Employment Contracts Must Be Transparent and Predictable:  Implications for Employers

PUBLISHED: 10th February 2023

The European Union (Transparent and Predictable Working Conditions) Regulations 2022 were signed into law, and came into force, on 16 December 2022.

The Regulations implement Ireland’s obligations, under Directive (EU) 2019/1152 on transparent and predictable working conditions in the European Union, into national law.

The low-key introduction of the Regulations just before Christmas may have diminished the significance of the changes that the Regulations have introduced (particularly on contracts of employment and terms and conditions of employment).

The Regulations create new employee rights and amend employers’ obligations under the Organisation of Working Time Act 1997, the Terms of Employment (Information) Act 1994 and the Protection of Employees (Fixed-Term Work) Act 2003.

The Government press release announcing the publication of the Regulations stated that “these [new] rights [will] cover all workers in all forms of work, including those in the most flexible non-standard and new forms of work such as zero-hour contracts, casual work, domestic work, voucher-based work, or platform work.”

The most significant changes introduced by the Regulations are outlined below.

Probationary Periods

There has been a significant change to the law governing probationary periods.

In the case of private sector employees, probationary periods of employees shall not exceed six months unless there are exceptional circumstances. A probationary period can, on an exceptional basis, be longer than six months, but it must “be in the interest of the employee,” and it cannot exceed 12 months. It remains to be seen what will ultimately be considered to “be in the interest of the employee”.

If an employee avails of specified types of protected leave during the probationary period, then the probationary period can be extended by the employer for the duration of the employee’s absence. Any probationary period in a fixed term contract needs to be proportionate to the expected duration of the contract and nature of the work. A probationary period is not permitted in the renewal of a fixed term contract, where the renewal relates to the same tasks and functions.

For employment contracts entered into on or before 1 August 2022, with a probationary period exceeding six months, the probationary period shall expire on the earlier of the expiration of the sixth month period, or, by 1 February 2023, which has now passed.

Employers should review their current contracts of employment to ascertain if any employees have contracts with probationary periods for longer than six months, including circumstances where any initial probationary period has been extended, as these periods may all have now expired and if so, consideration as to the status of such employees is recommended.

Employers would also be well advised to review their existing employment contracts and probationary practices in light of these changes. Employers may also need to re-examine their performance management processes to ensure employee reviews are conducted in a timely fashion and completed within the new restricted probationary period.

Exclusivity

Employees may no longer be restrained, without notification, from working for another employer outside of their work schedule i.e., they may choose to take up additional or parallel employment. The adverse treatment of an employee who takes up other employment is now prohibited. It is still permissible to impose a restriction on the right to work for another employer if it is proportionate and based on objective grounds. If an employer wishes to impose an exclusivity clause, the justification, or objective grounds on which the restriction is based, must be clearly set out in the contract. The Regulations include a non-exhaustive list of objective grounds and includes:

1. Health and safety
2. The protection of business confidentiality
3. The integrity of the public service
4. The avoidance of conflicts of interest
5. Safeguarding of productive and safe working conditions
6. The protection of national security
7. The protection of critical and national infrastructure.
8. The protection of energy security
9. The administration of public service functions
10. Compliance by the employer and the employee with any applicable statutory regulatory obligations
11. Compliance by the employee with any professional standards for the time being in force.

There are further grounds that are specific to the healthcare sector.

It seems likely that in most full-time employment relationships, an employer may rely on example (k) above in an exclusivity clause, as having another job would likely result in that employee working more hours than is permitted under the Organisation of Working Time Act 1997.

Variation to Written Employment Terms

The Employment (Miscellaneous) Provisions Act 2018 introduced the requirement to provide a Statement of Terms within five days to include:

• The full name of the employer and the employee
• The address of the employer
• The expected duration of the contract
• The method of calculating pay and the pay reference period
• The expected length of the working day and week

The information to be provided to an employee within five days has now been extended to also include the following:

• Duration and condition of probationary period, where one applies
• The place of work or where there is no fixed or main place of work, confirmation that the employee is employed at various places or is free to determine their own place of work.
• The commencement date, title, grade, nature or category of work, or a brief specification or description of work and details of the terms and conditions relating to hours of work (including overtime). 

Employers are now also required to provide a statement of terms and conditions within one month (previously two), and must include additional information as follows:

• Pay intervals, details of any paid leave, including annual leave and public holiday entitlements, details of any sick pay entitlements, details of any pension and/or pension schemes, the period of notice to be given by employer/employee and any collective agreements that may affect terms of employment.
• The employer must now also provide detail of training that will be provided, where mandatory training is required by law.
• The identity of the social security institutions receiving the social insurance contributions attached to the contract of employment and any protection relating to social security provider by the employer.
• If an employee’s working pattern is unpredictable, the employer must now set out the number of guaranteed paid hours and the remuneration for those hours. The hours and days must be referenced, as well as the notice period for work assignments.

Changes to Terms and Conditions

Where changes are made to the written statement of employment provided to an employee, employers are now required to notify the employee in writing of the nature and date of any change no later than the day on which change happens. This time limit is particularly onerous on employers.

More Predictable Working Conditions

An employee who has been in the continuous service of an employer for at least six months and who has completed their probationary period may request a form of employment with more predictable and secure working conditions, if available. Employers must consider these requests and provide a reasoned response to the employee if the request is not successful. A request can then be submitted every 12 months if refused. Subsequent employer responses can be verbal, subject to certain conditions.

Mandatory Work-related Training

Training must be provided free of charge where it is mandated by law. Time spent on such training will count as working time and will take place during working hours, if possible.

Predictability of Work:  Improvements for Precarious Working Conditions

A key objective of the Directive was to improve the working conditions for those in precarious working situations to provide more favourable and predictable working conditions.

Employees may now refuse work if they are given less than 24 hours’ notice of the scheduled work, without being subjected to adverse treatment from their employer. How this will play out in practice remains to be seen.

Thoughts and Considerations

The changes introduced by the Regulations affect the foundation of all employment relationships: the contract and the terms and conditions of employment.

Some employers may be able to avoid the full impact of the Regulations if their employees are subject to a collective agreement or a registered employment agreement.

All employers should review their contracts in light of these changes, to ensure that they are in compliance.

In particular, we would advise employers to review their existing probationary practices and to ensure that all new employees are assessed and reviewed in a timely manner from the commencement of their employment to ensure that any required appraisals are completed in advance of the six-month restricted period.

Considering the onerous obligations to provide more detailed information within more restricted periods, we would also advise employers to issue contracts (containing all information required at both the five-day stage and the one-month stage) in advance of an employee commencing employment.

Existing employees are entitled to request this information, but they are not entitled to it until they submit a request. And existing employees do benefit from all of the additional rights introduced by the Regulations.