The High Court ruled last week that laws under which minimum pay and conditions are set, under Employment Regulation Orders (EROs) proposed by JLC's for approval by the Labour Courts, are unconstitutional.  The challenge was brought by a group of fast food operators, the Quick Service Food Alliance Limited, to an ERO setting minimum pay and conditions for catering workers outside Dublin. 

The ruling is likely to have implications for the pay and conditions of work of about 200,000 low paid workers in a variety of sectors. 

The first relief which the plaintiffs sought was a declaration that certain sections of the Industrial Relations Act 1946 and 1990 were unconstitutional.  The plaintiffs also sought declarations that the ERO fixing the statutory minimum rate of pay for workers outside Dublin was unreasonable and constituted an unlawful and disproportionate interference with the property rights of the plaintiffs.

In relation to the first limb of the claim i.e. the application to have certain parts of the Industrial Relations Act 1946 and 1990 declared unconstitutional, Judge Feeney granted the relief sought on the basis that the sections were unconstitutional after finding that they delegated "excessive" law making powers concerning pay and conditions to JLCs without stating any policies or principles to guide or direct those powers.  Feeney J had particular difficulty with the fact that the 1946 legislation enabled JLCs to make orders on rates of pay but that the legislation contains no principles to guide them in setting these rates of pay. In setting these rates of pay, the JLC's did so without any parliamentary supervision. This delegation of power amounted to an unconstitutional transfer of power as the Acts allowed the Labour Court to be involved in deciding and promoting laws which could only be enforced by criminal sanction. Those rates and conditions should be determined and based upon principles and policies laid down by the Oireachtas and not by a delegated body acting without established principles and policies.

In relation to the second aspect of the plaintiffs' claim he declared that an ERO made by the Labour Court in May 2008 fixing minimum pay and conditions for workers outside Dublin was an unlawful interference with the property rights of the plaintiffs.  Their property rights had been breached because the ERO of May 2008 required them to pay wage rates which were determined in an arbitrary manner.  As part of their argument, the plaintiffs said that the JLC system allowed the setting of wage rates higher than the national minimum wage and Sunday pay rates higher than those under the Organisation of Working Time Act.  Feeney J found that this resulted in certain rates being set for one geographical area and significantly different rates and conditions applying, potentially in the immediate vicinity, without any readily apparent ground for the disparity.  Accordingly the legislation permitted for the making of arbitrary and unreasonable orders.

Comment

The implications of the ruling are potentially far reaching as it may have repercussions for the pay and conditions of about 200,000 workers in a variety of sectors.  It also means that prosecutions being brought by the National Employment Rights Authority (NERA) against employers for alleged breaches of pay rates set under the JLCs will now fall. 

Reaction to the ruling has been mixed. This is indicative of the polar opposite interests of the employer and union bodies.  Employers have welcomed the ruling calling for the abolition of the JLC system completely. Employers have also indicated that the ruling could lead the way for increased employment on the basis that there is already a national minimum wage in existence together with a plethora of employment rights protection legislation for workers.

Workers and unions have responded by saying that the Judgment removes the only protection that low paid workers had on their pay and conditions and may have potentially devastating effects for them.  Their concerns are compounded by the fact that the Government's legislative proposals for reform of the area are not yet finalised. 

On foot of this, unions have called for interim protection for workers. The Minister announced that he has plans for temporary protection for those covered by the JLC system.  The proposed temporary protection will cover both existing personnel and new recruits taken on by companies. However the Government cannot indicate when this will be introduced.  Ultimately the Judgment further cements the need for the Government to finalise its proposals for legislative reform of the ERO and REA systems of setting wages.