The system that determines the pay and conditions for about 170,000 workers in the country is out of date, totally inappropriate for the current economic circumstances and in need of a radical overhaul, according to IBEC.
The employers' lobby group said that the rationale for the Joint Labour Committee (JLC ) system largely disappeared in 2000 with the introduction of the national minimum wage and it was now acting as barrier to employment.
It said that the system sets even higher legally enforceable minimum pay and conditions in specific industries, including catering, contract cleaning and the hotel sector.
IBEC Director of Industrial Relations Brendan McGinty said: "It is time to reform the outdated way we set pay and conditions in these industries. Some of these systems were set up in the early part of the last century and are no longer appropriate or necessary."
"The system is not flexible enough to protect jobs and enterprise, especially in the face of the worst economic downturn since the foundation of the State. Unsustainable wage levels and unduly restrictive practices make it too difficult for us to compete with other countries. The UK equivalent of the JLC system, the Wage Council mechanism, was abolished in 1993 and has not been replaced," he added.
He said that, for enterprises and employees covered by Joint Labour Committees, there is no provision for an employer who cannot afford the set rate of pay to obtain any exception.
"This is in contrast to the National Minimum Wage Act 2000, which contains a mechanism for exception from the minimum wage where the employer is in financial difficulty."
The JLC rate is the rate of pay specified in an Employment Regulation Order made by the Labour Court on foot of a proposal by a JLC.
Employers who have unwittingly found themselves with a liability to implement terms and conditions set by the JLC system, often due to lack of awareness of premium payments, may now be faced with massive bills for arrears.
Prior to the advent of NERA (National Employment Rights Authority ), many employers were not fully aware of their obligations under the JLC system.
They operated what they understood to be compliant mechanisms for calculating pay.