INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
MANUFACTURING, SCIENCE, FINANCE
Chairman: Mr Flood
Employer Member: Mr McHenry
Worker Member: Ms Ni Mhurchu
1. Payment of the second phase of Partnership 2000, 2.25% plus 1% of local negotiations provision.
2. The Company was founded in 1981 and is a general insurance company based in Galway. It specialises in personal lines business (motor and house). The Company, along with Friends Provident Life Assurance Company, is part of the Eureko Ireland Group. In 1997, Eureko acquired Touchline Insurance.
Having struggled to achieve profitability since its formation, the Company's Irish owners decided to dispose of the business to Eureko in 1993. However, the Company has continued to suffer losses since then (details supplied to the Court).
In March, 1997, an agreement was reached between the parties on pay restructuring. Part of the agreement stated in relation to Partnership 2000.:-
"For 1998, the Company's only commitment is to pay the
standard 2.25% and 1% in the second 6 months of the second
Because of its continuing financial difficulties, the Company is pleading inability to pay the 2.25% (due from the 1st of January, 1998) and 1% (due from the 1st of July, 1998) of Partnership 2000. There are approximately 80 workers involved in the dispute.
The dispute was referred to the Labour Relations Commission and a conciliation conference took place on the 12th of February, 1998. As the parties did not reach
agreement, the dispute was referred to the Labour Court in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 30th of April, 1998, in Galway.
3. 1. The Company agreed in March, 1997, that it would pay the 2.25% and 1% of Partnership 2000. In 1997, the Company introduced a number of cost-cutting measures including 25 redundancies. Staff were prepared to agree to no performance increases in 1997 and 1998, but the non-payment of Partnership 2000 would be a double penalty.
2. The staff have fully co-operated with the introduction of Touchline Insurances. In the Company magazine for Spring 1997, the General Manager of the Company referred to "the huge effort by management and staff across all functions within theCompany". In Spring 1998, the magazine referred to strong improvements in the Company. In April, 1998, Eureko recorded an "extraordinary insurance company performance."
4. 1. The Company has lost considerable money in the years 1994-1997. The Company agreed to pay the second phase of Partnership 2000 on the basis that it was projecting a loss of £1 million for 1997. The eventual loss was £3.7 million. As a result, the Company had to review its situation. It was decided that the Company would now only deal in motor and house insurance. Twenty five workers took voluntary redundancy. Even this was not sufficient and the Company was forced to take more cost-cutting measures (details supplied to the Court). The Company does not expect to break even until 2000.
2. The cost to the Company of paying Partnership 2000 to the current staff would be £68,000. One of the terms of the redundancy package was that the weeks' pay formulae were based on salaries in December, 1997. Should Partnership 2000 be paid, the agreement offered that pay increases in 1998 would result in the redundancy settlement being re-calculated. This would add a further £29,000 to the wage bill.
The Court is satisfied that the agreement entered into by the parties in March, 1997, did not specify a specific level of reduction in Company loss and, therefore, was not dependent on achieving a target figure.
However, it is also clear to the Court that the Company has severe financial constraints and accepts that the Company is dependent on significant improvement in performance this year.
The Court, having considered all the information supplied, recommends that the commitment to pay 2.25% on the 1st of January, 1998 and 1% on the 1st of July, 1998, be honoured by the Company but payment be frozen to the 1st of March, 1999, at which time the increase and the back money would be paid.
Signed on behalf of the Labour Court
13th May, 1998______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.