The Supreme Court recently issued an important judgment which struck down as unconstitutional Registered Employment Agreements (REAs). The judgment has implications for up to 100,000 workers in certain sectors covered by REAs such as construction and contract cleaning.

The plaintiffs in the action comprised a number of electrical contractors who were not party to the original electrical contracting REA and who objected to being bound by its provisions. The key points of their arguments were that once an REA was registered with the Labour Court it bound all workers and employers in a sector even if they had not been party to the relevant negotiations. Further if an employer does not comply with the provisions of an REA then it faces the possibility of criminal sanction. It said this represented an excessive delegation of law making power beyond the Oireachtas and contrary to the provisions of the Constitution.

Ruling

The Supreme Court agreed with the electrical contractors' arguments. It noted that whilst the Oireachtas can in certain circumstances delegate law making powers to subordinate bodies to make rules and laws within the limit of the Oireachtas, that was not what happened here. The REAs were not created by the Labour Court, they were created by private individuals. The Labour Court merely registered them. The Court was of the view that this represented an impermissible and excessive delegation of law making power. It struck down as unconstitutional Part III of the 1946 Act.

Implications for employers

Whilst any REAs created under the 1946 Act are now no longer valid, employees existing contractual rights remain in place. Employers may seek to vary such agreements however they will require an employee's consent to any such changes.

For future hires in these sectors employers are no longer bound to apply the industry rates and remuneration under the former REAs. They must however still comply with other basic employment law protections (such as minimum wage etc.). Any REAs registered under the Industrial Relations (Amendment) Act 2012 ("the 2012 Act") remain valid and it is possible that unions may seek an increase in agreements negotiated under the auspices of this regime (as this imposed stricter policies and procedures surrounding the formulation of REAs).