REA1044

The scope of the REA

The REA applies to “a building or civil engineering firm”. It is not suggested that the Respondent is involved in civil engineering and so the case turns on whether or not it is a building firm. That term is defined by Clause 1 of the First Schedule of the REA as follows: -

• “ A Building Firm is defined as “a firm the principal business of which is one or a combination of any of the following activities;
  

• • (ii) The construction of foundations on such sites.
    
    (iii) The construction, reconstruction, repair and maintenance within such sites of all sewers, drains and other works for use in connection with sanitation of buildings and the disposal of waste.
    
    (iv) The construction, reconstruction, repair and maintenance on such sites of boundary walls, railings and fences for the use, protection or ornamentation of buildings.
    • (v) The making of roads and paths within the boundaries of such sites.
  • (d) The manufacture, alteration, fitting, and repair of articles of worked stone (including rough punched granite and stone), granite, marble, slate and plaster.

• The categories of worker covered by the REA are listed at Clause 2 as including a number of specified trades and ‘general operatives’
  

The issue which arises for determination in this case is whether the Respondent is a ‘building firm’ as defined by the REA and so bound to abide by its terms. A secondary issue arising is whether the workers employed by the Respondent come within a category encompassed by the REA.

It is clear to the Court that paragraph (a) of the definition of a building firm, recited above, relates to the construction of the superstructure of buildings, including its supports, walls and roof. Paragraph (b) relates to the provision or removal of ancillary and other services to buildings such as plumbing, heating and air conditioning. Paragraph (c) relates to ground work and preparatory work for buildings. Paragraph (d) relates to stone cutting and associated works which are often carried out off site.

It is accepted that if the Respondent is covered by the Agreement the relevant provision is that contained at Clause 1(a) of the definition, that is to say that it is involved in the construction of buildings.

The word “building" is defined by the Oxford Dictionary of English, second edition, as “a structure with a roof and walls”. It was submitted on behalf of the Respondent that its principal business involves the construction of part of a building but does not involve the construction of a whole building. It is the Respondent’s case that the wording of Clause (a) of the definition relates only to firms who undertake all of the work associated with erecting a complete building.

The approach of the Court

In interpreting collective agreements this Court has traditionally adopted a purposive approach which looks at the objective which the parties to the agreement intended to achieve. In discerning that objective the Court looks to the written text of the agreement as a whole, the provisions of associated or collateral agreements between the same parties, the factual matrix in which the agreement was concluded and the manner in which it has been applied by the parties over time.

The REA is first and foremost a collective agreement although it has special characteristics in that it is incorporated into the individual contracts of employment of those to whom it relates. It is also intended to have the force of law and is enforceable against the parties thereto.

In Mythen Brothers Ltd v BATU[ 2006] ELR 237 the Court extensively considered the approach which should be adopted in construing a Registered Employment Agreement. Here the Court held as follows: -

• In considering whether or not the complaints herein are well founded the Court must first interpret the Agreement so as to establish its scope. In so doing the Court is conscious that the Agreement is primarily an industrial relations instrument which was drafted by industrial relations practitioners for the guidance of employers, employees and trade unions. Consequently the interpretation of the Agreement should not be approached as if it were a statute or the product of legal draftsmanship. Rather, the terms of the Agreement should be construed by applying to them a meaning which they would normally bear in the conduct of industrial relations so as to achieve the result envisaged by the parties to the Agreement. It seems to the Court that this approach finds support from Section 33 of the Act, which allows a Court of Law to defer to this Court for a definitive interpretation of a Registered Employment Agreement.

• “The court is not concerned to investigate the subjective intentions of the parties to an argument (which may not have coincided anyway). Its task is to elicit the parties' objective intentions from the language which they used. The starting point is that the parties meant what they said and said what they meant. But an agreement is not made in a vacuum and should not be construed as if it had been. Just as the true meaning and effect of a mediaeval charter may be heavily dependent on understanding the historical, geographical, social and legal background known to the parties at the time, so must a more modern instrument be construed in its factual setting as known to the parties at the time. Where the meaning of an agreement is clear beyond argument, the factual setting will have little or no bearing on construction; but to construe an agreement in its factual setting is a proper, because a common-sense, approach to construction, and it is not necessary to find an agreement ambiguous before following it.”
  
  “On the facts here, it was a collective agreement which was incorporated into the contracts of the individual plaintiffs. A collective agreement has special characteristics, being made between an employer or employers' organisation on one side and a trade union or trade unions representative of employees on the other, usually following a negotiation. Thus it represents an industrial bargain, and probably represents a compromise between the conflicting aims of the parties, or 'sides' as in this context they are revealingly called. But despite these special characteristics, a collective agreement must be construed like any other, giving a fair meaning to the words used in the factual context (known to the parties) which gave rise to the agreement.”

• “One rule of construction with regard to contracts is that, where the terms of a contract are ambiguous, and one construction would lead to an unreasonable result, the Court will be unwilling to adopt that construction.”
  

• “In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.”

• The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax (see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.

The Agreement must make sense

In interpreting the REA the Court must presume that the parties intended their agreement to make sense from the perspective of business efficiency. It is also to be assumed that the parties did not intend their agreement to produce an absurd or unreasonable result. This was the approach taken by the UK Courts in a number of leading cases involving the construction of commercial contracts. InSchuler AG v. Wickman Machine Tool Sales Ltd[1974] AC 235 the House of Lords held that the most natural construction of a clause could be rejected if it would lead to a wholly unreasonable or absurd result, it being assumed that the parties could not have intended such a thing. It later adopted a similar approach inAntaios Compania Naviera S.A. v. Salen Rederierna A.B.A.C. 191, 201

These authorities relate to the construction of commercial contracts but the rationale on which they are based applies with arguably greater force to the construction of collective agreements such as the REA.

The Wages and Conditions Agreement

In ascertaining the intention of the parties to the REA the terms of the Registered Employment Agreement (Construction Industry Wages and Conditions Wages and Conditions of Employment) are instructive. Counsel for the Respondent submitted that the REA in issue in this case should be construed in isolation from that agreement. The Court cannot accept that submission. The Wages and Conditions Agreement is between the same parties as the REA under consideration. The definition of a building firm, for the purpose of that agreement, is identical to that contained in the REA now in issue. Hence, the ambit of both agreements must be regarded as identical. Moreover the Wages and Conditions Agreement pre-dated the REA now in issue and formed part of the background against which the REA was concluded.

Clause 10 of the Wages and Conditions Agreement makes provision for the engagement by principal contractors of what are described as approved specialist sub-contractors “in any trade or activity”. In order to be regarded as an approved contractor, the sub-contractor must,inter alia,“comply with the Registered Employment Agreements for the industry.

It appears to the Court that Clause 10 of that Agreement was intended to facilitate the engagement of subcontractors engaged in particular forms of construction activity such as shuttering, steel fixing, bricklaying plastering etc. It is self evident that such firms would not be engaged in the construction of whole buildings. If the definition of a ‘building firm’, which is common to both the Wages and Conditions Agreement and the REA in issue, was intended to exclude such contractors this provision of the Wages and Conditions Agreement would be self-contradictory.

Conclusion

The Respondent’s principal business involves shuttering and steel fixing in the construction of the superstructure of buildings. It is a specialist sub-contractor which undertakes work under contract to main or principal contractors. As is reflected in the Wages and Conditions Agreement, the use of sub-contractors, or specialist firms, has long been a feature of the construction industry. The activity in which the Respondent is engaged is an essential and indissociable part of the process of creating a building. In that regard this case is readily distinguishable from other cases to which the Court was referred in which it was held that the provision of certain types of ancillary services in buildings was not covered by the REA. .

Giving a restricted meaning to the word “buildings” so as to exclude those involved in this type of activity would mean that a significant number of specialist contracting firms, which have long been a feature of the industry, and their employees, would be outside the ambit of the REA. The plain purpose of the REA is to provide common conditions for all construction workers and to provide ‘a level playing field’ for employers in relation to wage costs which, given the nature of the industry, account for a significant proportion of overall costs. The work undertaken by specialist contractors, such as the Respondent, is an integral part of the construction process and it would be plainly unreasonable and contrary to the intention of the framers of the REA to hold that such activity is outside the scope of the agreement.

Classification of workers covered

Turning to the classification of the Respondent’s employees, the REA applies to a list of designated craft occupations and goes on to provide for an additional category of ‘general operative’. This has always been understood as a residual category encompassing manual workers who do not fall within the craft categories listed in the preceding provision of the REA.

Decision

For all of the above reasons the Court is satisfied that the Respondent is a building firm within the meaning of the REA. It follows that the complaint herein is well founded. The Court will make an order directing the Respondent to comply with the REA.




Signed on behalf of the Labour Court



Kevin Duffy
24th May, 2010______________________
CONChairman



NOTE

Enquiries concerning this Decision should be addressed to Ciaran O'Neill, Court Secretary.