INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
KRUPS ENGINEERING LIMITED
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr McHenry
Worker Member: Ms Ni Mhurchu
1. Application of closure agreement.
2. The Company has been engaged in the manufacture of a range of domestic appliances at its Limerick plant since 1964. In October, 1998, the Company announced the closure of the Limerick plant with the loss of 506 jobs. Discussions on a severance package were held on the 10th of November, 1998, and were accepted by the workforce on the 13th of November, 1998.
The issue in dispute concerns the application of the agreement to approximately 26 employees whose service was broken by way of compulsory lay-off for a period of less than 26 weeks in the early 1980s. Clause 5 of the closure agreement states:-
"Employees with break inservice
Redundancy to be calculated from date of re-employment."
The issue was the subject of two conciliation conferences under the auspices of the Labour Relations Commission on the 21st of December, 1998 and the 30th of March, 1999. As agreement was not possible, the Union requested referral to the Labour Court in accordance with Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute on the 25th of May, 1999.
3. 1. Clause 5 of the closure agreement resulted from a specific question which was asked during the discussions on the 10th of November, 1998. It related to two individuals who had resigned from the Company and who were subsequently re-employed. The Company clearly stated that their redundancy would only be calculated from the date of their re-employment.
2. The issue on behalf of employees who were compulsorily laid off for less than 26 weeks was not raised on the 10th of November, as a precedent already existed in the Company. It was established practice that such employees received full severance payments. The negotiating committee also confirmed to one of the claimants at a meeting on the 11th of November that she would receive her severance payment based on her full service as was the norm.
3. The Union assures the Court that there will be no repercussive claims, if this claim is conceded.
4. 1. The agreement entered into in November, 1998, supercedes all others. It has to, or it is worthless. It was ratified by the workforce, by secret ballot, with a majority of 397 votes for and 14 against. The issue of broken service is addressed by Clause 5. To re-interpret this Clause at this point in time goes against both the letter and the spirit of the agreement.
2. The Company recognises that the calculation of service for statutory redundancy includes the previous employment period for reckonable service. However, the generous payment terms agreed for severance payments were on the basis of the latest period of employment only. Concession of the Union's claim would expose the Company to significant extra cost as there may be a succession of knock-on claims from other ex-employees.
The Court is being asked to adjudicate on an agreement, which has been reached between both sides, on redundancy compensation. The Court accepts that ex-gratia redundancy packages need not be based on legal principles as apply to statutory redundancy payments. However, in this case, as the reason for the break in service was related to a lay off situation and, therefore, outside of the control of the claimants, the Court believes that some form of compensation should be paid to the claimants.
Therefore, the Court recommends that the Company should add an additional £26,000 in total to the severance package for the claimants involved in this case. The details of the division of this lump sum to be agreed with the Union.
Signed on behalf of the Labour Court
31st May, 1999______________________
Enquiries concerning this Recommendation should be addressed to Dympna Greene, Court Secretary.