Legislation which allows for the setting of legally enforceable pay and conditions for thousands of workers in various employment sectors has been deemed unconstitutional by the High Court.
The ruling means many particularly lower paid employees will only have a legal entitlement to the National Minimum Wage and other basic statutory protections, rather than to better sectoral minimum rates and conditions established through negotiation between employers and unions and the setting of legally binding Sectoral Employment Orders.
The High Court ruling is embarrassing for the Government, as the 2015 legislation struck down was put in place to address flaws in the 1946 Industrial Relations Act, which in 2013 was itself deemed unconstitutional in how it dealt with sectoral wage-setting mechanisms.
A body called National Electrical Contractors Ireland (NECI), representing small to medium-sized electrical firms, had challenged both the Industrial Relations (Amendment) Act 2015, and a 2019 Sectoral Employment Order for the electrical contracting sector made under the legislation.
The SEO fixed legally binding minimum rates of pay conditions including a sick pay scheme, pension contributions for all employers in the sector - including those who had not been party to the negotiations.
Employers breaching the terms could face criminal prosecution.
NECI argued that the employer and union bodies that negotiated the SEO were not "substantially representative" of the sector, and also raised issues about competitiveness and how the economic sector was defined.
In his ruling, Mr Justice Garrett Simons was critical of both the Labour Court, and the Minister for Business, Enterprise and Innovation.
He found that a statutory report which the Labour Court was obliged to deliver to the Minister prior to ministerial authorisation of an SEO was flawed in two significant respects.
"First, the report fails to record even the conclusions of the Labour Court on crucial matters, still less does the report state a rationale for those conclusions," he ruled.
He also found that the report failed to set out a "fair and accurate" summary of the submissions of interested parties opposing the SEO, or to engage with the issues raised in those submissions.
He concluded that the Minister for Business, Enterprise and Innovation acted beyond her powers in purporting to make the SEO, and had erred in law in concluding on the basis of the report and recommendation submitted by the Labour Court that that it had complied with the requirements of Chapter 3 of the Industrial Relations (Amendment) Act 2015.
He ruled that neither the procedures leading up to the SEO, nor its content, complied with the legislation.
Mr Justice Simons noted that the electrical contractors had raised issues including whether the trade union and employer organisations who negotiated the SEO complied with the requirement to be "substantially representative, how the "economic sector" was defined, the implications for small and medium-sized electrical contractors, and the potential anti-competitive effect of fixing a minimum wage for electricians.
"These are all matters to which the Labour Court is required under statute to have regard. Yet, these submissions are engaged with in the statutory report not at all," Mr Justice Simons said.
He also said the proposed SEO was also invalid as it purported to fix the rate of pension contributions payable by reference to the actions of a third party.
Mr Justice Simons said that on receiving the Labour Court report, "the Minister should have refused to make a sectoral employment order confirming the terms of the recommendation. The Minister acted without jurisdiction in purporting to make the order. "
He went on to find that the parent legislation - the Industrial Relations (Amendment) Act 2015 - was unconstitutional, as it did not contain sufficient principles and policies to guide the "very broad discretion" conferred on the Minister, and indirectly, on the Labour Court.
"A decision to impose mandatory minimum terms and conditions of employment across an entire economic sector necessitates making difficult policy choices. This is because the consequences of making a sectoral employment order are so far-reaching, and the interests of the principal stakeholders, namely, the employers, workers and consumers; are not necessarily aligned. The fixing of high rates of renumeration might well be welcomed by workers, but may limit competition, and thus adversely affect consumers," said the Judge.
He said the making of an SEO also presented difficult choices regarding how to resolve the potentially conflicting objectives of promoting fair competition and the freedom to provide services within the European internal market, while ensuring appropriate terms and conditions of employment for both domestic workers and posted workers from other EU members states.
The judge noted that regard was to be had to the potential impact on competitiveness, but the decision makers were "at large" as to the choice as to which objective was to prevail, adding that the concept of "fair and sustainable" remuneration was "hopelessly vague and too subjective".
"In short, Chapter 3 [of the legislation] involves a standard-less delegation of law making to the Minister, and one which would be almost impossible to challenge by way of judicial review. The parent legislation is, therefore, invalid by reference to Article 15.2.1° of the Constitution," he ruled.
A spokesperson for the Minister for Business, Enterprise and Innovation, which oversees the Labour Court, said the detailed judgment was currently under review, and that the Department was not in a position to comment on the ruling until the matter had received proper consideration.
The Irish Congress of Trade Unions warned that the High Court decision to declare provisions of the Industrial Relations (Amendment) Act 2015 to be unconstitutional, thereby rendering Sectoral Employment Orders invalid, could have very serious implications for tens of thousands of construction workers.
ICTU said the trade union movement would continue to represent its membership, and to insist on the preservation of the pay, terms and conditions of employment of these workers in line with those currently applying.
Labour TD and former minister of state for employment affairs Ged Nash said the electrical contracting judgment had serious implications for tens of thousands of workers and businesses across the State and called for it to be appealed to the Supreme Court
Mr Nash said that in the meantime, the Oireachtas should "urgently" pass a short piece of legislation to restore and confirm three Sectoral Employment Orders currently in place covering the electrical, mechanical engineering and construction sectors.