In February of this year, the Supreme Court upheld an appeal by Ryanair in the case of Ryanair v IMPACT under the controversial Industrial Relations (Amendment) Act 2001 and the Industrial Relations (Miscellaneous Provisions) Act 2004.

The dispute in this case began in December 2004 when Ryanair began the conversion of its Dublin fleet. A number of the pilots sought to have their union negotiate with Ryanair in relation to the resulting changes to their terms and conditions. Ryanair refused to negotiate with the union. The company argued that while it did not engage with trade unions, it did engage in extensive collective bargaining through its employee representative committees (ERCs). It also submitted that the internal dispute resolution procedures within the company had not been used.

The Labour Court found in favour of the union, and this decision was subsequently upheld by the High Court. Ryanair appealed the decision to the Supreme Court.

Ryanair succeeded on appeal. Firstly, insofar as 'trade disputes' are concerned, the Supreme Court found that the Labour Court should have investigated whether there was internal machinery within the company to resolve the problem and whether that machinery had been exhausted. Only then could it determine whether there was a trade dispute.

Secondly, the Supreme Court held that simply because employees unilaterally abandon collective bargaining negotiations cannot mean that it was not the employer's practice to engage in such negotiations. If that were the case, then the jurisdiction of the Labour Court could be invoked at any time simply by employees withdrawing from whatever collective bargaining machinery the company has put in place.

Thirdly, the Supreme Court held that it was unfair and virtually impossible for the Labour Court to determine whether there was adequate internal dispute resolution procedures in place without first ascertaining which pilots / employees were in dispute. Throughout the judgment, the Supreme Court criticised the Labour Court for failing to apply fair procedures because, while oral evidence was given by witnesses on behalf of Ryanair, none of the pilots / employees concerned were identified or gave evidence.

The effect of the Supreme Court judgment was to quash the original decision of the Labour Court and send the matter back to the Labour Court for a rehearing (which is expected to take place next Autumn).

This case is likely to have a significant impact on the Industrial Relations Acts 2001-2004. Before the Supreme Court's decision, it was considered that if an employer did not recognise a trade union, it was liable to have a binding order in relation to terms and conditions made against it by the Labour Court. The Supreme Court decision casts some doubt over this. It now appears that it may be possible to escape the remit of the Industrial Relations Acts, 2001-2004 if an employer has in place some form of permanent machinery or procedure whereby independent representatives or workers can negotiate collectively with the employer with a view to reaching agreement.

Accordingly, employers who do not recognise trade unions, and who wish to deal directly with their employees in relation to their terms and conditions of employment, would be well advised to consider putting in place some form of formal procedure /process to enable them to do so.

Under section 2(1) of the 2001 Act (as amended), the Labour Court may investigate a trade dispute where it is satisfied that:

• a trade dispute exists
• it is not the practice of the employer to engage in collective bargaining, and
• internal dispute resolution mechanisms have failed to resolve the dispute.

In summary, the Acts permit the Labour Court to issue legally binding determinations on pay and conditions of employment in circumstances where an employer refuses to engage in negotiations with a trade union representing employees and all attempts to facilitate a voluntary agreement have failed.

Many employers feared that the effect of this legislation would be to force employers to recognise and negotiate with trade unions.

For further information please contact Aoife Bradley.


Summer 2007.