SEOs Declared Invalid - Key Issues For Employers In Ireland

• Published date: 30 June 2020
• Subject Matter: Employment and HR, Real Estate and Construction, Contract of Employment, Retirement, Superannuation & Pensions, Construction & Planning
• Law Firm: Maples Group
• Author: Ms Karen Killalea, James Scanlon and Ciara Ni Longaigh

The recent decision of the Irish High Court in 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) will have a significant impact on employers and employees currently bound by Sectoral Employment Orders (SEO) in the electrical contracting, mechanical engineering, building and construction sectors.

The recent decision of the Irish High Court in 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) will have a significant impact on employers and employees currently bound by Sectoral Employment Orders (SEO) in the electrical contracting, mechanical engineering, building and construction sectors.

The High Court ruled last week that the SEO applying to electrical contractors and their employees is invalid. In summary, this was because:

• The Labour Court's decision making process breached statutory requirements because it failed to adequately report on the reasons for its recommendation to make an SEO;

• Third parties unconnected to the SEO could influence pension contribution rates which would then be binding on employers; and

• The primary legislation under which the SEO was made (Chapter 3 of the Industrial Relations (Amendment) Act 2015) was unconstitutional because it devolved lawmaking power to a Minister without adequate safeguards.

This means all SEOs are invalid where the primary legislation on which they are based has been declared unconstitutional.

This creates uncertainty for employers and employees in the sectors impacted by SEOs. Some employers may seek to walk away from the terms of the SEOs but employees and trade unions will very likely seek to protect their existing SEO pay conditions by asserting contractual entitlements.

This may not be the end of the road for the SEO and for Chapter 3 of the Industrial Relations (Amendment) Act 2015) as there may be an appeal to the Court of Appeal or possibly directly to the Supreme Court. This means that this matter may not be resolved for some time.

Background

This case concerned a challenge in the High Court to the Sectoral Employment Order (Electronic Contracting Sector) 2019 (S.I. No.251 of 2019) by a relatively small employer representative body, the National Electrical Contractors of Ireland ("NECI"). The SEO had already been the subject of a long running challenge by NECI...