Supreme Court ruling casts doubt on wage agreements

Ruling affects up to 80,000 workers in construction and electrical contracting

Minister for Jobs, Enterprise and Innovation Richard Bruton: insisted the existing contractual rights of workers in sectors covered by Registered Employment Agreements were unaffected by the ruling. Photograph: David Sleator

Minister for Jobs, Enterprise and Innovation Richard Bruton: insisted the existing contractual rights of workers in sectors covered by Registered Employment Agreements were unaffected by the ruling. Photograph: David Sleator

Fri, May 10, 2013, 08:04


Employment in the construction sector was effectively deregulated yesterday after the Supreme Court struck down as “unconstitutional” wage agreements involving thousands of workers.

In a landmark ruling, the court said the system of Registered Employment Agreements (REAs), which set minimum rates of pay and conditions in several employment sectors, had delegated law-making powers beyond the Oireachtas.

The ruling has implications for 70,000-80,000 employees across the construction and electrical contracting sectors whose employment terms are governed by the agreements, as well as a smaller number of workers in the printing and drapery industries.

The system, which has been the subject of several legal disputes in recent years, allows employers and unions to make agreements, which when registered by the Labour Court became legally binding on an entire sector.


‘Field of legislation’
However, the court declared the agreements had strayed “unmistakably into the field of legislation, which was the sole preserve of the Oireachtas”.

In their ruling, the five judges said the Industrial Relations Act of 1946, which provides for the agreements, raised serious issues of incompatibility with the Constitution.

The challenge to the REAs was taken by a group of electrical contractors, who welcomed the court’s ruling, saying the decision would allow them to control their own cost-base and secure existing jobs.

However, its full ramifications remained unclear yesterday with employers and unions at odds over what it meant for existing employment contracts governed by REAs.

The Government said it was studying the judgment, and will take legal advice on it before commenting in detail.

Minister for Jobs, Enterprise and Innovation Richard Bruton insisted the existing contractual rights of workers in sectors covered by REAs were unaffected by the ruling.

“Contractual rights can be altered only by agreement between the parties involved,” he said.

However, the electrical contractors’ group, the NECI, said the judgment meant all current agreements were “now cancelled”.

Ibec’s Brendan McGinty said the judgment not only raised questions as to the legal status of recently agreed REAs, it also called into question the separate Joint Labour Committee wage-setting system, which remains under review following a similar High Court judgment of unconstitutionality in 2011.

The Technical, Electrical and Engineering Union said the ruling erodes existing protection. The union’s general secretary, Eamon Devoy, said the electrical contractors have brought about a situation whereby foreign contractors will enter the country to undercut domestic operators.


Savage attack
Socialist TD Joe Higgins said the ruling will be seen by employers and subcontractors as a signal for a savage attack on the wages and conditions of workers.

Fianna Fáil’s spokesman on jobs and enterprise, Dara Calleary, called on the Government for clarity .

“There is still confusion over whether those currently covered under existing contracts will see a forced reduction in pay and conditions as a result of this decision,” he said.