INDUSTRIAL RELATIONS ACTS, 1946 TO 2004
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr McGee
Employer Member: Mr Grier
Worker Member: Ms Ni Mhurchu
1. Compensation for loss of earnings.
2. The dispute relates to a claim for compensation for loss of earnings by three workers employed as Managers. In the 1980's FAS established a company called FAS International Consulting Limited (FIC) to carry out contracting work overseas, primarily in developing countries. The three claimants were assigned to FIC. When they travelled abroad they were paid an allowance (a 1% dislocation payment) to compensate them for the hardship of working in such countries.This allowance was in addition to travel and subsistence expenses. In 2003 FIC was wound up and the claimants were reassigned to other positions in FAS at no loss of pay or conditions.The Union submitted a claim for loss of earnings on behalf of the three claimants in relation to the overseas allowance. 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 27th May, 2004 in accordance with Section 26 (1) of the Industrial Relations Act, 1990. A Court hearing was held on the 13th September, 2004.
3. 1. The 1% payment formed an essential part of the three workers salary for a substantial period of time, in two cases approximately 18 years and in the other case, six years. The payment in question increased in line with salary as it was based on 1% of salary and was paid quarterly to them.
2. As an example and taking the period 1997 to 2002 the net salary earnings for the 1% in question yielded as follows;
Member A = € 8,550 i.e. €1,900 p.a.
Member B = € 20,552 i.e. €4,110 p.a.
Member C = € 19,826 i.e. €3,965 p.a.
When calculating the loss consideration also must be given to the projected loss for the claimants up until retirement date (an average of 10 years each for the three workers.). In doing such projections, annual increases, Benchmarking etc, would significantly increase the projected loss to the workers.
3. FIC at the time of closure was a highly profitable company, yet the claimants were forced to redeploy back to FAS which resulted in an enforced financial loss to them of the 1% salary adjustment payment.
4. The FAS policy document on job rotation provides that there would be no diminution of salary or other conditions of service. The contested 1% payment was a condition of service for the claimants for many years. Diminution, by its removal, did take place.
5. The claim is not cost increasing in the context of the Sustaining Progress Agreement as the payment of the 1% should never have been removed in the first place.
4. 1. The overseas allowance was designed solely to compensate for the extra hardship involved in doing business in developing countries .The following extract from the November,1992 minutes of the FIC Board illustrates this point;
"as this payment is designed to compensate for the hardship of working in developing countries it should be related to the amount of time spent working in these countries. Therefore it is proposed that the amount of this payment be paid quarterly in arrears and be based on time spent in the previous three months in developing countries".
2. The quarterly payments referred to above were made on receipt of a separate claim form setting out details of each day spent working in a developing country.
3. The earnings of all FAS staff are determined solely by reference to approved salary scales which do not include travel or subsistence or per diem hardship allowances. The issue of loss of earnings therefore does not arise in this case.
The Court, having considered the submissions of the parties, does not find that there is merit in the Union's case and, therefore, does not recommend concession of the Union's claim.
Signed on behalf of the Labour Court
17th September, 2004______________________
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.