INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Duffy
Employer Member: Mr Carberry
Worker Member: Mr O'Neill
1. Redundancy terms.
2. The case before the Court concerns a dispute between SIPTU and Management at Dairygold in relation to the application of a severance package agreed between the parties in October, 2003.
The Union's position is that Management failed to implement fully the terms of the Agreement reached in October, 2003, on the basis that the introduction of a cap on the severance package meant that certain workers were not receiving their full entitlement.
The Company maintain that the placing of the cap on the redundancy terms is compliant with the Terms of the Agreement, and that the payment of the Terms of the Agreement is based on the Company's ability to pay.
The dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 3rd of December, 2004, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 16th of December, 2004.
3. 1. Both parties unanimously agreed the terms of the Redundancy package for implementation. The Agreement was to apply to all staff members of Dairygold. It is unacceptable that certain workers were treated less favourably than their colleagues, who received their settlement a few months earlier.
2. The Company have breached the terms of the Agreement by introducing a cap on the redundancy terms.
4. 1. Due to increased market pressure, the Company must continue to implement it's rationalisation programme. To remain viable in the sector a balance between redundancy payments and re-investment must be achieved.
2. At the time the Agreement was negotiated, it was clearly stated that any non statutory elements were dependent on the Society's financial ability to apply the Redundancy terms.
In essence, this dispute concerns the interpretation of an agreement on redundancy terms concluded between the parties in October 2003. In relevant part this agreement provides as follows:
“The key details of the new terms are outlined below:
A) If an individual would have received a higher gross under the old terms than under the new terms they will be eligible for the higher of the two.B) If the new terms yield more than the old terms a cap of 2.2 times annual gross earnings will apply. However, this will not result in a lesser payment than the individual would have received under (A) above”
The Union contend that the reference to the “old terms” in A) above relates to a number of old redundancy agreements applicable within the Dairygold Group which were specifically referred to and considered by the negotiators of the 2003 agreement. They contend that there was no mention of any old agreement applicable to the plant to which the present dispute relates.
In a supplemental submission, presented at the start of the hearing, the Company contends that an old agreement did apply to the Roscrea plant to which paragraph A) of the agreement applies and that in consequence the cap referred to at paragraph B) also applies. The Union say that they have no knowledge of the agreement on which the Company rely and that this was never referred to in the negotiations of the 2003 agreement and could not, therefore, be covered by the provision for a cap.
The Court notes that in local discussions, at conciliation and in its original submission to the Court the Company made no mention of any agreement covering the Roscrea plant. Furthermore, the Company were unable to assist the Court in establishing when this agreement was concluded, with whom it was concluded or in what circumstances it was concluded. In all the circumstances the Court cannot accept that this agreement (if it exists) was in the contemplation of the parties to the 2003 agreement when they formulated the provision now in dispute. Accordingly, the Court is satisfied, as a matter of interpretation, that clauses A) and B) of the agreement do not operate so as to apply a cap of 2.2 times average earnings in this case.
The Company have also argued that the expression “the non-statutory elements of this agreement are paid on a ex-gratia basis” means that they are discretionary and can be withheld by management. They submitted that the changed economic circumstances of the employment justify them in applying the cap in this case. They also say that the agreement (at clause 15) allows for a review and that the local discussions constituted a review of the agreement.
In the industrial relations terms in which this agreement is drafted it is, in the Courts view, clear and easily understood. It commits the Company to paying the agreed terms, on the conditions set out in the agreement, for as long as the agreement remains in force. The Court does not accept that any element of the agreed payments are discretionary.
In the course of any agreement circumstances may change which make its terms more or less attractive, to one side or the other, than was originally envisaged. Nevertheless, parties are expected to adhere to the agreement for its duration or until it is voluntarily renegotiated. In this case the Company claim that the changes in the economic and commercial circumstances of the employment have made the terms agreed in 2003 non-viable. If that is the case it justifies the Company in seeking a review of the agreement but not in seeking to unilaterally depart from its terms.
The Court recommends that the terms as set out in the 2003 agreement (without the imposition of a cap) be paid in this case. The parties should then agree to a review of the agreement in accordance with clause 15. This review should be completed by end January 2005. Should the agreement not be reached, outstanding issues may be referred back to the Court.
Signed on behalf of the Labour Court
22nd December, 2004______________________
Enquiries concerning this Recommendation should be addressed to Andrew Heavey, Court Secretary.