FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : DAWN MEATS (EXPORTS) LIMITED - AND - UNITE (ATGWU) DIVISION : Chairman: Ms Jenkinson Employer Member: Ms Doyle Worker Member: Mr O'Neill |
1. Claim of inability to pay Towards 2016
BACKGROUND:
2. The Company which is a subsidiary of QDM Holdings and operates the abattoir at Grannagh Co. Waterford. Due to the downturn in demand for its products and ongoing trading losses it has pleaded inability to pay 2.5% increase due under Towards 2016 with effect from 1st October, 2007. A decision which affected 48 general operatives. Following unsuccessful conciliation an agreed independent assessor was retained to examine the financial situation but due to concerns relating to commercial confidentiality the information gleaned was not revealed either to the workforce nor the
Union. The Assessors report did not uphold the Company's case.At a further conciliation conference the Company argued that it was still losing money and could not pay a wage increase.
The dispute was referred to the Labour Court on the 21st January, 2010 in accordance with Section 20(2) of the Industrial Relations Act, 1969 and both parties agreed to be bound by the Recommendation.
A Labour Court hearing took place on the 28th April, 2010.
UNION'S ARGUMENTS:
3. 1. The independent Assessor has examined the audited books and has deemed the Company to be in a strong enough position to pay the final phase of Towards 2016 wage increase which fell due on 1st October, 2007.
2. Other companies within the QDM Group have paid all phases of Towards 2016 to their Employees.
COMPANY'S ARGUMENTS:
4. 1. The Company has been losing money over the past number of years, it was over staffed, costs of waste disposal, transport and buying cattle have all increased significantly.
2. Sales are dropping, and there is extreme pressure from the multiples forcing down prices of all beef products. These factors along with the economic circumstances justify the position taken by the Company.
RECOMMENDATION:
This dispute concerns a plea by the Company of inability to pay the final phase of “Towards 2016”, i.e. 2 ½ % from 1st October 2007.
Clause 1.7 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 1.9 sets out the procedure to be followed where such a plea is made and Clause 1. 9(ii) deals with situations where an Employer claims inability to meet the terms of the agreement in full.
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.
The Assessor concluded that the Employer could not seek the protection of Clause 1.9 (ii).
The Assessor concluded as follows:
- “The company is trading in a very difficult commercial environment and has lost money in the last two years. Its current trading position is very difficult. However having considered its position at this time very carefully I do not uphold its claim under Clause 1. 9(ii).
The Employer discounted the findings of the Assessor’s Report and held that they were inconsistent with the audited accounts provided for 2006 and 2007 and the management accounts provided for 2008. It stated that since the Assessor had concluded his report the Company has again lost money in 2008 and 2009. It has been forced to restructure its operations and negotiate a survival plan with the trade union. It submitted that drastic measures had to be taken in 2008, which resulted in a different cost structure; these measures supersede the claim for the pay increase for which the Company has pleaded inability to pay.
As the dispute remained unresolved following the Assessor’s Report, it was referred to the Court pursuant to Section 20(2) of the Industrial Relations Act, 1969, the parties agreed to be bound by the outcome of the Court.
The Court is confined to determining whether the Employer can or cannot pay the terms at all.
The Court has considered the submissions made by both sides. The Employer was willing to provide financial information on a restricted and confidential basis to the Union. The Union was not satisfed with these restricitions and considered the offer inadequate. The Court was unable to accept the information with restrictions imposed and consequently had no additional information, than that contained in the Assesor's report, to consider the Company's position.
The Agreement provides that the onus is on the Employer to convince the Union of its position and to substantiate its plea of inability to pay. Thus, unless the Employer can demonstrate to the Court that it has no capacity whatever to meet the pay terms of the Agreement, the plea must be rejected in its entirety. As the Employer has failed to satisfy the Union of its plea and has not provided information, which the Court can use to assess its situation, then the Court must uphold the Assessor’s findings.
Therefore the Employer must pay the outstanding 2½% with retrospective effect from 1st October 2007 due under the final phase of “Towards 2016”.
The Court so decides.
Signed on behalf of the Labour Court
Caroline Jenkinson
28th May 2010______________________
JFDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.