Irish High Court declares Sectoral Employment Orders unconstitutional
The Irish High Court has ruled that a Sectoral Employment Order (SEO) setting out the wage, pension and sick pay entitlements of electricians working in the construction industry is invalid and has struck down the legislation under which the order was made.
National Electrical Contractors Ireland (NECI) challenged the SEO made under Chapter 3 Industrial Relations (Amendment) Act 2015 on the grounds that it breached its rights and was unconstitutional. Chapter 3 of the Act provides that the Labour Court may recommend the making of an SEO to the Minister for Business, Enterprise and Innovation. The Minister may make an SEO if satisfied that the Labour Court has complied with the requirements of the Act.
The Court held that the Minister acted ultra vires in making the SEO. The Court reasoned that “the Minister erred in law in concluding, on the basis of the report and recommendation submitted to him, that the Labour Court had complied with” the provisions of the Act. The report submitted to the Minister was deficient because it failed to record both the conclusions of the Labour Court on significant matters or the rationale for these conclusions. The report also failed to fairly and accurately summarise the submissions made by interested parties who opposed the making of the SEO. Due to these shortcomings, the Minister should have refused to make the SEO. The Court concluded that the SEO was invalid as the Minister acted outside his jurisdiction in making it.
The Court also held that Chapter 3 of the Act was contrary to Article 15.2.1 of the Constitution as it did not contain sufficient principles and policies to guide the Minister to make an SEO. The Court stated that “a decision to impose mandatory minimum terms and conditions of employment across an entire economic sector necessitates making difficult policy choices” as the consequences of an SEO are far-reaching and the interests of employers, employees and consumers are not necessarily aligned. Making an SEO also “presents difficult choices as to how to resolve the potentially conflicting objectives” of i) promoting fair competition and the freedom to provide services within the EU and ii) ensuring adequate terms and conditions of employment for domestic workers and posted workers from other EU member states. The Court held that Chapter 3 of the Act abdicates the making of these significant policy choices to the Minister, and indirectly to the Labour Court. The Court concluded that “Chapter 3 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” and is therefore unconstitutional.
The Court declared the SEO in this case to be both invalid and unconstitutional. The decision means that employers no longer have to comply with the terms and conditions of employment set out in SEOs made under Chapter 3, unless these terms and conditions have been incorporated into an employee’s contract of employment.
Click here for the full judgment in NECI v The Labour Court & ors.