Maurice Quinlivan (Limerick City, Sinn Fein)
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I have not received any apologies from members. I remind members that if they are participating online, they should do so from within the Leinster House complex. Today's meeting is to discuss the Sectoral Employment Order (Construction Sector) 2024. The Industrial Relations (Amendment) Act 2015 introduced sectoral employment orders, SEOs, as the mechanism for sectoral wage setting. This mechanism applies across economic sectors, replacing the previous system of registered employment agreements, REAs. The intent of the legislative framework governing SEOs is to establish minimum rates of pay, sick leave provisions and pension provision for particular sectors.

The draft sectoral employment order we are discussing today was laid before both Houses of the Oireachtas on 23 October 2024. Both the Dáil and Seanad referred it to the committee for consideration. To assist us in our consideration of the sectoral employment order, I welcome the Minister of State at the Department of Enterprise, Trade and Employment with special responsibility for business, employment and retail, Deputy Emer Higgins. I also welcome the following departmental officials: Mr. Dermot Mulligan, assistant secretary, workplace regulation and economic migrant division; and Ms Mary O'Connor, assistant principal officer, industrial relations unit.

I begin, as always, by explaining some limitations to parliamentary privilege and the practices of the Houses as regards references made in evidence to other persons. The evidence of witnesses physically present or who give evidence within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that could be regarded as damaging to the good name of the person or entity. If witnesses' statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction I may give.

Copies of the Minister of State's statement have been circulated to all members. I invite her now to make her opening remarks.

Emer Higgins (Dublin Mid West, Fine Gael)
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I am very pleased to present to the committee a draft sectoral employment order for the construction sector. The draft order proposes to amend the previous SEO made in 2023 by confirming new minimum rates of pay, pension and sick pay entitlements for workers in the construction sector. If approved, the order will be the fifth of its kind to be made since the first SEO for the construction sector was issued in 2017.

Before I detail the specifics of the order, I remind us all of our respective roles, including mine as Minister of State and that of committee members, as Members of the Houses of Oireachtas, in terms of the SEO process. An SEO is a statutory minimum wage-setting mechanism in a given economic sector. In essence, an SEO is a collective bargaining mechanism which, once the statutory threshold has been met, gives the Labour Court, as a neutral decision-maker, the power to examine an application for an SEO in a given economic sector. As part of this examination, the Labour Court must explore all the policy considerations set out in the Industrial Relations (Amendment) Act 2015 by affording all interested parties an opportunity to engage with the proposals and have an opportunity to be heard. Once the Labour Court has complied with the statutory process set out in the 2015 Act, it then has the power to make a recommendation for an SEO to me. This recommendation must be accompanied by a report setting out the process and matters the Labour Court considered in reaching its recommendation. The purpose of the report is to assist with satisfying the Minister that the Labour Court has complied with its statutory functions under the Act.

My role in this process, as Minister of State, is quite limited. Pursuant to the 2015 Act, I have the power to either accept or reject the recommendations presented. I am compelled to accept the recommendations if I agree, based on the statutory report the Labour Court has prepared, that the court has complied with the statutory process. If I, as Minister of State, am not satisfied that the Labour Court has complied with its duties as set out in the Act, I would have to return the proposal to the court setting out the reasons for not accepting the recommendation. To be clear, I do not have any power to engage with the substantive recommendation itself. I receive the recommendation and either approve or reject it.

I confirm to the committee that I have considered this draft recommendation in line with the terms of the 2015 Act, relying on the statutory report outlining the Labour Court's deliberative process. Having done so, I am satisfied that the Labour Court has complied with its statutory role. Accordingly, my Department has notified the Labour Court that I accepted the recommendation and would be referring the matter to the Houses of the Oireachtas, as required by the Act, for their consideration. Furthermore, as required, a draft order was laid before the Houses. The 2015 Act also sets out that the Houses of the Oireachtas may only accept or reject the draft order as it is. The Act does not permit any alterations or amendments from the committee to the draft order. If the Houses accept the recommendation, I will then sign a statutory instrument to give it effect. I am keen to do so before the dissolution of the Dáil. Should the Houses reject or fail to approve the draft order, the proposal for the SEO would then fall.

I turn now to the proposal itself. The application for an examination came before the Labour Court by way of application by the Building and Allied Trades Union, Connect Trade Union, Operative Plasterers and Allied Trades Society of Ireland, OPATSI, SIPTU and Unite the Union. They did so pursuant to section 14 of Chapter 3 of Part 2 of the Industrial Relations (Amendment) Act 2015.

The five unions requested that the Labour Court examine the terms and conditions relating to the remuneration and any sick pay scheme or pension scheme, of all persons employed in the construction sector as craftspeople, construction operatives, and apprentices. Having examined the submissions and the accompanying supporting material, the Labour Court reports that it was satisfied that the applicants were substantially representative of the workers of the particular class, type or group in the economic sector in respect of which the request is expressed to apply. This gave the court the jurisdiction to proceed with the examination.

The court then, as it is required to do, published its intention to undertake an examination of the unions’ request and invited submissions from interested persons. Written submissions were received from three interested parties. They were the construction industry committee of ICTU, the Construction Industry Federation and Connect Trade Union. No parties objected to the making of an SEO. These submissions will be made available for anyone to examine on the Labour Court’s website.

A public hearing was then held on 6 August of this year and again on 9 September. All interested parties were given an opportunity to be heard and to engage with the various policy considerations that the process requires. Having considered the matter fully within the statutory time limits, the Labour Court then made its recommendation to me. According to its report, the court has considered the factors set out in section 16(2) of the Act. This includes the potential impact of the making of an order on levels of employment and unemployment in the identified economic sector, the potential impact on competitiveness in the economic sector concerned and that the SEO would be binding on all workers and employers in the economic sector concerned. I understand that the Labour Court’s report has been shared with members of the committee, so I hope they have had the opportunity to examine it themselves in greater detail. I confirm that it will be made available on my Department’s website.

I hope the committee will recognise the importance of ensuring industrial relations stability in the construction sector and will accept the order in its draft form. I trust that the committee recognises that Ireland needs a competitive, productive and sustainable construction sector for the delivery of high-quality and affordable residential and commercial properties alongside its national physical infrastructure. I believe this SEO plays a really significant role in supporting this sector through the maintenance of harmonious industrial relations. The terms of the SEO refer merely to the minimum rates of pay and terms and conditions, so it is a floor. At times when the sector is buoyant, it is expected that most employers will exceed these minimum rates. The real importance of the SEO is to ensure that in times of economic downturns, workers are properly protected and the sector maintains its attractiveness as a profession for apprentices in particular.

It has been a long-standing practice of trade unions and the employers in the construction sector to enter into collective agreements that govern the terms and conditions of employment. These arrangements have been in place for many decades and have provided the industry with cost certainty and stability. The original SEO provides for a dispute resolution mechanism, which does help when it comes to preventing industrial unrest.

Should this order be approved by the members, I will sign an order giving it legal effect. Its terms will be binding across the entire economic sector. The new order will become effective on 1 August 2025. It will remain in place for two years and includes a second minimum remuneration increase in August 2026. I will hand over to members.

Maurice Quinlivan (Limerick City, Sinn Fein)
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We have a rota in place, and Deputy Louise O'Reilly is first. She has 14 minutes.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I thank the Minister of State and her officials for being here this morning. We welcome the SEO. These things take a long time; sometimes unnecessarily so. In the last portion of her submission, the Minister of State said that the SEO will be binding across the sector. I speak to people within the trade union movement on a very regular basis and while it is not massively widespread, there are pockets of noncompliance with the SEO. It is not just in construction but we are talking about construction this morning. Could the Minister outline for us how this is going to be enforced? The best way for any worker to enforce an SEO is to be a member of and be active in his or her trade union, and ensure he or she has his or her rights at work vindicated. However, we are also sitting here knowing that trade union density in the construction sector is not huge. With regard to making sure the Minister of State lives up to that statement, if it is binding across the sector, can she outline for us the steps that will be taken?

Emer Higgins (Dublin Mid West, Fine Gael)
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I thank the Deputy for welcoming the SEO. It is really important that we have these. It is a form of collective bargaining where we have trade unions, and where we have employers come to the table and collectively agree on the way forward for their industry.

With regard to compliance with the provisions of the SEO, inspections carried out by Workplace Relations Commission inspectors operate a compliance model. That means an inspector will work with the employer to ensure that the employer fulfils all of its statutory obligations, and that any outstanding wages or entitlements are given to workers. The inspectorate division of the WRC carries out inspections of employer records with a view to determining compliance with employment rights legislation, effectively. These inspections are in response to complaints received of alleged non-compliance with relevant employment rights legislation. They arise as part of compliance campaigns, which focus on compliance in specific sectors, or with specific pieces of legislation. They also arise from routine inspections, both announced and unannounced, which act as an overall control mechanism.

The aim of the WRC inspectorate is to achieve voluntary compliance with employment law through the provision of education, awareness, inspection of employers' employment records, and then enforcement when necessary. We know this is going to be very well communicated to the sector. The sector has a legal obligation and we expect it to have these minimum rates. On top of that then, we have a situation where the WRC can carry out inspections. It should be noted that while the WRC inspectorate does not currently have the powers to enforce the terms of the statutory orders, it goes in and has the powers to see what is happening in that company. Employees whose rights under a wage-setting mechanism have not been complied with are then referred to the adjudication service of the WRC for investigation. Dispute resolution, under SEOs, provides for access to the WRC's adjudication service. That specific division is for individual complaints and disputes. Then, the WRC conciliation service is there for collective disputes as well, and obviously an appeal is available on application to the Labour Court. Notice, in writing, of a dispute should be given to an individual and to their trade union as well, and it can be progressed that way.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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That is okay. I understand how to serve notice for a dispute but my question relates to how it is going to be enforced. It is not down to the WRC inspectors because that is not their role. The Minister of State has said that it is binding, and it should be. She has also said that it is the minimum, and that is all that it is. There is nothing to stop any worker bargaining collectively, getting organised and doing that.

It is binding. How is it enforced? If it is not the WRC inspectors, is it up to an individual? That will bring me on to my next question. Is it up to an individual to take a case to the WRC himself or herself, or is it a collective group? How is compliance assured? I do not suggest noncompliance is rife. I do not believe that it is but there are pockets of noncompliance. We are talking about the absolute bare minimum here. This people are not on massive money. We are talking about very modest wages and the absolute minimum. Is the only option open to a worker, where they find they are working in a noncompliant organisation, to take an individual case to the WRC? I would put it to the Minister of State then that this leaves that worker in a very vulnerable position.

Emer Higgins (Dublin Mid West, Fine Gael)
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If there is noncompliance, a case can absolutely be taken to the WRC. It can be taken by an individual, and it can be reported to the trade union and taken that way. If the Deputy is aware of a situation where there is noncompliance, please let us know because that is something we will look at. We have EROs and SEOs in other industries. They work very effectively and it is very rare that we have noncompliance reported but there is action taken where there is.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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That action is taken by the individual worker. What I am saying is, that is not ideal. There should be a role for the WRC inspectors in this regard. I am going back a while now to 2006 and the negotiation of the Towards 2016 national wage agreement.

I think 90 inspectors were recommended at that stage but we are not yet up to that and the workforce has increased massively. Even if it were to be the WRC inspectors, they would still have an awful lot on their plate.

This comes back to compliance. There are certain sectors where bogus self-employment is an issue, especially construction. It is a way for certain employers, albeit not all, to get around the SEO. Will the Minister of State give consideration to having inspections carried out on site by Revenue and the Department of Social Protection, as the relevant authorities? I understand that strays outside of her Department but those are the relevant statutory bodies that would do it. One surefire way for an employer to get around the SEO is by means of bogus self-employment and it does not seem to be policed well. Construction is one sector where this has been an issue and my party colleague Senator Gavan will be aware of it as well. It was an issue when we were working in the union and it remains one now. Should consideration be given to this and would the Minister of State consider making that recommendation to her colleagues?

Emer Higgins (Dublin Mid West, Fine Gael)
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In terms of collaboration with Revenue and the Department of Social Protection, I assure the Deputy that does happen. On 11 July, I chaired a meeting with officials from the Department of Social Protection and Revenue looking at the issue the Deputy described and the determination of the employment status working group. The working group had been set up on foot of the Supreme Court ruling on the Domino’s case and we have been working with the Department of Social Protection and Revenue to put forward changes to the code of practice to better inform employers of their obligations in this new context. There will be new tests for the appropriateness of self-employed versus PAYE status. We need to work with both the Department of Social Protection and Revenue to make sure, first, that employers understand their obligations, and we had a meeting to that effect on 11 July. As a result of that, there will be a new code of practice, which needs to be shared with relevant stakeholders and communicated out. Once it is in practice, we will absolutely need to look at how we can ensure everybody is compliant with it.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Is there a timeframe for that code of practice?

Emer Higgins (Dublin Mid West, Fine Gael)
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I understand that the draft of it is nearing completion and that a review has been undertaken by the Department of Social Protection, the Revenue Commissioners and the Workplace Relations Commission. I should add that the commission was also represented at that meeting and a lot of collaboration is happening in that regard. It is now being shared with the group members for final observations. We are nearing the end of that and we hope to have it quickly for employers.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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How soon will this new SEO be operational?

Emer Higgins (Dublin Mid West, Fine Gael)
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It will come into effect in August.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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In the meantime, will there be no SEO?

Emer Higgins (Dublin Mid West, Fine Gael)
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No, the current SEO has not expired. The new one will be in place from next August and will also allow for increased remuneration the following August. One reason we tend to sign the SEOs about six months in advance is to give employers enough notice to take account of them.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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Does the Minister of State know what the increased sick leave entitlement is?

Emer Higgins (Dublin Mid West, Fine Gael)
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The weekly contribution coming into effect from August 2025 will be €2.37 for employers and €0.63 for employees, which means the total weekly contribution will be €3.

Paul Gavan (Sinn Fein)
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The Minister of State is welcome. I want to emphasise a couple of the previous points. Clearly, we want this SEO to be passed quickly in order that it will be in place for the works concerned. I have to declare a personal interest; I have a son who is entering his third year of an apprenticeship. My concern, which Deputy O'Reilly put well, is that if it is left to an individual to make a complaint about non-compliance with an SEO, the reality, as I know from my work on the ground as a trade union official, is that the person will be fired. That is what happens. I would respectfully suggest that the Government has to come up with a way and means of enforcing the SEO that does not fall on individual workers, because that is the issue.

The second issue I will make again relates to what Deputy O'Reilly said. Bogus self-employment is widespread. It was highlighted by a number of people in their submissions, including Joseph King of Connect Trade Union. It is clear there is not sufficient enforcement. There are sites in Limerick where subbies basically say that if someone wants a job, they can come in self-employed or else they are not coming in. That is happening today. I have spoken to people who have faced that. It is really widespread. My question is about enforcement, and a related question is where we are with the number of workplace inspection employees at the moment and what the target is.

Emer Higgins (Dublin Mid West, Fine Gael)
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I am pleased to hear the Senator wants this to be passed quickly. That is absolutely our intention. For his son who is a third-year apprentice, this will mean he will be at 75% of the craft rate from August 2025, or 75% of €23, which is about €17.25. This is, I hope, good news for the Senator's son and all apprentices in his position. Where somebody is being paid below that, that absolutely needs to be reported. That is the process that is in place. For anybody who is afraid of reporting that their employer is not paying them the legal, statutory obligation, there is the Unfair Dismissals Act, which protects them.

Paul Gavan (Sinn Fein)
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I know but that is not a protection in practice. In practice, the person will be fired and their main priority will be to get another job. Moreover, informal blacklists are in operation. I hear what the Minister of State is saying but, with the greatest of respect, it is not a defence for these workers, many of whom are young.

Emer Higgins (Dublin Mid West, Fine Gael)
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Their trade union is there for that reason. That is why people organise in a collective way. Five trade unions were at the table to negotiate this and have worked closely with employers in this sector to agree terms and conditions. Employers will now be legally and statutorily bound from August, once we sign this into law, to pay appropriately in that regard and unfair dismissals legislation is in place in case what the Senator outlined occurs.

It is very concerning to hear about the sites in Limerick. I urge the Senator to report any details of complaints like that to the Department of Social Protection, Revenue and the WRC. Three bodies have the power to look at this and to investigate any incidents like that.

In respect of the WRC specifically, this year an additional €2.4 million has been allocated, bringing its budget to €21.2 million. The inspectorate currently has sanction for 80 inspectors and 54 are in situ. A national recruitment campaign is under way. We now have a panel of interviewed applicants and expect to be able to hire to fill those vacancies in the coming weeks. The WRC had carried out over 6,500 separate visits to workplaces to the end of last year, with 4,727 inspections completed. As at the end of June of this year, the WRC inspectorate had completed 2,468 workplace inspections, involving 3,316 individual inspection visits.

As can be seen, we have inspectors on the ground carrying out these site visits and inspections.

David Stanton (Cork East, Fine Gael)
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I welcome the Minister of State. This hearing is just to give the order fair wind. As the Minister of State has said, she has no real role in the substantive issues. I have one question. In her submission, the Minister of State said:

At times when the sector is buoyant, it is expected that most employers will exceed these minimum rates. The real importance of the SEO is to ensure that in times of economic downturns, workers are properly protected ...

Have we any idea how much the pay in the sector is above the minimum rate? Has any research been done on that at all? The Minister of State’s statement was a curious one to make.

Emer Higgins (Dublin Mid West, Fine Gael)
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The CSO does research on the sector but it is not broken down by craft. We have given a breakdown by craft, so it is a bit difficult to compare and contrast. Ultimately, we saw that the construction sector was a very unfavourable one in which to work during the recession and that this had a considerably negative impact on the pipeline of apprentices. It took Ireland a long time to recover from this and to have a buoyant and experienced workforce to tackle the shortage of housing and the infrastructural issues that so many of our craftspeople, tradespeople and other workers throughout Ireland are now addressing for us.

David Stanton (Cork East, Fine Gael)
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We are now in a different position because the sector is extremely buoyant. I understand there are many vacancies in it at the moment, which would lead one to conclude that most employers will exceed the minimum rates to hold on to workers. There is competition between employers at present. I am curious as to whether there is any information on this.

The Minister of State mentioned apprentices. Many apprentices do not stay the course. They start their training but, for whatever reason, leave after a certain period. I am not sure whether the Minister of State has any up-to-date figures on this. It is quite concerning.

I note that the SEO covers minimum rates, but if apprentices are to be retained they should be paid more. Employers tell me that when apprentices are on block release, they are not actually working or producing in the workplace. It was suggested that the National Training Fund might be used in this case. Maybe this is something that the Government will consider in the future.

I look at this matter from both the side of apprentices and the side of employers. Where employers are paying apprentices’ wages while the latter are on block release, those employers are not getting any work done for it. However, apprentices with a mixture of training and work are training while they are working. This might need some attention next time round. Again, I am not sure whether the Minister of State has any figures with respect to the number of apprentices who drop out each year.

Emer Higgins (Dublin Mid West, Fine Gael)
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One of the things we have done through the negotiations is set out a stepped pay scale for apprentices. In year one, apprentices are paid one third of the craft rate, but when they get into year two, they are paid half of it. They are paid 75% of it in year three and 90% in year four. This is to recognise the training, development and additional skills they gain each year.

Although apprentices are the responsibility of the Department of further and higher education, I have many discussions about them. The Department of Social Protection, where I am a Minister of State, has a division that organises construction expos annually. These are targeted at people on the live register and early school-leavers to encourage them to take up apprenticeships. The expos are really successful. We had one in Tallaght last year and the year before. It was highly successful and there was a great buzz around it, in addition to great energy. Many transition year classes attend to see it in action. It is great to see engagement at this level to encourage people to become apprentices. SOLAS does a huge amount in this area and I will certainly pass the Deputy’s feedback on to it. I agree that we absolutely need a sustainable apprenticeships model.

Only recently, I suggested to officials in the Department of Social Protection that they carry out a study of people who go through the expo, become apprentices and later drop out, to determine their reasons for doing so. Anecdotally, I have heard that the cost of tools, for example, might be prohibitive, depending on the employer. Therefore, I have asked the Department to carry out a review of the feedback from those who drop out of apprenticeships. If people enter careers that are just not for them, there is nothing we can do about it, but if there are things the Government can do to support people to stay in apprenticeships longer, it absolutely will do them.

David Stanton (Cork East, Fine Gael)
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I support that initiative. It is a very positive one. Well done on it.

The cost of tools and such things can have an impact. Overall, we need to encourage more people to become apprentices, stick it out and become qualified.

I understand that both sides have agreed on this matter. I commend the Labour Court and the Department on the work they have done in this regard. I have no problem saying I am happy with this.

Emer Higgins (Dublin Mid West, Fine Gael)
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I thank Deputy Stanton.

Paul Gavan (Sinn Fein)
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I support Deputy Stanton’s point. The cost of tools is shocking. I am in a fortunate position in that I am able to support my son in this regard, but plenty of families really struggle. If there is an initiative forthcoming in this regard, it will be a really good way of trying to retain young apprentices who are trying to make their way in the world. I would very much encourage the initiative.

My last question is a follow-up. Did the Minister of State say we have 54 labour inspectors right now? Is that correct?

Emer Higgins (Dublin Mid West, Fine Gael)
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Yes.

Paul Gavan (Sinn Fein)
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That is a shortfall of almost 30% on where we should be. Having noted the good work the inspectors do and the amount of money they recover in unpaid wages – let us call it what it is: wage theft – I am bit shocked that things have been let go to the point of our having such a shortfall in labour inspectors. How has that come about?

It is about two years since I asked my next question. There has been a consistent shortfall in the number of labour inspectors who should be in operation. A complement of 90 was recommended in 2006 as part of the Towards 2016 agreement. Many more people are at work today than there were then, yet our number of inspectors is effectively half of what it was then. The repercussions of this for workers are really serious. The Minister of State referred to this in terms of the bogus self-employment issue I referred to.

I am genuinely concerned about this matter. It occurs to me that the Department just has not been proactive enough. I do not expect the Minister of State to know off the top of her head the highest number of inspectors her Department has had over the past four years, but I would like to know that figure. My random guess is that it is nowhere near 80. This is just not good enough. People are not getting the protections and support they need in the workplace. We know there are major issues in the area we are talking about today, namely construction. I want a follow-up on that particular point, and that will be it.

Emer Higgins (Dublin Mid West, Fine Gael)
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I thank the Senator. We expect this problem to be resolved very shortly. The WRC inspectorate is staffed by civil servants from my Department. The staff are ranked at executive officer and higher executive officer levels. Resources at inspectorate level in the WRC have increased by almost one third since 2020, with the WRC now having been sanctioned for 80 inspectors, representing an increase of 20. We are recruiting these at present. Additional funding provided in the most recent budget will increase the WRC’s inspectorate number to bring the worker-employer ratio across the State into line with international norms.

We fought very hard in the budget to get an extra €2.4 million for the WRC. The WRC will provide for more labour inspectors. One of my priorities when I became Minister of State six months ago was to ensure the WRC would be adequately staffed. That is why I am so pleased that, from the end of November, we will be recruiting the 26 additional inspectors who are already on the interview panel. We are making very good progress in rectifying the issue.

Paul Gavan (Sinn Fein)
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It has to be done. I thank the Minister of State.

Maurice Quinlivan (Limerick City, Sinn Fein)
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That concludes our consideration of this matter.