INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969
DONEGAL MEAT PROCESSORS
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Duffy
Employer Member: Mr Doherty
Worker Member: Mr. Somers
1. Inability to pay Sustaining Progress.
2. The Company is located in Carrigans, Co. Donegal and employs approximately 210 people. It is part of the Foyle Food Group. The Company is pleading an inability to pay the terms of Sustaining Progress (S.P.) and is citing Section 1.10(ii) of S.P.
The Union wrote to the Company on the 28th of April, 2003, requesting implementation of the new terms of S.P. The Company replied on the 10th June, 2003, stating that it was unable to pay. Following a number of meetings between the parties, the Company stated that it was prepared to disclose audited financial information to the Union's financial analyst. His findings were that the information provided did not support the Company's claim of inability to pay the terms of S.P. The dispute was then referred to the Labour Relations Commission (LRC) and it was arranged for an independent assessor to meet the parties. His reported concluded as follows:-
"If the Company had sought cost offsetting measures under Clause 1.10(iii), I would have had no hesitation in supporting their position. I do believe that the Company should be supported by their workforce in maintaining employment in Carrigans but at the same time I cannot recommend in favour of their inability to pay plea. I would think a deferment would be more appropriate."
Following a second conciliation conference with the LRC - and no agreement being reached between the parties - the dispute was referred to the Labour Court in accordance with Section 20(2) of the Industrial Relations Act, 1969. A Labour Court hearing took place on the 25th of June 2004, in Cavan.
3. 1. The Company had difficulty paying the terms of the Programme for Prosperity and Fairness (PPF), and an agreement to pay was needed with the help of the LRC. The Company made the Union fully aware of its present difficulties,
including BSE, overcapacity of slaughtering in Ireland and the financial position of the Company.
2. It is more expensive for the Company to kill and bone cattle than it is for other processing and slaughtering plants within the Foyle Food Group.
3. Estimates of implementing the terms of S.P. will cost the Company €276,000 to the 30th June, 2004, and thereafter €289,000 per annum.
4. The Company believes that the Union's assessment of its financial accounts is incorrect (details supplied to the Court).
4. 1. The Company's audited accounts for the year ended 31st December, 2001 show that it made a profit of €840,000 compared to a loss of €807,553 the previous year. It made a profit of €1.17 million for year ending 31st December, 2002. The Union's financial analyst concluded that the Company's performance going into 2003 was very strong.
2. In accordance with the terms of S.P., Section 1.10(ii), the onus is on the Company to convince the Union of its inability to pay. The financial information provided does not support the Company's claim.
This dispute concerns a plea by the Company of inability to pay the terms of the pay agreement with Sustaining Progress.
Clause 1.8 of the agreement provides that an employer may plead inability to pay the terms of the agreement where this would lead to serious loss of competitiveness and employment. Clause 1.10 sets out the procedure to be followed where such a plea is made.
Clause 1.10 provides for two distinct types of inability to pay plea. Clause 1.10(ii) deals with situations where an employer contends that they are unable to meet the pay terms at all. Clause 1.10(iii) deals with situations where an employer claims inability to meet the terms of the agreement in full or where it is claimed that cost-offsetting measures are necessary for them to do so.
In either case, the Agreement provides that the onus is on the employer to substantiate the plea. The procedures prescribed by the agreement involve an examination of the economic, commercial and employment circumstances of the employer by an independent Assessor appointed by the LRC. If the dispute remains unresolved it is to be referred to the Court. However, the basis of the Court investigation is quite different depending on the type of inability to pay plea relied upon.
If the plea is of the type envisaged by the Clause 1.10(ii) (inability to pay at all), the dispute is referred pursuant to section 20(2) of the Industrial Relations Act, 1969, and the Court is confined to determining whether the employer can or cannot pay the terms at all. Thus, unless the employer can demonstrate to the Court that they have no capacity whatever to meet the pay terms of the Agreement, the plea must be rejected in its entirety. By contrast, if the plea is of the type envisaged by the clause 1.10(iii), the Court investigation is pursuant to section 26(1) of the Industrial Relations Act, 1990, and the Court has the normal flexibility to issue a recommendation on the merits of the case setting out proposals on how the dispute might best be resolved. This could, in appropriate cases, provide for modification of the agreed terms including phasing or timing of increases and/or cost-offsetting measures.
In this case, the employer has pleaded inability to pay the terms of the Agreement at all. Consequently, the Court must proceed in the manner prescribed by the clause 1.10(ii) of the Agreement.
The Court has considered the very comprehensive submissions made by both sides and has considered all of the financial and related information with which it was provided. The report of the Assessor has also been fully considered and given serious weight. The Court is satisfied that the Company is experiencing signification financial and competitive pressures which, had the matter been before the Court pursuant to Clause 1.10(iii), would have been reflected in the Recommendation. However, the Court has not been convinced that the circumstances of this Company are such that it cannot pay the terms at all.
Accordingly, the Court must find that the Company can pay the terms of the Agreement and recommends that it do so in full.
Signed on behalf of the Labour Court
12th July, 2004______________________
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.