HomeCompany NewsThe recent High Court decision on Sectoral Employment Orders

The recent High Court decision on Sectoral Employment Orders

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National Electrical Contractors of Ireland v the Labour Court, the Minister for Business Enterprise and Innovation Ireland and the Attorney General (2019 No. 280 JR)

On the 23 June 2020, the High Court released a judgment in a case which ruled Sectoral Employment Orders (“SEO”) as invalid and struck down the parent legislation under which they were made (Chapter 3 of the Industrial Relations (Amendment) Act 2015) (the “parent legislation”) as unconstitutional.

What is an SEO?

An SEO can set the pay, pension or sick scheme for workers in an economic sector such as in this case, the electrical contracting sector.  The Labour Court issues a statutory report to the Minister for Business Enterprise and Innovation following an examination of the relevant economic sector and submissions made by interested parties.  When the Minister signs, the recommended SEO provisions are given statutory footing under Chapter 3 of the parent legislation.  All employers within the sector concerned are required to apply the terms and conditions as set out in the SEO, to their employees even if their contract provides for lowers terms and conditions.

In 2018 and 2019, SEO’s were issued in the Mechanical Engineering, Construction and Electrical Contracting Sectors.

The Case

This action was brought by the National Electrical Contractors Ireland – NECI (the “employers”) against the Labour Court, the Minister, the Attorney General and Ireland.  They sought a declaration that the Labour Court had breached its duties in the manner of its report and recommendations to the Minister, and further challenged the parent legislation as unconstitutional due to the wide-ranging requirements it imposed upon employers.

Mr. Justice Garrett Simons held that the Labour Court had not complied with the requirements of the parent legislation in its statutory report and struck down the SEO.  He also reviewed Article 15.2.1 of the Constitution and the parent legislation.  Article 15.2.1 of the Constitution holds that “the sole and exclusive power of making laws for the State is hereby vested in the Oireachtas: no other legislative authority has power to make laws for the State.”  The Judge noted that the law-making powers invested in the Minister went beyond the Minister’s delegated role and thus, the Minister was acting outside their powers rendering the parent legislation invalid under Article 15.2.1 of the Constitution.

What does this mean for the sectors in which an SEO has issued

The Department of Business Enterprise and Innovation has 21 days to appeal the decision.  If the decision is appealed, it is possible that a stay will be granted ensuring that the terms of the SEO’s remain in place while awaiting the appeal.  The NECI are likely to argue that any stay will be harmful to their members.

The electrical contracting sector was the third sector to receive an order, following the construction and mechanical engineering sectors.  The Judgment renders any current SEOs as invalid.

It will fall on the government to legislate to address the issues identified with the parent legislation and SEO’s.

The decision is welcomed by employers who had argued the terms and extent of the SEO was onerous.

Trade Unions and associations representing electricians and construction workers will be disappointed by the outcome and it could have significant implications for people working in those sectors.  Employers should be wary and proceed with caution as the decision is likely to be appealed to the Supreme Court.

If you have any queries on the above or any other employment-related matters, please contact Emer Murphy on emurphy@lavellepartners.ie or 01 644 5800.