Minister for Enterprise and Jobs Richard Bruton has rejected suggestions that proposals to reform wage setting mechanisms could cause difficulties between Fine Gael and the Labour party.

Tens of thousands of workers in hotels, restaurants, retailing and other sectors would lose their legal entitlement to special Sunday premium payments under the proposals, details of which were announced yesterday.

Under the proposals, legally binding employment regulation orders, which govern pay and conditions in the sectors, would no longer set a Sunday premium. Instead workers in these sectors would rely on existing legislation such as the Organisation of Working Time Act, which provides for a range of ways by which Sunday working requirements can be recognised.

These include time off in lieu, a “reasonable allowance” or an overall pay increase to take account of Sunday work.

Speaking on RTÉ radio this afternoon, Mr Bruton said wage-setting mechanisms needed to be "radically reformed" in order to create the competitiveness we need.

"These systems were established back in the 40s when many of the legal provisions which now protect workers weren't there. Clearly we have to modernise this and have a system that can respond to a system where 350,000 people have lost their jobs in the last 3 years."

Mr Bruton added that his role as minister was to create a mechanism that would ensure a balanced system that allowed for the creation of jobs and protecting workers in troubled sectors.

The Minister is seeking to have discussions with unions and employers on his proposals completed by June 10th with a view to bringing an action plan to Cabinet in the second half of next month.

Amid angry exchanges in the Dáil this morning, Minister for Public Reform Brendan Howlin insisted there is “no predetermined outcome” to the discussions with the social partners.

Fianna Fáil spokesman on communications Eamon Ó Cuív said the proposed changes “will have a very serious detrimental effect on employees’ rights”. He queried whether the Labour Party had been consulted on the changes.

Sinn Féin spokesman on finance Pearse Doherty said there was a “real fear” that the incomes of the lowest paid would be cut. “There is now a very public controversy that is going deep into the hearts and households of many, many thousands of families,” he said.

Mr Doherty said the Dáil should debate the report given that it finds very clearly that the cutting of rates on the JLCs would not lead to any increase in employment.

However, Mr Howlin said there was a commitment in the programme for government to review the JLC structure. He said the report will be the basis for the discussions that will take place between the Mr Bruton’s department and the social partners.

“Whatever emerges from that will come back to government and had that stage I think it will be appropriate to have a full debate in this House on what is proposed rather than speculative debate on what might or might not be involved.”

He said Mr Bruton “has his own views” but insisted that there was “no pre-determined outcome” on the issue, which had to be a “whole of Government” decision.

Speaking on RTÉ radio this morning, Minister for Social Protection Joan Burton refused to confirm whether the proposals would lead to pay cuts. She said that what was required was a "balanced reform that recognises the reality of modern business."

However, Ms Burton also said there was also a need to protect those on lower incomes. "You have to think of the consequences and the incentives to actually work and if you reduce the incentives to work it means that more people will lean on social welfare. That means the Department of Social Welfare is going to end up costing our taxpayers more," she said.

Separately, Chambers Ireland said reformation of the wage-setting mechanisms process was "a step in the right direction". Retail Excellence Ireland also welcomed publication of the reform proposals which it said could help to secure existing jobs and aid the creation of new positions.