A Labour Court ruling setting pay rates in the hospitality industry has been successfully challenged by the Irish Hotels Federation (IHF).
The Labour Court today withdrew from High Court proceedings taken by the IHF and hotelier Michael Vaughan of Vaughan Lodge Hotel in Lahinch, Co Clare. They were challenging the way a statutory minimum wage and working conditions were fixed last November.
The applicants also challenged the constitutionality of the laws under which the Hotels Joint Labour Committee (HJLC), which is a division of the Labour Court, made its decision.
The Labour Court ruling affected 25,000 hotel workers outside Dublin, Dún Laoghaire and Cork.
Today's decision by the Labour Court not to defend its ruling is likely to have implications for around 250,000 workers whose wages and conditions are fixed under the same laws.
Joint Labour Committees (JLCs), established by the Industrial Relations Act (1946), also operate in other generally low-paid sectors such as hairdressing and contract cleaning. As a result of today's decision an amendment may be needed to the legislation to prevent further challenges by employers which could cause significant disruption to industrial relations processes.
John Power of the IHF said the federation was "compelled to take this action" and that its decision had been vindicated. It will not now be proceeding with a constitutional challenge.
He said the case was not a challenge to wage agreements but a challenge to an unfair process. The IHF would re-engage with the HJLC, Mr Power said, adding that he hoped the case would "result in an enlightened and transparent process".
The Labour Court had ordered wage increases of 22 cent an hour for low-paid hotel staff. The IHF and Mr Vaughan challenged the "sequencing" of increases to be paid under the terms of the social partnership agreement Towards 2016.
Counsel for the Labour Court had insisted that the employers had been heard properly and it was entitled to make a legally binding order requiring a 2.5 per cent pay increase be paid on top of the minimum wage.
Labour Party employment spokesman Willie Penrose said the Government must act quickly to protect the workers potentially affected by today's development, adding he would raise the matter in the Dáil next week.
The decision could also have "serious consequences" for negotiations of the new national wage agreement. He said the action against the Labour Court added to a "concerted attack on the principle of basic wages and conditions".
He noted the controversy over Irish Ferries making staff redundant and replacing them with low-wage labour from abroad, and an award of €116,000 to a restaurant worker who had been exploited for five years.
Sinn Féin spokesman on worker rights Arthur Morgan said the development could have "dire repercussions for low paid workers" who he said were generally most vulnerable to exploitation and underpayment.
"The Government must vigorously defend existing workers rights and conditions in the event of any future constitutional or other challenges to the Joint Labour Committee mechanism," he said.