Industry-wide collective agreements have been accepted in Ireland for many years. In this judgement, the Supreme Court has ruled the system for governing terms and conditions of employment in the electrical industry and, by extension, other industries, unconstitutional.

Two main collective systems apply in Ireland. One, the Joint Labour Committee system, was ruled unconstitutional by the High Court in 2011. The second, Registered Employment Agreements (REAs), has now suffered a similar fate in the Supreme Court.

The appellants were electrical contractors concerned that wage rates for electricians in the industry were being enforced by the Labour Court, even though many were not party to negotiations. The Supreme Court has found that the REAs, set up under Part III of the Industrial Relations Act 1946, are unconstitutional in that only the Oireachtas can make legislation - it cannot cede powers on these matters to the Labour Court.

The Supreme Court noted that the 1946 Act contained two mechanisms under which a general sectoral agreement made in respect of terms and conditions of employment in a specified industry or sector of an industry may become legally enforceable both in civil and criminal law but found that the powers given to parties within the industry, albeit subject to challenge at the Labour Court, were excessive and unconstitutional:

"In effect, Part III allows the parties to an employment agreement to make any law they wish in relation to employment so long as the Labour Court considers them to be substantially representative of workers and employees in the sector, and does not consider the agreement itself to be unduly restrictive of employment or make provision for unduly costly or inefficient methods of work or machinery, and otherwise complies with the formal requirements of s.27. No guidance or instruction is given to the Labour Court as to how the matters of representativity or restriction on employment or inefficiency or costly methods of work, are to be gauged. The process permitted by Part III cannot be said to be merely the filling in of gaps in a scheme already established by the Oireachtas: in truth the Oireachtas which enacted the 1946 Act could have no idea of even those areas which may be subject to regulation in an employment agreement sought to be registered under the Act, and no conception still less control of the possible range of regulation that might be made in respect of each such matter. Nor did the Oireachtas retain any capacity for review either by the Oireachtas or by a member of the Executive responsible to it, of the agreements actually made. Whatever may be thought of a scheme which permits parties to an agreement to clothe that agreement with certain legal consequences including the possibility of enforcement by criminal proceedings, once such an agreement purports to become binding on non-parties pursuant to s.30 of the Act, it passes unmistakably into the field of legislation which by Article 15 is the sole and exclusive preserve of the Oireachtas. The limited and essentially negative limitations imposed by s.27(3)(d) are plainly inadequate to bring the exercise of such power within constitutional limits."
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