Sectoral Employment Orders – finding of Unconstitutionality

24 June 2020

Judgment of Mr Justice Garrett Simons 23rd June 2020

Yesterday Mr Justice Simons delivered a High Court judgment in a case taken by a group of electrical contractors against the Labour Court, the relevant Minister, Ireland and the Attorney General. Mr Justice Simons has declared that the Sectoral Employment Order in respect of which complaint was made by the group of electrical contractors, is invalid and that the legislation under which the Sectoral Employment Order was made (Chapter 3 of the Industrial Relations (Amendment) Act of 2015 (‘the 2015 Act), is unconstitutional. The decision will impact on each of the four Sectoral Employment Orders currently applicable to construction workers.

Whilst at this stage our review of the judgement is preliminary, the Judge concluded “that the Minister had acted outside her powers in purporting to make the SEO”. The Judge came to that conclusion having assessed that the report and recommendation submitted to the Minister by the Labour Court, and on which, under the relevant legislation the Minister is required to have regard when deciding whether to make the order requested, was deficient in a number of material respects and did not therefore comply with the standards required under the 2015 Act. He concludes that, having received same, the Minister should have refused to make the order requested. Having therefore concluded that the Minister was acting outside her powers, the Judge effectively condemned the Sectoral Employment Order in question.

The Judge then went further. Whilst it was not strictly speaking necessary for him to consider the constitutional challenge before him, in circumstances where he had already ruled on the substantive issue he said that he intended to do so in the following exceptional circumstances:

(i) both parties are agreed that the constitutional issue should be resolved in these proceedings; (ii) the constitutional issue has been fully argued over the course of a six-day hearing before this court; and (iii) the exercise of judicial self-restraint would merely defer—rather than avoid—the necessity of a court having to rule on the validity of the legislation.

In reviewing Chapter 3 of the 2015 Act, the Judge found that the legislation invested in the Minister/Labour Court authority to make significant policy choices and decisions which would have far reaching consequences for employers, workers and consumers. In doing so the legislation delegated a role to the Minister which was “a standard-less delegation of law making to the Minister” and for that reason the parent legislation was invalid by reference to Article 15.2.1 of the Constitution which provides that only the Oireachtas has the power to make laws.

As set out above, the Judge states that he has gone a step further than was necessary in order to deal with the matter before him. In deciding to do so, and in concluding that it was incumbent on him to refrain from exercising judicial restraint in this particular case, he was clearly mindful of a period of confusion following the case of John Grace Fried Chicken Limited & Others v The Catering JLC, The Labour Court & Others (2011) in which Mr Justice Feeney in the High Court declared a section of the Industrial Relations Act 1946 (which governed Employment Regulation Orders) to be invalid having regard to the same Article 15.2.1 of the Constitution.

The issue came before the Courts again in 2013 when, in the case of McGowan & Others v The Labour Court & Others, the Supreme Court took the issue further and on 9th May in 2013 delivered a judgment, the effect of which was to render all Registered Employment Agreements then in being unenforceable by virtue of the fact that the procedures under which they had been established were, and always had been, unconstitutional.

The system of collective bargaining and Registered Employment Agreements condemned as unconstitutional by the Supreme Court in 2013 had been in place since 1946 and, with the finding of unconstitutionality, every Registered Employment Agreement and Employment Regulation Order issued, made or implemented under the Industrial Relations Act of 1946 was rendered void, invalid and unenforceable.

In response to the 2013 striking down of that legislation, the government passed the 2015 Act. By virtue of Mr Justice Simons’ judgment of yesterday a significant piece of legislation has now suffered a similar fate and the impact and consequences of the judgment will now have to be considered. It is assumed that the judgment will be appealed and the issue will be considered once again by the Supreme Court. The matter is clearly one of national importance.

Based on our preliminary review of the judgement – with further analysis required in order to understand the full implications of it – we can conclude that the Judge has declared those parts of the 2015 Act which allow the relevant Minister to make Sectoral Employment Orders pertaining to different fields of commercial activity invalid. The impact of the decision will echo the impact of the McGowan judgment in 2013.

At that time and until the 2015 Act was passed, the immediate impact of the McGowan judgment was to:
(a) remove the criminal sanction on an employer for failure to comply with a collective agreement;
(b) require that each Contract of Employment put in place after the judgment be negotiated directly and individually with each employee; and
(c) cast some doubt on the enforceability of an obligation in a third party contract, (such as a GCCC contract for works) to comply with the terms of a collective agreement, rendered invalid by virtue of the judgment.

Undoubtedly similar issues arise out of this judgment.

For further information please contact Siobhan Kenny, Construction Associate

< Back