The challenge to the SEO was brought by Allbrite Electrical and Mechanical Limited, along with the employer body APHCI. The challenge was based on a separate 2021 Supreme Court ruling of ultra vires in relation to similar pension provisions to those in the SEO.
Acting Ultra Vires
The SEO included a provision that workers “shall be entered by his or her employer into a pensions scheme the terms of which, including both employer and employee contribution rates, shall be no less favourable than those set out in the Construction Workers’ Pension Scheme”. A similar provision was found by the High Court, and Supreme Court in 2021, to be ultra vires in a separate challenge to a different SEO. In that case it was found that the provision essentially abdicates the function of setting the rate of the pension scheme to a third party, namely the trustees of the Construction Workers Pension Scheme.
This decision does not come as a surprise, as the SEO for the electrical contracting sector was struck down by the Supreme Court for the same reasoning due to an almost identical pension provision.
The Impact on Employees
The striking down of the SEO means that the SEO ceases to exist, and its minimum protections no longer apply to employees in the sector. Employees can still avail of the protections afforded to them under their employment contracts, in addition to the statutory minimum protections available to all employees. However, trade unions have already warned that attempts by employers to reduce the SEO’s superior terms and conditions for impacted employees may be met by industrial action. It has also been reported that trade unions may seek for the SEO to be reconstituted with an amendment to the impugned wording and an uplift in the SEO’s rates, which date back to 2018.