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Chapter 3 Of Industrial Relations (Amendment) Act 2015 “Unconstitutional” – High Court Rules

The Sectoral Employment Order for Electrical Contracting Sector made pursuant to Chapter 3 of the Industrial Relations (Amendment) Act, 2015 declared invalid.

Background: The judgment of the Supreme Court in McGowan v Labour Court [2013] IESC 21, where it was held that the ‘registered employment agreements’ under the 1946 Act were unconstitutional, led to the enactment  of the Industrial Relations (Amendment) Act 2015 (“2015 Act”). Chapter 3 of the 2015 Act provided for passing of the Sectoral Employment Orders (“SEO”) for a specific economic sector. This decision related to the SEO for Electrical Contracting Sector which regulated the remuneration, pension schemes and sick pay schemes for electricians working in the Construction Industry.

Facts: The procedure for this SEO commenced in October 2018, when a request was made to the Labour Court to examine the terms and condition relating to the remuneration, sick pay and pension schemes of the workers in the ‘electrical contracting sector’. Two applications were submitted to the Labour Court,  the first application was on behalf of the Connect Trade Union; and the second application was made jointly by 2 employers’ organisations (a) Electrical Contractors Association (“ECA”) and (b) Association of Electrical Contractors of Ireland (“AECI”), which were treated as a joint application. The written submissions and SEOs drafted separately by the trade union and the employer’s organisations were submitted to the Labour Court for review and consideration.

National Electrical Contractors Ireland (“NECI”) participated as an interested party and submitted that the SEO was financially ‘unsustainable’. The Labour Court convened a hearing on the 14th March 2019 and subsequently made reports and recommendation to the Minister for Business Enterprise and Innovation (“Minister”) that the SEO reflected accurately the terms of national collective agreement. NECI received a copy of the Report and Recommendation on 21st June 2019, by which date, NECI had already instituted the judicial review proceedings.

Preliminary Issue and Findings: The procedure and outcome of the application of Chapter 3 of the 2015 Act was challenged on both non-constitutional related and constitutional grounds. The preliminary issues were (a) whether the Labour Court had the jurisdiction to define the limits of the economic sector itself; and (b) if it did, did it act lawfully in this case?

Non-Constitutional Grounds: Regarding the preliminary issue concerning Labour Court’s jurisdiction, the High Court held that the Labour Court had the discretion to define the economic sector itself as the legislation required it to specify the class, type or group of workers to which the recommendation would apply to.

In determining the Labour Court’s compliance with Chapter 3, Justice Simons noted that the statutory report and recommendation was deficient, where it failed to record conclusions on crucial matters or to set out a proper summary of the submissions made by the interested parties, for the Minister to consider. Therefore, the Minister could not have been satisfied with the Labour Court’s compliance of Chapter 3.

Justice Simons further noted that the recommendations in respect of pensions were invalid as rate of pension contribution payable was referenced to the actions of a third party, which undermined the legal certainty of the SEO and breached the principle delegatus non potest delegare, which means a delegate cannot further delegate.

Justice Simons concluded that the Minister upon receipt of the recommendation should have refused to make the SEO and hence acted beyond his powers in making the SEO.

Constitutional Grounds: Justice Simons pointed out that the concept of “fair and sustainable” remuneration was hopelessly vague and too subjective. He further noted that Chapter 3 of the 2015 Act involved a standard-less delegation of law-making to the Minister, which would be almost impossible to challenge by way of judicial review and hence the parent legislation is invalid by reference to Article 15.2.1o of the Constitution.

Decision: Chapter 3 of the 2015 Act was held to be unconstitutional and struck down, which renders the SEO invalid. Separately, the SEO was deemed to be invalid on the grounds that the Minister acted outside of the legislation when making the SEO.

Takeaway for the Employers: This judgment will have a knock on impact on the SEO for construction workers. Therefore, employers in these sectors will no longer have to comply with the rates of pay set out in these SEOs for any new employees or renewal of fixed term contracts. However, employers will have to continue to comply with those rates for existing employees as such rates will form part of the existing employment contract. Employers should be mindful that this decision may be appealed and should keep themselves updated before making any changes to their current terms and conditions of employment .

Link

Authors – Anne O’Connell & Chaitra Girish Mallya

Anne O’Connell Solicitors

Fitzwilliam Hall

Fitzwilliam Place

Dublin 2

www.aocsolicitors.ie

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