaul of some employment relationships.

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For further information on this topic, or for general advice on any employment law issues, contact Michael Kennedy, Partner at mkennedy@byrnewallace.com, Loughlin Deegan, Partner at ldeegan@byrnewallace.com or Stephen Kane, Solicitor at skane@byrnewallace.com in the ByrneWallace Employment Law Team. 

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