FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 33(1), INDUSTRIAL RELATIONS ACT, 1946 PARTIES : FOLEY ENGINEERING AND CONSTRUCTION LIMITED (REPRESENTED BY DAMAR CONSULTANCY LTD) - AND - ZBIGNIEW OBLAK, ANTOI BEMOWSKI, DARIUSZ TRYALA, KRZYSZTOF KACPRZAK (REPRESENTED BY JC HOBAN & COMPANY SOLICITORS) DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Interpretation of a Registered Employment Agreement
BACKGROUND:
2. The case before the Court concerns a dispute between Foley Engineering and Construction Limited and four named individuals represented by J.C Hoban & Company Solicitors in relation to the application of the Construction Industry Registered Employment Agreement (REA), Wages and Conditions of Employment. The workers' representative contends that the Company carried out work within the scope of the REA and employed the claimants to work in circumstances that entitle them to payment on the Grade A and Grade D rates. The company, now in liquidation, disputed the substantive submission of the claimants.
The four named individuals submitted a request for Interpretation of the REA on February 15th 2010 in accordance with Section 33(1) of the Industrial Relations Act, 1946. A Labour Court hearing took place on 8th July, 27th October and 1st November 2010..
The following is the Court's Decision:
DECISION:
This matter came before the Court by way of an application by Mr. Zbigniew Oblak, Mr. Antoi Bemowski, Mr. Dariusz Tryala and Mr. Krzysztof Kacprzak c/o J.C. Hoban & Company Solicitors, Suite 114, Capel Building, Mary’s Abbey, Dublin 7 for an interpretation of the Registered Employment Agreement (Construction Industry Wages and Conditions of Employment) (the Agreement) and its application to them. It is brought under Section 33(1) of the Industrial Relations Act, 1946.
Section 33(1) of the Industrial Relations Act 1946 provides as follows:
- "The Court may at any time, on the application of any person, give its decision on any question as to the interpretation of a registered employment agreement or its application to a particular person".
Mr. Krystian Boino Solicitor,J.C. Hoban & Company, Solicitors on behalf of the Applicants submitted that the Respondent is a firm covered by the Second Schedule to the Registered Employment Agreement (Construction Industry Pay and Conditions of Employment) (the REA). He submitted that the main activities in which the employees were involved were assembly of warehouse construction elements including steel elements, pipe installation, installation of wall and roof elements of warehouses, bricklaying, stone-laying, tiling, painting, tools operating, and van driving.
Furthermore, he submitted on behalf of Mr. Zbigniew Oblak that he should be classified as a Grade A Construction Operative under the Agreement, and on behalf of the remaining 3 Applicants - Mr. Antoi Bemowski, Mr. Dariusz Tryala Mr. Krzysztof Kacprzak submitted that they should be classified as Grade D Construction Operatives.
Mr. David Kearney, Damar Consultancy on behalf of the Company denied that the Applicants are workers to whom the REA applies as the Respondent was not a firm encompassed by the REA. He submitted that the principal activity undertaken by the Respondent was the manufacture and fabrication of metal work products and that it was not a building or civil engineering firm within the meaning of the REA. The Respondent is engaged in the manufacture and fabrication of metal work products including gates, railings, sliding doors, metal stairs, handrails, hoppers, walkways, ramps, support, steel frames and overhead cranes, waterwheels, turbine connector flanges, cattlegrids, rollers, stable doors, racking, sluice valves, bin-compactors, balconies, litterbins and golfing aids. The Company is also involved in the erection of warehouse construction structures.
Mr. Kearney told the Court that at its height the Respondent employed up to 20 employees directly involved in the manufacture and fabrication process of products within the plant and between 5 and 7 employees involved in on-site activities. The Respondent did not dispute that the Applicants were carrying out the activities as described.
Mr. Tony Harney, Harney Nolan Business Advisors, Auditors and Accountants, for the Company, produced information for the Court, outlining details of the Company’s accounts for 2007 and 2008. He tendered information, dated 28th April 2010, on the estimated manufacturing and installation costs as an apportionment of the overall business costs for the company, which operated a manufacturing business at its factory premises in Borris, Co. Carlow. These figures showed that manufacturing costs accounted for 65% and installation costs accounted for 35% of overall business costs.
The Company was declared insolvent and a Liquidator was appointed on 23rd December 2009.
The Court was supplied with the Memorandum of Association of the Respondent. At paragraph (a)(i) thereof the Respondent is authorised: -
- “To establish maintain and operate a business as electrical, electronic, mechanical and general engineers ,engineering manufacturers and engineering consultants, as designers, developers, manufacturers, fitters, testers and repairers of the wholesale and retail dealers in general engineering products and trucks, refrigeration and electrical machinery, motors, appliances, instruments and equipment, and all manner of tools, fittings, components and accessories, computer hardware and computerised systems, switchgear, mechanical and hydraulic systems, radio and television equipment, scientific and laboratory equipment, and industrial, commercial and domestic goods of all kinds, as proprietors and managers of factories, shops and warehouses and as storage, packing and haulage contractors; to acquire, hold, turn to account or dispose of patents, trade marks, licenses and all manner of proprietary rights and to print and publish reports, designs, specifications, books and journals as may be considered expedient.”
- “To carry on the business as builders, building and general contractors, as painters and decorators, central heating contractors, joiners, turners, fitters, layers of pipes and installation of sewerage systems, as site clearance contractors, electrical, civil and mechanical and general engineers, water supply engineers, builders providers, plumbers, road making contractors, plant hire contractors, shop fitters, building and estate designers and promoters, as retailers, wholesalers, importers, exporters, manufactures, assemblers, distributors and dealers in all materials, goods, items and equipment necessary for the carrying out of the aforementioned businesses.”
Mr. Kearney stated that although the Memorandum authorised the Respondent to carry out the business as builders, etc. in reality it was primarily a manufacturing company and the provision in the Memorandum was a “catch-all” provision which allowed the it to expand into other areas if it wished to do so.
On behalf of the Applicants, the Court was told that the vast majority of their working time was spent on building or civil engineering sites where they engaged in general duties appropriate to a construction operative. There was total disagreement as to the precise proportion of the Applicants’ time was spent on sites. The Respondent stated that they were only on site to carry out checks on the steel it provided.
Conclusions of the Court
The Court has been asked to decide on whether or not the Applicants are workers to whom the REA applies. The REA only applies to those firms the business of which is covered by one or a combination of the activities specified in the Second Schedule to the Agreement.
The Respondent contends that it is not a firm covered by the Agreement and consequently is not encompassed by its terms.
The scope of the REA
The REA applies to “a building or civil engineering firm”. That term is defined by Clause 1 of the First Schedule of the REA as follows: -
“ A Building Firm is defined as “a firm the principal business of which is one or a combination of any of the following activities;
(a) The construction, reconstruction, alteration, repair, painting, decoration, fitting of glass in buildings, and the demolition of buildings;
(b) The installation, alteration, fitting, repair, painting, decoration, maintenance and demolition in any building, or its site, of articles, fittings, pipes, containers, tubes, wires or instruments (including central heating apparatus, machinery and fuel containers connected thereto) for the heating, lighting, power or water supply of such buildings;
(c) (i) The clearing and laying out of sites for buildings.
- (ii) The construction of foundations on such sites.
(iii)The construction, reconstruction, repair and maintenance within such sites of all sewers, drains and other works for use in connection with sanitation of buildings and the disposal of waste.
(iv)The construction, reconstruction, repair and maintenance on such sites of boundary walls, railings and fences for the use, protection or ornamentation of buildings.
(v)The making of roads and paths within the boundaries of such sites.- (d)The manufacture, alteration, fitting, and repair of articles of worked stone (including rough punched granite and stone), granite, marble, slate and plaster.
The categories of worker covered by the REA are listed at Clause 2 as including a number of specified trades and ‘general operatives’.
In interpreting the REA the Court must presume that the parties intended their agreement to make sense from the perspective of business efficiency. It is also to be assumed that the parties did not intend their agreement to produce an absurd or unreasonable result. The Court takes the view that if the Respondent is involved in “the construction of buildings” it is thereby covered by Clause 1(a) of the definition of the Agreement.
Mr. Kearney submitted that the principal activity undertaken by the Respondent was the manufacture and fabrication of metal work products including gates, railings, sliding doors, metal stairs, handrails, hoppers, walkways, ramps, support, steel frames and overhead cranes, waterwheels, turbine connector flanges, cattlegrids, rollers, stable doors, racking, sluice valves, bin-compactors, balconies, litterbins and golfing aids. The Company is also involved in the erection of warehouse construction structures.
Mr. Boino submitted that among the activities the employees were involved in were the assembly of warehouse construction elements including steel elements, installation of wall and roof elements of warehouses, bricklaying and stone-laying.
In order to determine this issue the Court must consider if the Respondent’s principal business involved is in the construction of buildings or part of buildings and whether the on-site and off-site activities form an integral part of the overall process involving activities referred to in the Second Schedule.
It is clear to the Court that paragraph (a) of the definition of a building firm, recited above, relates to the construction of the superstructure of buildings, including its supports, walls and roof.
The Respondent gave evidence that it is involved in the manufacture of steel which is then erected on site by subcontractors with blocklaying work being carried out by different subcontractors.
Evidence was given by Mr. Billy Power, an independent Steel Subcontractor, who told the Court that he is an independent contractor. He stated that seven out of ten contracts he works on originates from the Respondent, where the Respondent informs him of a job where it is manufacturing the steel and he carries out the steel erection. He said that on many occasions he works under the direction of the main contractor and would have no dealings with the Respondent at all.
Mr. Patrick Spruhan, an independent Blocklaying Contractor stated that the Respondent informs him of jobs where it was manufacturing the steel and that he carried out the blocklaying/ bricklaying work required. He said that he was paid by the main contractor.
The Court was given conflicting evidence as to who was involved with the erection of Kingspan wall panels and other construction-related work on the projects the Respondent was involved in. The Respondent stated that the main contractor takes over when the steel is delivered whereas the Applicants told the Court that they were involved in cutting steel on site, fixing gutters, fixing Kingspan panels, blocklaying, building steps/stairs, digging wells for water and sewage, painting, groundsworks, preparation work for foundations, installation of thermal insulation, erecting of timber shuttering for laying concrete, laying kerbs etc. They had a van supplied by the Company, they collected other workers to bring them on site and they travelled to different locations doing this work.
Mr. Boino accepted that Company used Subcontractors for part of its work. The Subcontractors in their evidence denied that the Applicants worked with them on site and stated that they had never seen them before.
The Court notes that the building structures supplied by the Respondent were specifically designed to the main contractor’s specifications. The Respondent is registered under NACE by code 45.25 which identifies a company as “other Construction work involving special trades”. Invoices supplied by the Respondent to the Court indicate that it purchased a large quantity of Kingspan materials over the years. The accounts for the year ending 31st December 2008 included a sum of just over €1 million paid to subconcractors and for year 2007 the figure was just under €1 million.
The Court’s attention was drawn to promotional material published on the Respondent’s business activities. It gives details of its services, including manufacturing, erection and design/detailing. It shows details of a large sample of warehouses, factories, car showrooms, building structures on a racecourse, retails showrooms, etc. It states that it has completed many major construction projects for various Irish companies, and states that the Respondent organises and directs all their business activities, involved in assessing customers needs and providing a complete service where the client is number one. The brochure states:
- “As our slogan says… “BUILDING FOR YOU.””
In asserting that its business was not encompassed by the REA, the Respondent placed considerable emphasis on the breakdown of its turnover between manufacturing and its on site work. The Court has found previously (PHI Ireland LimitedINT1018) that apportionment of a firm’s costs/turnover between on site and off site activity cannot be regarded as the sole or determinative criterion in deciding whether or not it is covered by the REA.
The REA is an employment agreement made between the CIF and a number of named Trade Unions of workers and was concluded for the purpose of ensuring that all workers in the Construction Industry were treated in the same way in terms of rates of pay and conditions of employment thus maintaining a level playing field amongst employers in the industry.
The REA was written not by lawyers but by industrial relations practitioners. It is addressed to building employers, workers and their trade unions. Its purpose is clear and there can be no doubt that the parties to the agreement intended it to have general application in the industry. It is an employment agreement between parties and should be construed in accordance with the rules normally applied in the interpretation of collective agreements.
Based on the information provided for the Court, it appears that the Applicants were involved in a process whereby they habitually carried out construction related activities which must come within the ambit of the REA and to that end they should be afforded the benefits of the REA.
Determination
For all of these reasons the Court is satisfied that the REA is applicable to the Applicants encompassed by this claim.
Signed on behalf of the Labour Court
Caroline Jenkinson
5th January 2011______________________
SCDeputy Chairman
NOTE
Enquiries concerning this Decision should be addressed to Sharon Cahill, Court Secretary.