INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
(REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Flood
Employer Member: Mr Doherty
Worker Member: Mr. Somers
1. Severance package.
2. The Company manufactures shirts in Donegal and has been in operation under various owners since 1894. In 2003 the Company closed its second factory in Carndonagh with a loss of 19 jobs and made a further 32 workers redundant at its main plant in Buncrana. The Company claims that it was forced to take this action because of substantial losses. The Company paid only statutory redundancy to those with the necessary services, eight workers with less than two years service received no compensation. The Union claims that there had been redundancies previously in May 2002 and the Company paid two weeks pay per year of service plus statutory, and two weeks for those with less than two years service. The Company have said that they could not afford to pay any extra and that the redundancies are necessary in order to survive.
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 25th March, 2004 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 21st May, 2004.
3.1 The Company has been able to sustain a healthy trading position and profits for a considerable number of years which contradicts the Company's position.
2. The Company had purchased the premises in Carndonagh which the Union believes will increase in value, thus making the Company a profit when sold, which could fund the severance package the Union is requesting.
3. The Union are proposing an ex-gratia element of the existing severance package from two weeks per year of service to 1.5 weeks per year of service to offset the additional cost to the Company.
4. Under the new legislation the cost the Company for 1.5 weeks per year of service plus statutory amounts to €80,638.65. an increase of €2,625.74 (an increase of €84.70 per person).
5. The Union believes that they are being reasonable in seeking the 1.5 weeks pay per year of service plus (the 'new') statutory entitlements to settle this dispute. This falls short of the average severance terms for workers around the country.
4.1 This Company is the last commercial manufacturer of shirts in the Republic of Ireland. It is now cheaper to manufacture shirts and import them to Ireland than it is in many cases to manufacture them within Ireland.
2. The Company sustained losses of €180,000 in 2002 and estimated net loss of €100,000 in 2003.
3. The Company is experiencing cash flow difficulties with high debtors and stock levels. It has been accepted by the Union at local meetings and at conciliation that the Company is in a precarious financial situation. Any award of an ex-gratia payment above statutory payments already made will have a serious effect on the cash flow of the Company.
4. Irrespective of the change in the statutory redundancy terms, the Company would not be in the position to offer staff the old statutory plus two weeks pay per year of service on this occasion because of the overall cost of the redundancy programme.
5. Any award of an ex-gratia payment will cause the Company further cash flow difficulties and will tip the balance in favour of off shore manufacturing versus continued employment in Ireland.
While the Company argued that the New Redundancy Payments Act that came into effect in May 2003, enhanced the level of redundancy terms applicable to the claimants, it also resulted in an increased rebate to the Company.
Having considered the written and oral submissions made by the parties, the Court recommends that the difference between the rebate given to the Employer under the New Statutory Legislation and that which would have applied under the old Statutory Legislation should accrue to those declared redundant in this case.
A formula for distribution to be agreed between the parties.
Signed on behalf of the Labour Court
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.