Since Ireland’s entry into the European Union, the statutory protections afforded to employees have improved dramatically.  We now have minimum wage legislation, working time protection and statutory protection from dismissal.  Despite all of this, employers in certain industries and geographical areas have, for the past sixty years, also had to comply with a separate system which also governs minimum terms and conditions in those industries and geographical areas.  This system operates through the much maligned Employment Regulation Orders (EROs) and Registered Employment Agreements (REAs). EROs and REAs are around since the days of the old trade boards and have their statutory basis in the Industrial Relations Act 1946.  It is now believed that some 15% of the private sector workforce is covered by an ERO and 8% by an REA.

EROs are issued by Joint Labour Committees (JLCs) which fix statutory minimum rates of pay and conditions of employment in particular sectors.  Equal numbers of employer and employee representatives are appointed by the Labour Court alongside an independent chairperson who has a casting vote on the issue, appointed by the Minister for Jobs, Enterprise and Innovation.  JLCs set terms and conditions for specific categories of worker in certain sectors and geographical areas.  There are currently 13 JLCs in place.

REAs are collective agreements on pay and conditions of employment, negotiated between employer and worker representatives who come together to form Joint Industrial Councils (JICs).  Once agreed, a party to such agreement may apply to the Labour Court to have the agreement registered in the Register of Employment Agreements.  There are currently 68 REAs in place, four of which apply to all employers within the industry or sector covered, irrespective of whether they are or were a party to the agreement.  These include the electrical contracting sector, the construction sector, the drapery, footwear and allied trades and the printing sector.

Government Current Legislative Approach

On the back of pressure from the IMF, the Minister for Jobs, Enterprise and Innovation, Richard Bruton, recently commissioned a review of the entire ERO/REA system.  The result of this review was the Duffy/Walsh Report which recommended the basic framework of the ERO/REA system should be maintained but should be more responsive in adapting to fluctuating economic circumstances.

Minister Bruton has since issued proposals to reform the ERO/REA system which proposals include abolishing Sunday wage premia and a mechanism allowing employers to plead inability to pay.

Challenges to the current system

There have been a number of challenges to the current ERO/REA system, predominantly in the electrical contracting, hotel, construction and most recently, the catering industry.

Today, the High Court issued its decision in a constitutional challenge brought by John Grace (funded by a lobby group called the Quick Service Food Alliance Limited (QSFA)) against the catering JLC.  Mr. Justice Feeney found that (1) certain provisions of the 1946 and 1990 Industrial Relations Acts (which include the making of EROs) are unconstitutional and (2) the system constituted an unlawful interference with the property rights of the Plaintiff.

What now?

Today’s decision is of enormous significance to anyone whose employees are covered by a JLC/ERO.  However, the decision, in a sense, raises more questions than answers. Presumably if the legislation underpinning one ERO has been found to be unconstitutional, the implication is that all EROs issued by JLCs are also unconstitutional.  In addition, even though the making of EROs may be unconstitutional, it is quite possible that the employees covered by the JLC system might have express or implied rights to the terms and conditions provided for by an ERO.  Furthermore, the JIC/REA system remains in place and employers covered by the electrical contracting, construction, drapery, footwear and allied trades and printing REAs are still bound by the provisions of those REAs.

It is now unlikely that Minister Bruton’s proposals in relation to the reform of the system will go far enough.  At best, legislation will need to be put in place to provide a new statutory footing for any system which might be brought in to replace the making of EROs.  At worst, new employees entering into the industries and geographical areas covered by the JLC system will do so on the basis of national minimum wage and statutory protections, potentially creating a two tier system, even within one organisation.