Supreme Court finds employment agreements unconstitutional

Thursday 09 May 2013 22.08
The court found the Industrial Relations Act of 1946 raised serious issues of incompatibility with the Constitution
The court found the Industrial Relations Act of 1946 raised serious issues of incompatibility with the Constitution

The Supreme Court has declared Registered Employment Agreements, which set pay rates for certain sectors, unconstitutional.

In a significant judgment affecting several employment sectors, the court ruled such agreements delegated law-making powers beyond the Oireachtas.

The court said the agreements "passed unmistakably into the field of legislation which was the sole preserve of the Oireachtas".

The challenge to the REAs was taken by electrical contractors, who have welcomed the decision.

The electricians' union the TEEU has said the decision does not overturn existing pay rates and conditions.

However, the electrical contractors group, the NECI, said the judgment means all current agreements "are cancelled".

The five-judge Supreme Court ruled the Industrial Relations Act of 1946, which made provision for the agreements, raised serious issues of incompatibility with the Constitution.

It allowed parties to such agreements to make any law they wish in relation to employment, the judgment said.

The court said there was no obligation on the Labour Court or the parties to the agreements to consider the interests of those who would be bound by them and who are not parties to them.

Furthermore, while the agreement once registered is binding on everyone in the sector it may only be varied on the application of the original parties.

The Labour Court could not itself initiate any process of variation, the court noted.

There was a "wholesale grant, indeed abdication of law making power to private persons unidentified and unidentifiable at the time of grant to make law in respect of a broad and important area of human activity and subject only to a limited power of veto by a subordinate body", the judgment said.

The court said the act allowed the parties to an employment agreement "to make any law they wish in relation to employment so long as the Labour Court considers them to be substantially representative of workers and employers in the sector".

Eamon Devoy of the TEEU said certain employers were looking for a loophole in the law and they had found one today.

Speaking on RTÉ's News At One, Mr Devoy said that while the ruling meant that REAs were no longer constitutional, other contracts of employment could not be unilaterally altered without agreement.

Mr Devoy said that contractual rights and conditions could only be altered by the agreement of the parties involved and that as a result any terms agreed between employers and workers were not affected.

However, he said the removal of the minimum pay rates set by REAs would allow contractors to undercut the current rates paid to technical workers covered by the 70 REAs registered with the Labour Court.

He said this would leave the sector exposed to workers from overseas being hired by contractors at a rate no greater than the current minimum wage of €8.65 per hour, considerably less than the rate paid to many technical workers under the REA agreements.

Speaking on the same programme, Dave Butler of the National Electrical Contractors of Ireland welcomed the decision.

He said that all REAs are now unconstitutional and invalid.

Mr Butler said that up to today the NECI had been bound by REAs that it had no part in negotiating.

He said that REAs had been agreed by the larger employers and the unions, and the NECI "had been left outside the door".

Now that these REAs have been declared unconstitutional, Mr Butler said that its contractors intend to grow their business, and employ people in what he called "a realistic way".

However, he denied that this would lead to a race to the bottom, and said NECI arrangements would be "far from the minimum wage".

Minister for Jobs Richard Bruton said the Government intends to study the finding and get legal advice before commenting in detail.

He said: "The judgment has the effect of striking down Registered Employment Agreements put in place under the 1946 Industrial Relations Act."

Minister Bruton said the agreements that set pay and conditions for workers in five sectors, including electrical contracting and construction, are affected by today's judgment.

Existing contractual rights of workers in sectors covered by Registered Employment Agreement are unaffected by today's ruling, he added.