An Interview with DLA piper discussing labour & employment in Ireland – Lexology

This article is an extract from GTDT Labour & Employment 2021. Click here for the full guide.

1 What are the most important new developments in your jurisdiction over the past year in employment law?

As the covid-19 crisis continues, so do the legal developments related to the crisis. Since March 2020, there have been over 35 covid-related government announcements, regulations or wage scheme changes that have impacted employers and it has been necessary to understand and advise clients on the nuances of these during this time. One thing is clear – remote working is here to stay and the government is fully behind it. In January 2021, the government published the National Remote Work Strategy, in which it is an aim to bring about legislation enshrining a right to request remote work. Currently, employees are able to ask their employers for the right to work remotely, but there is no underpinning of such a right and no obligation to grant the request on the part of the employer. Draft legislation has now been published to address issues such as minimum length of service, the period within which the employer must respond, and reasonable grounds for refusing requests.

Recognising in part that remote working can lead to a blurring of the lines between work and life, on 1 April 2021 the Workplace Relations Commission (WRC) published a code of practice on the right to disconnect, which came into effect the same day. While the code itself is not legally binding, it will be used as evidence in any adjudication concerning an employee complaining of their working hours under existing legislation. The code gives practical guidance on the issue to both employers and employees, and while it gives employees the right not to routinely work outside of their normal working hours, there are circumstances in which it can still be required by an employer. These circumstances include emergency situations, and crucially, where business and operational reasons require it having regard to an employee’s role and service being provided.

The focus now for employers is firmly on returning to the workplace with the easing of the work from home restriction on 24 January 2022. This comes with its own unique set of challenges.

Any return to work should be guided by the Transitional Protocol (the Protocol) published by the government. With over 41,000 inspections carried out by bodies such as the Workplace Rights Commission to date measuring employers’ compliance with the Protocol, there is a pressure on employers to get it right. The Protocol sets out general guidance for measures such as adequate ventilation and enhanced hygiene. The Protocol also encourages employers to maintain at least one ‘lead worker representative’. Their role is to work with the employer to implement and monitor adherence to the Protocol, and work with the employer to facilitate a phased return to the office.

We are also seeing some evidence of employer anxiety around the potential conflict between privacy and infection control. This is particularly the case for companies with a global presence seeking to apply a blanket global policy requiring vaccination before return to office. The question of whether or not an employer can ask an employee to disclose his or her vaccination status is a hot topic. There may be an argument that information on the vaccination status of a given workforce is pursuant to an employer’s legitimate interests, but the threshold for satisfying this ground is high. This is amplified by the fact vaccination status relates to personal health, a highly sensitive category of data subject to tighter restriction than other categories. The Data Protection Commissioner has expressed a level of comfort with Ireland’s health service requiring its workforce to disclose their vaccination status, viewing it as ‘as necessary safety measure’. For other employers, the answer is not quite so straightforward. That said, with circa 92 per cent of the adult population in Ireland fully vaccinated, this tends to be less of an issue for employers in practice.

At the end of 2020, the WRC and Health and Safety Authority jointly published a Code of Practice on the Prevention and Resolution of Bullying at Work (The Code). While it does not change the legal definition, it paints a clearer picture of what does and does not constitute bullying and has brought a renewed focus for employers on this issue as a health and safety risk. Examples of bullying include intrusion, exclusion, verbal abuse or spreading malicious rumours. However, where these incidents are one-off occurrences, they will not constitute bullying, nor will expressing differences in opinion, constructive feedback or ordinary performance management. The Code places an obligation on employers to prevent workplace bullying through preventative actions, such as developing a policy in consultation with employees, providing training to staff, nominating a lead point of contact for bullying complaints, and developing processes for the raising of such complaints both informally and formally.

2 What upcoming legislation or regulation do you anticipate will have a significant impact on employment law in your jurisdiction?

Ireland is one of only 10 countries within the EU with existing strong legal protections for whistle-blowers already in place. On 12 May 2021, the General Scheme of the Protected Disclosures (Amendment) Bill was published by the Minister for Public Expenditure and Reform. The purpose of this amending legislation is to transpose Directive (EU) 2019/1937 (Whistleblowing Directive) into Irish law. The reason we believe it will still have a significant impact on employment law in Ireland is due to the broadening of scope in a number of key areas.

An existing obligation to establish and maintain procedures for making protected disclosures extends only to the public sector. The Directive requires that this obligation is extended to the private sector. Many Ireland-based employers already have whistle-blowing policies and procedures in place, particularly US-parented employers or employers in the financial services sector (due to separate obligations in the Central Bank (Supervision and Enforcement) Act 2013 enacted in response to the financial crisis). Detailed whistle-blowing policies will become the norm for all employers and will be designed with the time frames provided for in the Directive in mind. Current Irish legislation is silent on time frames for response. The Directive will also extend the protection to individuals not currently covered providing new legal safeguards for volunteers, shareholders, non-executive directors and even recruitment candidates. The type of disclosure that will attract whistle-blower protection for the individual goes beyond information that came to the worker’s attention ‘in connection with the worker’s employment’. The Directive broadens the scope referring simply to ‘information acquired’. The extension of the definitions of penalisation could also be problematic for employers and have a potentially significant impact on HR teams seeking to manage employees deemed to have made a protected disclosure, with withholding training, negative performance assessment or employment reference, ostracism, failure to offer permanent contract, damage to reputation on social media and medical referral now falling within the definition. The Directive provides for access to legal aid for whistle-blowers. There is no such requirement in the current Irish legislation, or importantly within the Irish employment framework (eg, WRC or Labour Court). Finally, full immunity from defamation claims and claims arising from the disclosure of trade secrets is provided so long as the individual had reasonable grounds to believe that the reporting was necessary.

For financial services sector employers, the long-awaited General Scheme of the Central Bank (Individual Accountability Framework) Bill 2021 was released on 27 July 2021. It outlines the draft Heads of Bill to address the Central Bank of Ireland’s proposals for an Individual Accountability Framework (IAF) and Senior Executive Accountability Regime (SEAR) originally proposed in 2018. The draft legislation indicates that the SEAR will cover banks, insurance and investment firms and third country branches of those institutions in the first phase and may extend to other institutions in future years. The legislation, which is expected to be enacted in the second half of 2022, rolls out new Conduct Standards applying to a wider tranche of workers in the sector rather than the only the most senior executives. Those covered by the new standards include those holding controlled function (CF) roles under the current Fitness and Probity Regime, those holding pre-approved controlled function roles (PCF), and those with the ability to exert significant influence over the affairs of a regulated financial services provider.

The IAF also lays obligations on firms and senior individuals or executives within them to clearly set out where decision-making responsibility is placed, and provide a statement to the Central Bank of Ireland of senior executive functions. Additionally, a legal obligation will be imposed on those with a senior executive function that requires them to take reasonable steps to prevent their firm committing a ‘prescribed contravention’, which is essentially a breach of financial services regulations, in areas of the firm’s business they are individually responsible for.

The Conduct Standards themselves fall into three categories – the Common Conduct Standards applying to CF and PCF roles, the Additional Conduct Standards applying to PCF roles and staff with significant influence over business affairs, and the Business Conduct Standards applying across the board. Those found to be in breach of any of the Conduct Standards may be subject to enforcement under the Central Bank’s Administrative Sanctions Procedure, and breaches under the Common or Additional Conduct Standards may also be subject to separate investigations. Breaches on the part of an individual, whether or not he or she participated in a breach by the firm, can include disqualification and fines of up to €1 million.

The Gender Pay Gap Information Act 2021 was finally introduced after a long delay, but the regulations setting out the detail are still awaited. The Act, which will commence upon the issue of a ministerial order, will apply firstly to employers of 250 employees or more, then two years from commencement, to employers of 150 employees or more, and finally three years from commencement, to employers of 50 or more. The Act will require the publication of information such as the differences between the mean and median hourly rates and bonuses of male and female employees as a percentage, and will require employers to explain any difference and steps that they have or intend to take to eliminate any difference. Moreover, the WRC may order an employer to take a specified course of action to comply with the Act, as may the High Court if the Irish Human Rights and Equality Commission applies for such an order, assuming it has reasonable grounds to believe an employer has failed to comply with the Act.

Finally, it is worth mentioning that in any other year, the introduction of statutory sick pay in Ireland would have been a significant development. Currently, the Sick Leave Bill 2021 is making its way through the legislative process, and draft legislation was published in November 2021.

3 How has the #MeToo movement impacted the investigation or settlement of harassment or discrimination claims in your jurisdiction?

Since the #MeToo movement, we have noticed increased caution on the part of employers around the treatment of an alleged victim of sexual harassment. Employers have shown an increased willingness to investigate harassment even outside of the work context. We have also noticed that employees are far more vocal on the issue – they expect more from employers in addressing harassment and inequality within the workplace, and are more willing to speak up as a bystander.

Undoubtedly influenced by the furore over Weinstein’s lawyers’ frequent use of NDAs within settlement agreements, it is not surprising to see a draft bill seeking to prohibit their use in harassment cases. The Employment Equality (Amendment) (non-disclosure agreements) Bill 2021 was introduced by way of a private members’ bill on 1 June 2021. Section 2 of the Bill seeks to insert a new section into the Employment Equality Act 1998, preventing employers entering into non-disclosure agreements (NDAs) where the employee has ‘experienced or made allegations of’ sexual harassment or unlawful discrimination and the effect of the NDA would be to conceal the details of the harassment or discrimination. Employers may only enter into NDAs with employees where an employee has expressed a ‘wish or preference’ to do so. Additional requirements for enforcing an NDA are also included, such as the requirement for an employee to be offered legal advice at the expense of the employer in writing, or that the employee will have an opportunity to waive his or her confidentiality in future.

It is noteworthy that this is a private member’s bill and is not guaranteed to become law. However, at the time of writing it had passed first reading and was in committee stage. The Bill is also being included in a wider public consultation around the Equality Acts in Ireland, which was due to close in December 2021. The findings of the consultation could inform government consideration of the legislation going forward, and there is a possibility of significant legal change affecting NDAs and, consequently, the settlement of harassment and discrimination claims.

Employers are under obligation to prevent sexual harassment and discrimination in the workplace, and to protect the health and safety of their employees. Employers should have in place policies and procedures, which are known to employees, to prevent or address harassment and discrimination complaints. Having such a policy in place can even constitute part of a defence in any claim arising from sexual harassment or discrimination, so long as the employer can demonstrate it was a reasonable step toward preventing such conduct. The Code of Practice on Sexual Harassment and Harassment at Work (a code in place prior to the #MeToo movement) aims to assist employers in developing robust policies in this area. It provides a helpful overview of the legal provisions covering sexual harassment and discrimination, and delves into what a good policy to prevent and address concerns should look like.

4 What are the key factors for companies to consider regarding the enforcement of restrictive covenants against departing employees?

Post-termination restrictive covenants, particularly those that contain non-compete provisions, can be difficult to enforce in Ireland. The view taken by the courts is that such provisions can constitute an unlawful restraint of trade, or that they impede on a citizen’s constitutional right to earn a livelihood. However, not all non-compete clauses will be deemed unenforceable. The employer must show that it has a legitimate business interest to protect, and that any restrictive covenant is actually necessary to protect it. For example, it would not be appropriate to have in place the same post-termination restrictions for a junior operator and the chief executive.

Restrictions must be limited insofar as possible in terms of geographical location, duration, and the type of activities restricted. When it comes to duration, six months is considered the upper limit of enforceability, with restrictive covenants typically ranging in duration from three to six months. Geographic restrictions should generally be confined to areas of operation, interpreted narrowly, though this will vary on a case-by-case basis. When considering which activities to restrict, the employer must take a reasonable approach and only restrict what is necessary to protect its interests – it cannot prohibit a former employee joining a competitor if no legitimate interest would be threatened.

It is not a one size fits all approach. The cases where employers have sought to enforce restrictive covenants typically turn on their own circumstances and often look closely at the drafting of any restrictions. Accordingly, each covenant should be tailored to each individual and take account of a range of factors such as the role and seniority of the former employee, their access to former clients, trade secrets or confidential information. Employers are more likely to enforce post-termination restraints when it is an employee’s market, and this year the war for talent in Ireland has intensified.

Where a business is looking to remove a member of staff from the market, but equally has no desire to have the staff member continuing to work for the business, a well drafted garden leave clause can often be a more effective way of addressing the situation. The member of staff will be prohibited from accessing business data, the premises, from talking to clients or from moving to a competitor, until his or her period of notice expires, preventing any former employee from becoming an immediate competitor. This can often provide some breathing space – once termination takes effect at the end of a garden leave period, any debate about the enforceability of restrictive provisions will take place some time after the employee has actually been removed from the business.

5 In which industry sectors has employment law been a hot topic recently? Why?

The impact of covid-19 across all sectors cannot be understated, though some sectors have fared well while others have languished. The restrictions designed to control the virus, in place from March 2020 in varying degrees of severity, have often forced the closure of retail, aviation and hospitality businesses. These sectors tend to have been the most adversely affected, as have the workers in those sectors. This saw a peak of some 600,000 workers (from a national working population of 2.2 million) claiming the pandemic unemployment payment, though with the return of retail and hospitality this number has fallen significantly. With restrictions restrictions having been eased further, including a physical return to workplaces and the easing of international travel restrictions, this trend of recovery looks set to continue.

Sectors such as the financial services, life sciences and technology sectors were the most resilient against the impact of covid-19, and were able to adjust well to the sudden shift to remote working. In fact, many businesses have seen an uplift in fortunes, particularly fintech firms, which have boomed thanks to exploiting gaps in coverage by traditional banks during the pandemic. For many workers in these sectors, the pandemic has brought about positive and welcome change to their working life – many will never return to attending a physical workplace full time, with flexible working become a fixture of the post-covid office.

Large technology firms have fared particularly well during the pandemic, in no small part thanks to an increasing reliance on technology to connect us in lieu of alternatives, and employment law is becoming an increasingly hot topic in the area. Ireland has a well-established, reputable tech sector, with many EMEA headquarters located here. However, it was already true that the number of skilled graduates fell below the number of jobs being created, a fact exacerbated by tech firms’ continued, and often rapid, growth during the pandemic. The war for talent only looks set to intensify – and so employers will look for measured advice on recruitment and retention, the enforcement of restrictive covenants, or other measures to either protect or grow their work force. Testament to the increasing significance of employment law in the sector is the increasingly number of employment specialist legal roles advertised in tech firms, which is a very notable change from the position, say, five to 10 years ago when there were one or two across all sectors in the country.

6 What are the key political debates about employment currently playing out in your jurisdiction? What effects are they having?

Environmental, Social, and Governance (ESG) issues are high on the government’s list of priorities. There is a real focus on recovering from the pandemic in accordance with an ESG agenda. It has not escaped the government’s notice that remote working can be a way of reducing transport-related CO2 emissions and air pollution, so long as managed well. A research paper titled Remote Work in Ireland suggests that remote working could be a factor in meeting a reduction in greenhouse gas emissions by 10 to 15 per cent by 2030. Accordingly, reduction in emissions forms part of the government’s ‘Making Remote Work’ strategy, and seems to be a way of killing two birds with one stone. However, economically landlords and builders rely on the physical presence of companies to justify rents, while cafes and stores in the city centre rely on a flow of workers to generate income. The debate over the balance between physical and remote working is likely to come further into focus, particularly as we move beyond restrictions.

Employee status is a recurring theme and continues to be a debate at the centre of employment law in Ireland with no less than four separate draft bills seeking to address the issue in the past four years, none of which have made it through to final stage legislation. The government’s primary concerns lie around ‘false entrepreneurship’ and the labelling of de facto employees as independent contractors. While some of this concern may be grounded in the tax treatment of those workers, there is also so a government concern that the pay-related social insurance payable in respect of their work is being withheld by employers. One proposed scheme to address this (which made it all the way through to the final legislative draft before it was pulled) proposed a €10,000 fine for any manager found to have hired someone as an independent contractor who was later deemed an employee. An updated Code of Practice on Determining Employment Status was published in August 2021 (the third version since 2001).

The Code was updated by an interdepartmental working group comprising the Department of Social Protection, the Office of the Revenue Commissioners and the Workplace Relations Commission. The basis for the latest update was grounded on concerns around newer business models and forms of work, such as the ‘gig’, ‘digital’ and ‘platform’ economies, leading to an increase in the number of individuals being categorised as ‘self-employed’ where in reality, ‘employee’ is the more accurate term. The types of businesses operating in the gig economy rely heavily on short-term, flexible arrangements, rather than traditional permanent employment and so are contributing to the evolution of the concept of an ‘employee’. Unlike the UK, there is no ‘worker’ status in Ireland. A worker is either an employee or they are not.

Whether or not to reward frontline workers with a bonus payment or holiday for their work during the pandemic is a current hot topic being pushed by the public sector unions – with many saying the country simply can’t afford it, and individual frontline workers saying they don’t want it.

The right to disconnect has also been the focus of some debate. While most view the recent introduction of a code of practice as a positive step, with employer groups and unions welcoming the change, the government opposition has criticised that it does not go far enough. It remains to be seen what, if any, effect the code will have in practice.

The Inside Track

What are the particular skills that clients are looking for in an effective labour and employment lawyer

Most of our clients are sophisticated and knowledgeable. They have a broad understanding of the legal issues and are looking for practical guidance.

An effective employment lawyer won’t get bogged down in setting out the risks and then sit on the fence. They will try and see things from the client’s perspective to understand the overriding commercial or employee relations objective and assess risk appetite before providing options and a pragmatic recommendation.

What are the key considerations for clients and their lawyers when handling employment disputes?

Reputational risk is increasingly a factor that employers take into consideration and that can put a particular employee case or issue on the board agenda. How will this be perceived in this country at this time is a question employers with an eye on ESG risks and ratings are starting to ask themselves. A full understanding of legal risk and the associated costs has always been very important – is this going to cost more than its value to the business. Clients should be advised at an early stage of the liability and quantum so they can assess whether it’s worthwhile running the case or mediating a commercial settlement. Clients are looking for a partner through the process to guide in a very clear way while having visibility of costs, process, timing and the attitude of the parties to arrive at a commercially practical solution.

What are the most interesting and challenging cases you have dealt with in the past year?

As clients turn to cost-cutting in the midst of redundancy restrictions (and, in some countries, government redundancy bans) we have seen a higher number of very senior executive exits. This has led to disputes, not simply involving high levels of remuneration but also equity and a focus on good leaver or bad leaver provisions in shareholders’ agreements. These cases are both interesting and challenging due to the pace, the high-profile nature and the level of expertise required. They can also be highly emotive for the individuals involved and our crisis management skills and experience of working with very senior individuals at board level have stood to us.

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