“In the landmark decision delivered by Mr Justice Kevin Feeney on July 7th, the High Court ruled that the ERO system is unconstitutional. The judgment is far reaching and has ramifications not just for employees in the catering sector and other sectors governed by 13 EROs currently in existence, but the wider landscape of Irish industrial relations.
This decision clearly has ramifications for other sectors in the economy, including the contract cleaning, agriculture and hotel sectors, which are governed by the ERO system. The judgment will also impact on the constitutional challenge to the ERO system for agricultural workers which was launched by the owners of Coolmore Stud and Ballydoyle training facility in May.
Whilst the ruling may not affect existing workers employed in areas covered by the ERO system, depending on the particulars of their contractual arrangements, it seems likely that employers will not be obliged to pay ERO rates for employees recruited going forward, and that such employees will, in many cases, be engaged on lesser terms and conditions but subject to the National Minimum Wage Act 2000, and other relevant statutory minima. Pending legislative reform in this area, therefore, employers will be permitted to pay new employees the national minimum wage, currently set at €8.65. On a practical level, before taking any steps on foot of this decision, employers should seek legal advice.
Individual circumstances will depend on the contents of specific contracts of employment, and it should be borne in mind that a contract may exist, albeit not in writing. Another likely consequence of the decision is that it will encourage local bargaining in those sectors once subject to the ERO regime.