New High Court Ruling- SEO Wage Legislation Deemed Unconstitutional- Sherlock Recruitment
New High Court Ruling- SEO Wage Legislation Deemed Unconstitutional- Sherlock Recruitment
This week saw the High Court rule on an existing SEO (Sectorlal employment Order). The SEO currently in place provides for set minimum pay and conditions for several workers primarily in the trades and labour sector. The SEO fixes legally binding minimum rates of pay and employment conditions including a sick pay scheme and pension contributions for all employers in the sector – including those who had not been party to the negotiations.
The challenge to the SEO was brought to the high courts by members of the National Electrical Contractors of Ireland (NECI) who represent small to medium-sized electrical firms across the country. They stated that the SEO breached their rights and was unconstitutional. They had challenged both the Industrial Relations (Amendment) Act 2015, and a 2019 Sectoral Employment Order (SEO) for the electrical contracting sector made under the legislation.
Their argument was that the employer and union bodies that negotiated the SEO were not “substantially representative” of the sector and raised issues about competitiveness and how the economic sector was defined. NECI stated that SEO will have implications for small and medium-sized electrical contractors, and the potential anti-competitive effect of fixing a minimum wage for electricians.
Mr Justice Simons ruled “A decision to impose mandatory minimum terms and conditions of employment across an entire economic sector necessitates making difficult policy choices. This is because the consequences of making a sectoral employment order are so far-reaching, and the interests of the principal stakeholders, namely, the employers, workers and consumers; are not necessarily aligned. The fixing of high rates of renumeration might well be welcomed by workers, but may limit competition, and thus adversely affect consumers,” Going on to declare provisions of the Industrial Relations (Amendment) Act 2015 to be unconstitutional, thereby rendering the Sectoral Employment Orders invalid.
The ruling means many particularly lower paid employees will only have a legal entitlement to the National Minimum Wage and basic statutory protections, rather than the sectoral minimum rates and conditions established through the SEO.
Arron Sherlock, of Sherlock recruitment, a leading supplier of trades and labour across the sector said ‘This ruling comes at time of great turmoil already inflicted on the sector by the Covid Crisis . The judgment will have serious implications for tens of thousands of workers and businesses across the state the full ramifications of which we will only understand in the coming months.’
This decision will be welcome for many employers in the electrical contracting sector given the extent of the employment terms prescribed in the SEO. However, a note of caution for employers in terms of the non application of the SEO as a result of the decision, as this may be the subject of an appeal. As such, we recommend employers to keep a close eye on developments and to take advice as may be necessary.
Sherlock Recruitment is a leading force of outsourced staffing solutions to the electrical, mechanical and construction industry and will remain committed to support both employers and employees while these issues are ironed out by the courts and relevant representatives.
If you have any questions or would like some advice or guidance on staffing matters, don’t hestitate to contact our offices
Office – 01 4568438
