INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
IRISH FERRIES LIMITED
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Ms Jenkinson
Employer Member: Mr Carberry
Worker Member: Mr. Somers
1. Benefit in Kind / travel concessions.
2. The dispute concerns 16 workers (three based in Dublin and 13 in Rosslare). The Company pays an 'out of hours travel allowance' to permanent shift staff for attendance on shifts outside of normal working hours. The allowance was introduced following an agreement negotiated in 1993. The payment is currently €203.16 per month plus €5.08 per extra shift as required. The allowance was paid tax free until January, 2004 when the Company was instructed by Revenue to apply PAYE and PRSI deductions under the new tax regulations in the form of Benefit In Kind (BIK). The Union claims that the Company should pay the tax. Management rejected the claim. The dispute was referred to the Labour Relations Commission. A conciliation conference was held but agreement was not reached. The dispute was referred to the Labour Court on the 26th June, 2004 in accordance with Section 26 (1) of the Industrial Relations Act, 1990. A Court hearing was held on the 10th September, 2004.
3. 1. The agreement negotiated in 1993, for payment of the allowance, provided for its payment net of tax. At the time of negotiations the Union only agreed to the new shift after the word 'net' was inserted.
2. The Union accepts that BIK is payable (in some instances) on travel allowance. However, the agreement clearly provides for net payments and, therefore, the Company is liable to pay the tax or alternatively increase the payments accordingly.
3. As the claimants are relatively youthful it would be unfair to negotiate a buy out (which would be presumably a small number of years) as opposed to their expectation of the payment going forward for their working life within the Company.
4. 1. The Company must abide by the BIK regulations introduced in January, 2004. All benefits must be processed through the payroll, with both PAYE and PRSI applying.
2. The Company is not in a position to gross up the payments due to the current need for cost savings across the Group.
3. The January 2004 BIK regulations exposed the Company to additional cost in the form of 10.75% employers PRSI payments, while major competitors do not pay travel allowances of any kind to staff travelling to their normal place of work.
4. The Company has offered to continue to pay the allowances either through the payroll or into AVC'S for the claimants.
5. The Company has offered to buy-out the allowances, and has recently reached agreement with 5 staff in Dublin.
Having considered the submissions of both parties, the Court notes that the Company is now bound by revenue regulations to pay the travel allowances and extra shift allowances through the payroll and that all future payments must be subject to appropriate PAYE/PRSI deductions.
In an effort to resolve this dispute the Court recommends that each of the individuals concerned in this claim should select one of the following options in full and final settlement of the claim:-
- Immediate suspension of the payment and acceptance of the buy out formula as applied to the five Dublin employees,
- Retention of the payments in as tax efficient a manner as possible for the individuals concerned, i.e through the AVC's if this is feasible (as offered by the Company)
- Retention of the payment on a gross basis plus the payment of compensation for the resulting loss incurred, parties to discuss the appropriate formula for this loss.
If there are any outstanding issues which cannot be resolved between the parties, a reference may be made back to the Court for a definitive recommendation.
Signed on behalf of the Labour Court
20th September, 2004______________________
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.