Supreme Court: Labour Court recommendation for Sectoral Employment Order quashed for failure to give reasons
The Supreme Court has quashed a recommendation by the Labour Court for a Sectoral Employment Order setting minimum conditions for electrical workers’ pay because it failed to provide adequate reasoning for the decision. The SEO was recommended under the procedure set out in Chapter 3 of Industrial Relations (Amendment) Act, 2015.
About this case:
Citation: IESC 36
Judge:Mr Justice John MacMenamin
However, the Court overturned a ruling by the High Court that Chapter 3 of the 2015 Act was an unconstitutional delegation of legislative power to the Labour Court. The High Court had previously found that the Labour Court was effectively creating law on employee remuneration without proper policies and principles derived from the parent legislation.
The applicant, Náisiúnta Leictreach Contraitheoir Eireann Cuideachta Faoi Theorainn Ráthaíochta (NECI), was a representative company for small and medium sized electrical contractors. Under Chapter 3 of the 2015 Act, the Labour Court was empowered to make recommendations to govern the conditions of employment for workers and employers in an entire sector of the economy.
Under the 2015 Act, a trade union or employers or workers could make a request to the Labour Court to examine the terms and conditions in relation to remuneration, sick pay schemes, or pension schemes for the workers of a particular class, type or group. The Labour Court could then make a recommendation for an SEO, which had to be approved by the Minister unless he was not satisfied that the Labour Court had complied with the provisions of Chapter 3.
In this case, the Labour Court had made a recommendation to the Minister on the rate of remuneration for workers in the electrical contracting sector. The applications were made by the Connect trade union and two employer groups. The applicant was opposed to the SEO, believing that it favoured larger employers who could apply economies of scale and pay fees that were unsustainable for smaller employers.
The applicant brought judicial review proceedings seeking to quash the Labour Court recommendation. In the High Court, Mr Justice Garrett Simons made a declaration that the Chapter 3 of the 2015 Act was repugnant to the Constitution on the basis that it improperly conferred legislative powers on the Labour Court. He also held that the Labour Court had failed to provide adequate reasoning for its decision in the case and that the Labour Court acted ultra vires by appending the Construction Workers Pension Scheme to the recommendation.
The matter was appealed to the Supreme Court by the State respondents, with NECI also making certain cross-appeals of the decision. This case report will only deal with the most significant issues before the Supreme Court.
The court began by outlining the factual background and purpose to the 2015 Act, citing cases such as McGowan v. The Labour Court  3 I.R. 718, Ryanair v. The Labour Court  4 I.R. 199 and John Grace Fried Chicken Ltd. v. Catering Joint Labour Committee  3 I.R. 211.
Giving judgment in the case, Mr Justice John MacMenamin first considered the cross-appeal from NECI that the Labour Court had no jurisdiction to define the “economic sector” to which an SEO would relate. Further, it was argued that the limitation for only “substantially representative” bodies to make requests for a recommendation allowed certain parties to “maintain a grip” on the process, to the detriment of NECI.
The court rejected both submissions. First, it was held that the Labour Court necessarily had a discretion to define the “economic sector” to which an application related because of its enhanced role in the 2015 Act. The entire process would be undermined if the Labour Court’s jurisdiction was limited in this way. Further, the “substantially representative bodies” point was unsustainable. There was nothing in the legislation which provided special status to representative bodies in an examination of a sector by the Labour Court. NECI had the same rights to make submissions in objection to the application.
Second, the court considered the issue of whether the powers conferred on the Labour Court was an impermissible delegation of legislative power. The court applied Cityview Press v. An Comhairle Oiliúna  IR 381, Bederev v. Ireland  3 I.R. 1 and O’Sullivan v. Sea Fisheries Protection Authority  3 I.R. 751. The court held that the proper approach to determining if an unlawful delegation of power occurred was to determine whether the Oireachtas had set sufficient standards by way of policies or objectives so as to ensure that the decision-making was regulatory rather than legislative.
The court disagreed with the High Court’s assessment that the Labour Court’s powers were too vague and open-ended and that Chapter 3 of the Act failed to set out proper policies and principles to guide the Labour Court. Mr Justice MacMenamin held that the policy outcomes of the legislation were clear and stated: “If the Oireachtas has identified the type of outcome or result it wants achieved, it must also, necessarily, be setting out guidelines whereby those particular goals or results are to be achieved.”
As such, the court determined that there were, in fact, several identifiable policies set out in the legislation which could guide the Labour Court. The High Court had therefore erred in its assessment.
The court also held that it was permissible for the Labour Court to make a recommendation to the Minister, who was bound to follow it unless the Minister was not satisfied that there was compliance with the Act. The court noted that any SEO required a resolution in both houses of the Oireachtas. Accordingly, this was a “high level of legislative safeguard” to justify the procedure, albeit that the procedure was very unusual.
The court then considered whether the Labour Court had provided proper reasons for its recommendation in the case. The court relied on Connolly v. An Bord Pleanala  ILRM 453 and stated that there was a duty on the Labour Court to give reasons in the case. The reasons should be adequate to allow an appellate court to engage properly with an appeal or review of the decision. The court also outlined the law from cases such as Meadows v. Minister for Justice  2 I.R. 701 and Balz & Anor. v. An Bord Pleanála  IESC 90.
While the Labour Court’s recommendation and report contained “extensive description” of the legislation and matters taken into account, the decision was lacking in any reason for why the decision was made. There was no indication of how the Labour Court had “satisfied” itself of certain findings or how it had “taken into consideration” certain submissions of the parties.
Accordingly, the Labour Court failed in its statutory duty to give reasons, the court said. It was held: “The approach in the recommendation was to give no hostages to fortune, and insofar as possible to process the matter in a manner which suggested no more than a desire to achieve what would, at minimum, be a fait accompli prior to any litigation.” Further, the correspondence showed that “the Labour Court simply was unwilling to address the issues which NECI were seeking to raise, having led NECI to believe those matters would be considered at the hearing. That did not happen.”
Finally, the court stated that it was impermissible for the Labour Court to peg the rate of pensions contributions to those fixed by the Construction Workers Pension Scheme. Under its statutory obligations, the Labour Court was required to set a minimum daily rate of contribution to the pensions scheme. As such, the Labour Court acted ultra vires by allowing the CWPS to determine any changes to the rate of pensions contribution for electricity workers.
In light of the court’s findings, Mr Justice MacMenamin set aside the declaration that Chapter 3 of the Act was unconstitutional and affirmed the decision that there was a failure by the Labour Court to give reasons. The matter was to be remitted for fresh consideration by a different Labour Court panel.