Hotel challenges laws used to set minimum wage
Mr Justice Bryan McMahon yesterday began hearing the challenge by a Co Clare hotel operator and the Irish Hotels Federation to the constitutionality of industrial relations laws under which a statutory minimum wage was fixed last November by the Labour Court, on foot of proposals from the Hotels Joint Labour Committee, for workers in hotels outside Dublin, Dún Laoghaire and Cork.
It is claimed the laws are “coercive” of employers and unconstitutional because they impermissibly delegate the state’s law-making powers to the Labour Court.
The state has denied the claims of unconstitutionality and has pleaded that, if the disputed laws do interfere with employers’ property rights, that interference is proportionate in the interests of social justice.
The action is by Vaughan Lodge, which operates a small hotel in Lahinch, Co Clare, employing 17 staff; Michael Vaughan and the IHF against the committee, the Labour Court, Ireland and the attorney-general. SIPTU, representing many of the workers affected, is a notice party to the case.
The challenge is to the Labour Court decision of November 5, 2007, approving committee proposals for a minimum wage for 25,000 staff in a number of hotel businesses, and fixing those minimum rates. The rate fixed is higher than that applied to staff working in hotel premises in Dublin, Dún Laoghaire and Cork city.
Mr Vaughan claims his hotel’s wage costs have increased by 25% in the past three years and now amount to 42% of its income.
Opening the case, Donal O’Donnell said the laws under which the committee and the Labour Court decided on the minimum wage rate were “anachronistic” and “bureaucratic” and drew their inspiration from legislation going back to the 1913 Dublin lockout (when employers in the city locked out workers on strike for better wages).
The provisions effectively allowed the committee and the Labour Court to set wage rates, any breach of which would amount to a criminal offence, he said.
The industrial relations scene in Ireland is “very different” now and the laws being challenged by the IHF sat “very uneasily” with existing much more general laws providing for a minimum wage and governing conditions of work, health and safety, dismissal and other matters, he said.
Mr O’Donnell also argued the Labour Court and the committee acted unfairly in the manner in which they reached their decision on the rate. The employers submissions in relation to the matter were not properly considered and the wage rates were set in a “perfunctory manner”, he argued.
Under the Industrial Relations Acts 1946 and 1990, the Hotels JLC and the Labour Court have powers to make and approve proposals fixing wage rates and conditions of employment which are then binding, counsel outlined. Mr Vaughan and the IHF contend the relevant laws — sections 42 and 43 of the 1946 act and section 48 of the 1990 act — are unconstitutional, incompatible with the state’s obligations under the EU Convention on Human Rights and an unlawful and disproportionate interference with their property rights.
It is claimed the 1946 and 1990 acts do not identify any goals, standards or factors to be applied by the Hotels JLC and Labour Court when exercising the powers conferred on them. The respondents have the power to fix minimum rates of pay and conditions of employment in excess of those decided upon by the Oireachtas without reference to any identified or definable principles, it is contended. It is also contended the chairman of the committee was guilty of predetermination in finding he was obliged to apply the terms of the national wage agreement, Towards 2016, to the rates of pay of the workers in question and that the committee failed to provide a proper report regarding its proposals.
Mr O’Donnell said his side had learnt the purported report was prepared in advance of the committee meeting, was signed off by its chairman and then “rubber-stamped” by the Labour Court.
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