The court ruled that the clinic should pay its administrative and clerical staff the same rate as those employed by the HSE, a decision which the clinic's chief executive, PA draig Bergin, said was "incredible".

Bergin said the clinic was seeking legal advice from a senior counsel on the matter, which some sources said bore striking similarities to the situation that underpinned Ryanair's recent successful Supreme Court appeal against the Labour Court.

The Galway Clinic does not recognise unions, but was brought to the court by Siptu under 2004 legislation that states that workers in such companies can still have their grievances investigated by the Labour Court.

It is expected that, as in the Ryanair case, the clinic will argue that the court did not have the jurisdiction to intervene as there was no trade dispute involved.

Bergin also said the decision set a dangerous precedent whereby the court could order private firms to increase their wages to match those of their public-sector competitors, even in nonskilled areas such as cleaning and catering.

"We pay the same rates as the HSE for nurses and clinical staff. It's when you get down to cleaning and so on that there's a difference. The problem is that these functions are overpaid in the public service, not that we're paying too little, " he said.

Siptu brought the clinic to the Labour Court over costcutting measures that it introduced after it lost over Euro3.2m in its first full year of operation.

Sources close to the clinic have said its financial position has improved since then and it is expected to make a modest profit this year.

A spokesman for Siptu said the union had brought the Labour Court case because "the conditions and rates of pay [at the Galway Clinic] were not as favourable as we have in the public sector hospitals".

He said the union was in the process of setting up a section at the clinic.