ANALYSIS:THE HIGH Court challenge to the system of joint labour committees and employment regulation orders for setting minimum pay and conditions is being taken by employers in the fast-food sector. If successful, however, it could have implications far beyond the catering industry.
The High Court was told yesterday by the plaintiffs that about 190,000 workers across the economy have their pay and conditions determined by similar orders. Trade unions put the figure at about 300,000.
More than a dozen sectors of the economy are covered by wage levels set by the joint labour committee/employment regulation order process. These include hotels, hairdressing, contract cleaning and tailoring.
Under the system at the centre of the case, joint labour committees – which comprise union and employer representatives as well as a chairman appointed by the Minister for Enterprise and Employment – submit proposals to the Labour Court. If approved, the court makes a legally binding order, known as an employment regulation order, setting out minimum terms and conditions to apply across the sector.
In essence, the orders – and a separate wage-setting mechanism known as registered employment agreements – set a floor on pay and conditions to apply in particular sectors.
Unions believe that if this system is struck down on constitutional grounds, current floors on pay and conditions will disappear, resulting in most workers concerned being brought down to the level of the national minimum wage. Some employers, on the other hand, maintain that this could not apply to existing personnel who have agreed rates in their contracts of employment.
In the catering industry in Dublin, the employment regulation order hourly rate for a trained worker is €9.31. The national minimum wage rate is €7.65, although the new Government is committed to restoring it to €8.65. Some employers argue that not only is the employment regulation order system unnecessary, given the minimum wage and other employment protection legislation, but that it is also very inflexible. They point out that such an order cannot be revoked or amended for six months, irrespective of how erroneous or unjust it might be.
The regulation order and registered employment agreement systems for setting wage levels have been controversial in industrial relations for some time. The system has been challenged on two occasions in recent years. However, in both cases, the courts dealt only with procedural issues. The central question of the constitutionality of the system was not addressed.
The previous government had planned legislation, but it was never enacted. Earlier this year it established a review of the systems, and this is being carried out by the chairman of the Labour Court, Kevin Duffy, and UCD economist Frank Walsh.
They have been asked to make recommendations on the relevance, fairness and efficiency of the current systems. Proposed reforms could include derogations for employers with financial difficulties to protect jobs.
The ruling on this legal challenge will be important for some employers in the sector. The Quick Service Food Alliance, which is taking the case, says many of its members are being threatened with prosecution by the National Employment Rights Authority for failing to pay the regulation rates. These cases have been postponed pending the ruling.