Fast-food firms challenge constitutionality of Labour Court-approved pay agreements

A CHALLENGE by fast-food operators to the constitutionality of laws setting mandatory minimum rates of pay and conditions for more than 190,000 workers has opened before the High Court.

The case relates to catering workers but has implications for all workers whose minimum pay and conditions are set under employment regulation orders (EROs) proposed by joint labour committees (JLCs) for approval by the Labour Court.

The operators complain the system allows for the setting of wage rates higher than the national minimum wage of €7.65 per hour, Sunday pay rates higher than those set under the Organisation of Working Time Act and more favourable working conditions than those provided for in law.

It is claimed the system has been put in place in the absence of any policy guidelines from the Oireachtas in breach of the property rights and rights to fair procedures of the fast-food operators.

A number of prosecutions of fast-food operators over alleged failure to implement the terms of a May 2008 ERO for catering workers have been stayed pending the outcome of the case.

The action is by John Grace Fried Chicken Ltd, Cook Street, Cork, its operator John Grace and the Quick Service Food Alliance (QSFA) Ltd, also of Cook Street, Cork, which represents the interests of owners of fast-food restaurants including Subway, Abrakebabra, Supermac’s and Burger King.

The proceedings, brought against the catering sector JLC, the Labour Court and the State, opened yesterday before Mr Justice Kevin Feeney and resume on Tuesday.

Outlining the case, Brian Murray SC, for the plaintiffs, argued the system under which minimum rates of pay and conditions are set by JLCs subject to the approval of the Labour Court is unconstitutional as the relevant legislation – the Industrial Relations Acts 1946 and 1990 – failed to set out guiding policy and principles for the setting of such rates.

This system was a “reincarnation of an Edwardian scheme” applying in an entirely different time and the problem was that a JLC essentially operated on a “blank canvas” without any parliamentary supervision, counsel argued.

His side was not challenging the right of the Oireachtas to set minimum rates of pay and conditions or to delegate that function but was contending the JLC system involved an unconstitutional transfer of the right to decide policy.

He said the proceedings were initiated in 2008 following a view expressed by the National Employment Rights Authority that the plaintiffs were in breach of an ERO made in May 2008. Counsel said an ERO was formulated by a JLC and promulgated by the Labour Court and its effect was to provide, by law, for pay, terms and conditions in particular sectors, in this case the catering sector.

His side was challenging the constitutionality of the relevant provisions of the Industrial Relations Acts allowing for the making of EROs and the giving of legal effect to those, counsel said. EROs interposed into workers’ contracts the terms and conditions set in that ERO and breach of those was a criminal offence, he added.

The “root of the challenge” was that nowhere in the Industrial Relations Acts was there any guidance concerning the principles and policies – such as competitiveness – by which the pay and conditions were to be calculated, counsel said.

Mr Murray said his side had brought a previous challenge to the 2008 ERO which was compromised and that was relevant to the issue of damages in this case. After that earlier case, the 2008 ERO was rescinded and replaced by another ERO which took effect in mid 2009, he said.

Counsel said the 2008 ERO provided for arbitrary and unfair distinction as it applied to take-away outlets with seating but not to those without seating. It also operated a distinction between the pay and conditions set for catering workers in Dublin and Dún Laoghaire and those for catering workers outside those areas.