INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
IRISH MUNICIPAL, PUBLIC AND CIVIL TRADE UNION
Chairman: Mr Duffy
Employer Member: Mr Grier
Worker Member: Ms Ni Mhurchu
1. Claim for improvements to voluntary severance and early retirement proposals announced by Company.
2. Aer Lingus announced in August that as part of its new three year business plan for the airline (2005-2007) it would be seeking to reduce its workforce by about 1300 over the period of the plan, with the majority of the job losses to happen at the front end of the period.
The Company put forward a set of proposals on a 'Voluntary Severance' and 'Early Retirement' package for consideration
THE COMPANY'S OFFER:
Option A Lump sum based on Company Service
€7,000 per completed year of Company service
Option B 9 weeksbasicpay per completed year of service (Max 130 weeks)
Option C 4 weeksbasicpay per completed year of service (Max 104 weeks)
Service Bonus of €2,750 per completed year of Company Service
(Maximum service bonus €40,000)
Basic pay included pensionable grade differentials but excludes any element of shift pay, roster duty allowances, credit payments, overtime payments etc.
The Minimum offer to any applicant is €40,000
- Workers aged 55 or over, with a minimum of 5 years pensionable service would be entitled to avail of an immediate pension
- Staff with an entitlement to an immediate pension or a deferred pension within 12 months will be eligible for a retirement lump sum based on the greater of Options A,B, or C subject to a maximum amount calculated in accordance with the table set out below
54, 55, 56 78 weeks
57,58 65 weeks
59 or over 52 weeks
*Option C service bonus is paid in addition to maximum lump sum
- Staff with more than 5 years pensionable service aged 45 years or over will be entitled to a deferred pension at 55
- Staff between the ages of 45 and 53 inclusive, that are entitled to a deferred pension at 55 years of age, will also be entitled to lump sum based on whichever of the options A,B or C is the greater.
THE UNION'S CLAIM:
- Voluntary Severance
1. 9 weeks pay per year of service, or part of year, based on gross weekly pay
2. No cap or claw back
3. Service bonus, particularly geared to shorter service, with a total minimum payment of €35,000
- Early retirement at age 50, as per Cahill Plan (option available from age 40)
- Provision for up to 7 added years
- Recognition of temporary service
- Elimination of claw back
- 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 21st September, 2004 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 1st October, 2004.
3.1 The Company went through a significant Survival Plan in 2001 which involved 2,000 job cuts, pay freeze and other changes. All commitments entered into by workers were delivered on. The net effect has been to completely transform the fortunes of the Company from a serious loss maker in 2001 to a viable and highly profitable flag carrier in the region of €95million in 2004.
2. The current package is weighted heavily in favour of those with short to medium service and discriminates against those with long service. The effect of a cap on payment is very significant.
3. The Union maintain that improvements they are seeking for long service workers were not to be at the expense of any reduction on the offer made to shorter service workers.
4. The Company alleges that a further series of job cuts is necessary to maintain the Company's competitive position and that these job cuts will be on a voluntary basis. For many staff the Company's decision to exit from functions such as third party handling and cargo narrows down their options, as the Company plan to outsource functions such as catering, cleaning, reservations and internal services. This places a stark choice before workers unless the Company abandons these plans or agreed alternatives solutions are found.
4.1 This scheme is voluntary on both sides.
2. The average payout in the 'Voluntary severance scheme is more than twice that of the Survival Plan. The scheme is seen as exceptionally generous and widely criticised by many in industry as lifting the bar to a level that is unthinkable for most companies.
3. The Company is facing into a very difficulty trading environment where it will not survive without taking aggressive action on total cost base.
4. The overall cost of the scheme is very significant and the Company could not sustain any increase in that cost.
5. The cost of early retirement has increased 35% above that of 2001
6. 720 workers have applied for this programme to date. The Company are confident that they will be able to address the staff surplus by voluntary means.
The Court is satisfied that in comparative terms the overall package proposed by the Company is reasonable. Whilst there are some elements of the package which are unusual in comparison to other redundancy settlements, such as the calculation of pay by reference to basic pay only, and the disregard of part years, similar provisions were contained in previous packages. The Union correctly pointed out that these earlier schemes were introduced when the financial circumstances of the Company were significantly less favourable than at present. Nevertheless, the present proposals contain substantially improved terms principally in respect of the number of weeks pay per year of service on which the package is based, which reflects the different circumstances now prevailing.
There are however some anomalies in the present proposals, relating mainly to those with longer service which should be addressed. Accordingly the Court recommends that the proposals be modified as follows:
- The maximum payable under option B should be increased from 130 weeks pay to 145 weeks pay
- The maximum lump sum payable to those opting for early retirement should be equivalent of 78 weeks pay irrespective of age subject to the proviso that no employee can receive more by way of lump sum than their potential earnings.
- The calculation of lump sums should be based on actual basic pay on the date of leaving, including increases falling due under Sustaining Progress.
Signed on behalf of the Labour Court
8th October, 2004______________________
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.