In the judgement delivered on 9 May last in McGowan and others v The Labour Court, Ireland and the Attorney General, the Supreme Court held that Part III of the Industrial Relations Act 1946 was invalid having regard to Article 15.2.1 of the Constitution. That Article provides, in effect, that the exclusive power to make laws is vested in the Oireachtas. The Supreme Court took the view that Registered Employment Agreements are instruments having the status of laws made by private individuals subject only to a limited power of veto by a subordinate body. While the Constitution allows for the limited delegation of law making functions, the provisions of the 1946 Act went beyond what is permissible under the Constitution.
The effect of this decision is to invalidate the registration of employment agreements previously registered under Part III of the 1946 Act. In consequence the Labour Court no longer has jurisdiction to enforce, interpret or otherwise apply these agreements.
As a result, all such agreements no longer have any application beyond the subscribing parties and are not enforceable in law. However, existing contractual rights of workers in sectors covered by Registered Employment Agreements are unaffected by the ruling. Contractual rights can be altered only by agreement between the parties involved.
There were 6 existing sectoral REAs registered or varied by the Labour Court in recent years: two in the Construction Sector and one each covering Electrical Contracting, Printing, Overhead Powerline Contractors and Dublin Drapery, Footwear and Allied Trades. It is estimated that between 70,000 and 80,000 workers were covered by these sectoral agreements. In addition, there were over 50 employment agreements covering individual enterprises that had been registered by the Court under the 1946 Act.
The striking down of the REAs means that new employees in these sectors can now be hired at a rate agreeable between workers and their employers. This is subject only to the provisions of the National Minimum Wage Act, 2000.
From the parties’ perspective, the primary objective of REAs is to provide them with a sense of certainty around terms and conditions that will apply when the employer is tendering for and working through contracts and to have in place agreed grievance and industrial peace provisions. The agreements also have the effect of ensuring that the industry terms and conditions are recognised and maintained. In addition, the existence of these legally backed agreements is recognised under European Union law and ensures, in accordance with the Posted Workers Directive, that contractors from outside the jurisdiction, who may be using employees from lower wage economies, do not obtain an advantage over local contractors in terms of wage costs.
This is a significant judgment that requires careful consideration having regard also to the amendments to the 1946 Act contained in the 2012 Industrial Relations Act.
The Attorney General is providing advice on any potential implications of the judgment for the 1946 Act as amended by the 2012 Industrial Relations Act. When I have considered that advice I will be in a position to comment further.