In our post on 09 May 2013, Peninsula brought you breaking news that it had been ruled by the Supreme Court that the system of creating Registered Employment Agreements (REAs) in accordance with the 1946 Industrial Relations Acts had been deemed unconstitutional. Since then, the Supreme Court decision has been published which has allowed all interested persons to have a read and find out for themselves how this decision came about. This decision is known as McGowan & ors -v- Labour Court Ireland & anor [2013] IESC 21 and it is this decision that will have lasting implications for thousands of employers and hundreds of thousands of employees.
However, Supreme Court decisions can often be loaded with technical jargon leaving employers and employees unsure as to what those implications are. Therefore, this post seeks to breakdown the technical jargon and identify how this will effect you.
Background to the Dispute
In short, the legal challenge in question at the Supreme Court concerned a number of electrical contractors who had previously sought to have the Electrical Contracting REA cancelled at the Labour Court. Upon the Labour Court’s refusal to cancel the agreement the contractors appealed the matter to the High Court. The High Court rejected the appeal on several grounds but mainly because of the delay in taking the claim. The High Court had specifically noted that the Electrical Contracting REA was first registered in September 1990 and that it hadn't been challenged for some 19 years afterwards. Therefore, the High Court rejected the appeal and did not consider the main arguments raised by the contractors. The contractors then further appealed the matter to the Supreme Court.
- All REAs, prior to the Indusrtial Relations Act 2012, were created under a system outlined in Part III of the Industrial Relations Act 1946;
- Once an REA was registered with the Labour Court, it could bind individual employers or indeed entire industries and if an employer failed to comply with the REA they could be criminally prosecuted;
- The electrical contractors were arguing that this Part III system was in breach of Article 15.2.1 of the Irish Constitution;
- Article 15.2.1 states that "the sole and exclusive power of making laws for the State is hereby vested in the Oireachtas: no other legislative authority has power to make laws for the State";
- Simply put, the contractors were arguing that the REAs amounted to the Labour Court "making laws" which they were not permitted to do as only the Oireachtas can make laws.
Supreme Court Decision
The Supreme Court took on board the contractors' argument and basically had to consider whether or not the creation of an REA effectively amounted to creation of a new law. If the answer was 'yes' then the REAs would most likely be deemed unconstitutional. If the answer was 'no' then the REAs would not be deemed unconstitutional. In considering this question the Supreme Court summarised what exactly an REA has the power to do:
- "An REA can make provision not merely for remuneration ... but can make provision for any matter which may be regulated by a contract of employment. Thus, it can determine wages, pensions, pension contributions, hours of work, health insurance, grievance procedures, discipline procedures, staffing levels, production procedures, approved machinery or equipment, and anything else in the employment relationship... It involves a fundamental part of the person’s life (if an employee), and their business (if an employer)."
- The Supreme Court went on to note that REAs are not created by the Labour Court; they are created by private persons (i.e. employers and employees) and the Labour Court simply registers that agreement. The Court went on to note that if an employer then does not comply with that REA then they may be criminally prosecuted. The Court was concerned with this as being criminally prosecuted means that you have been accused of breaking the law of the land.
- The Supreme Court also noted that the Oireachtas can delegate their powers to subordinate bodies (e.g. county councils) and these then make rules and laws within the limits set out by the Oireachtas. As such, there is nothing wrong per se with the Labour Court being delegated law-making powers. However, the Court noted that the Labour Court had almost no involvement in the creation of an REA save for registering it. They also noted that the Oireachtas had no involvement in the process and did not even have the power to review an REA after it is registered.
Taking into account all of the above, the Supreme Court agreed with the contractors' argument. The Court were particularly concerned with the fact that employers that were not parties to such an agreement could be rendered criminally liable for not complying with it. In view of all of these arguments they found that Part III of the 1946 Act was unconstitutional.
Impact of the Supreme Court Decision
