A fair method of fixing minimum rates of pay

It is not too often that the Supreme Court declares something to be unconstitutional, but when it does it is usually something that will have a wide ranging affect for a large number of people.

On May 9, a five-judge Supreme Court decided on the fate of Part III of the Industrial Relations Act, 1946. His Honour Judge O’Donnell delivered the judgment, with which the other 4 Supreme Court Justices’ concurred. The net effect of this decision was that Registered Employment Agreements were held to be unconstitutional on the basis that the law-making power which is invested in the Oireachtas had been abdicated to those who were party to the original agreement.

One of the cornerstones of the Irish legal system is the “separation of powers”, which splits the way the legal system is run into three separate and distinct areas. Much like a tripod, if one of the limbs of the system is intruded upon by one of the others or its functions are taken over by an outside body, the tripod fails to work how it is supposed to. This is what happened with Part III of the Industrial Relations Act, 1946.

Undoubtedly, this decision will affect a significant number of people who are subject to such agreements during their employment. The question is, though, just how much does it affect them?

The main thrust of what has been discussed since the decision, in these economically difficult times, is of course the set pay rates that certain sectors come under due to a registered employment agreement that it was a party to. By declaring these agreements unconstitutional, one of the factors that comes into play is the minimum pay rate that employees are subject to. Eamon Devoy of the Technical Engineering and Electrical Union has stated that, due to the judgment, the electrical industry (the case was brought by a group of electrical contractors) would now be exposed to overseas workers flocking to our shores and being hired for no more than the current minimum wage of €8.65, which is much less than what is paid to technical workers now.

Against this, David Butler of the National Electrical Contractors of Ireland welcomed the decision and stated that it gives contractors the opportunity to grow their business and employ people in a “realistic way”. He further denied that the decision would lead to a crash in wages and insisted that the NECI arrangements would be “far from the minimum wage”.

While Mr Devoy is technically correct, it is important to note that the main reason why REAs were found unconstitutional is because those who were party to the original REA themselves could have imposed the same stringent conditions if they so wished and it would have been legal.

REAs applied not just to the parties that initiated the agreement and those they represented, but to every worker and employer in the sector, whether or not they were a party at the original agreement, or represented in the conclusion of the agreement, or even in existence at the time it was made.

Add to this the fact that those who were party to the original agreement are the only ones who could alter the agreement and were free to alter it and make laws for the sector, which would include laws on minimum pay, without intrusion from the Oireachtas.

The Supreme Court described this power as passing “unmistakably into the field of legislation which was the sole preserve of the Oireachtas” contained in Article 15.2.1 of the Constitution.

A way of looking at the situation as it was before the judgment is this: A new school opens and a select number of students that attend the school are the ones who decide on the rules to be enforced, with the headmaster of the school helpless as to those students amending the rules when and how they wanted, even if it wasn’t to the benefit of all the students.

The striking down of this piece of legislation now ensures a fair method of fixing minimum rates of pay without everyone being subject to the rules of the ‘school bullies’.


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