Executive Summary

A new Sectoral Employment Order (SEO) – S.I. No. 207 of 2023, Sectoral Employment Order (Construction Sector) 2023 – will commence on 18 September 2023. Below, we outline what a SEO is, how the new SEO came about and the terms of the SEO.

What is a SEO?

SEOs, which are regulated by the Industrial Relations (Amendment) Act 2015 (as amended) (the Act), set out terms and conditions relating to remuneration, sick pay, or pension schemes for workers in a particular economic sector to include, for example, the construction industry. If an employment contract for a worker to which a SEO applies provides for a rate of remuneration that is less than the rate specified in the SEO, and/or which provides for less favourable pension or sick pay conditions than the conditions stipulated in the SEO, the terms of the SEO will apply.

Updating the SEO for the Construction Sector

On 10 December 2022, trade unions representing workers in the construction industry requested that the Labour Court (the Court) undertake an examination of the terms and conditions relating to the remuneration, sick pay or pension schemes, applicable to certain persons employed in the construction sector. In accordance with the Act, the Court convened a hearing of the matter on 13 February 2023 during which submissions from various stakeholders within the construction industry were heard. The Court recommended that the current SEO for the construction sector – S.I. No. 598/2021 – be amended to provide for an increase in remuneration and pension contributions (please see the table below). In reaching its decision, the Court held, inter alia, that:

• 1. an amendment to minimum rates of pay would likely have a positive impact on levels of employment in the sector and, consequently, a negative effect on the levels of unemployment; 
• 2. an increase in pay would likely have the effect of removing competition between contractors based on lower pay rates and would, therefore, promote competition based on other factors;
• 3. having regard to prevailing economic circumstances, an amendment to the current SEO would ensure fair and sustainable rates of remuneration in the sector and promote harmonious relations which would avoid industrial unrest in relation to pay;
• 4. having regard to the Court's recommendation for pay growth in the sector, provision would not be made for payment for travel time as this would result in a substantial increase in remuneration which would not be reflective of the general trends in the economy.

On 13 April 2023, the Minister of State for Employment Affairs and Retail Business, accepted the Court's recommendation and, on 2 May 2023, a draft order was laid before the Houses of Oireachtas. The order was approved and S.I. No. 207 of 2023 was published.

The terms of the SEO

We have summarised some of the provisions of the new SEO, which will commence on 18 September 2023, below:

Commentary

• We await to see if this SEO will make a real difference to the workers in the sector and in attracting further entrants to the sector.
• Employers in the construction industry should ensure that their employment contracts for those workers captured by the SEO adhere to the terms of the SEO.
• It is anticipated that the increase in the rate of remuneration of construction workers will impact upon the cost of construction projects at a time when such costs have already increased in recent years due to other factors such as Brexit, Covid-19, the war in Ukraine and inflation.