EMPLOYMENT APPEALS TRIBUNAL
APPEAL OF: CASE NO.
EMPLOYEE 1 PW14/2011
EMPLOYEE 2 PW16/2011
EMPLOYEE 3 PW17/2011
EMPLOYEE 4 PW19/2011
EMPLOYEE 5 PW20/2011
EMPLOYEE 6 PW21/2011
EMPLOYEE 7 PW22/2011
EMPLOYEE 8 PW23/2011
EMPLOYEE 9 PW24/2011
EMPLOYEE 10 PW25/2011
EMPLOYEE 11 PW26/2011
EMPLOYEE 12 PW27/2011
EMPLOYEE 13 PW28/2011
EMPLOYEE 14 PW29/2011
EMPLOYEE 15 PW31/2011
EMPLOYEE 16 PW32/2011
EMPLOYEE 17 PW48/2011
EMPLOYEE 18 PW49/2011
EMPLOYEE 19 PW50/2011
EMPLOYEE 20 PW51/2011
EMPLOYEE 21 PW64/2011
EMPLOYEE 22 PW67/2011
EMPLOYEE 23 PW68/2011
AND APPEAL OF EMPLOYER
against the recommendation of a Rights’ Commissioner in the case of:
EMPLOYER
under
PAYMENT OF WAGES ACT, 1991
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms S. McNally
Members: Mr D. Hegarty
Mr D. McEvoy
heard this case in Cork on 22 June, 9 October 2012,
9-10 January, 13-14 March 2013
Representation:
Employees: Mr Edmond Smith/ Mr Noel Murphy, Independent Workers Union,
55 North Main Street, Cork
Employer: Ms Paula O’Hanlon of IBEC on June 22nd 2012,
and Ms Deirdre Crowley, Crowley, Solicitors, Old Fort Road, Ballincollig, Cork, for the remaining days.
The determination of the Tribunal was as follows:
This case came before the Tribunal by way of an appeal by the Employer, and by a number of current employees against a decision of a Rights’ Commissioner references r-065472-pw-08 et al. under the Payment of Wages Act, 1991 involving their employer.
The background to the case was that the employing company, established in 2001, had a Service Level Agreement [SLA], with the HSE South to provide an easily accessible family doctor service for urgent medical needs outside of normal surgery hours to the population of Cork and Kerry, which the HSE funded.
The HSE reduced the level of funding to EMPLOYER in 2008. Following Labour Relations Commission negotiations proposals were put to ballot by SIPTU and were accepted by the members. A number of redundancies took place. This allowed employees to increase the rostered hours alleviating any potential loss of earnings at the time. Premium payments increased the basic hourly rate by 16.6 %. The funding from the HSE South was further cut by five per cent in 2009 and by a further 6.5 % in 2010.
The HSE confirmed that, it would reduce its funding to EMPLOYER by an amount equal to any funding EMPLOYER received from any other source.
Further meetings took place between SIPTU and the employer. A conciliation conference was held in 2009 from which a proposal emerged to reduce the overall cost base. Correspondence of the 3rd of August 2009 to the employer advised that the majority of SIPTU members, on a voluntary basis, accepted a pay reduction of twenty per cent for the remainder of 2009. This particular option had been put forward to the Labour Relations Commission by SIPTU on behalf of it’s members as the preferred option. Futhermore, there was an agreement that separate negotiations would take place in advance of 2010 in respect of any paycut for 2010.
The Company had a formal recognition agreement with two Unions; the INMO and SIPTU in respect of the nurses and drivers it employed.
On the 4th of August 2009 the employer notified employees in writing of the twenty per cent reduction in pay to apply with immediate effect. Payment of increments was also to be postponed. Some three months later the employer wrote to SIPTU to advise that the twenty per cent reduction was being reduced to ten per cent with immediate effect.
At the Tribunal hearing the employee appellant’s representative asserted to the Tribunal that the employer would not engage with his union (IWU) and that his members were not happy about that. He said that they were not seeking negotiating rights with the employer but, rather, that they just wanted to talk to the company about this issue. He queried what exploration of possible savings options had really been done by the company and he disputed the employer’s definition of parity in respect of other workers of similar grades in the HSE. He submitted that the employees of the company (hereafter referred to as the employer) had inferior terms to those of the HSE employees.
The employer, during the consultation process between April 2009 and July 2009, informed both verbally and in writing non-SIPTU members of the issues in respect of pay.
Employees’ Case
While acknowledging that the employer’s finances had deteriorated since 2008 and that it was currently under ongoing financial pressure the employees maintained that this was not a sufficient reason in itself to cut their wages. By agreement with the employer and the employee representatives and the Tribunal only a sample number of employees gave evidence in this case.
It was the contention of the employees that they were not a party to the June 2009 proposals, as they had not participated in the ballots in June 2009, which endorsed the agreement to the pay cut of twenty per cent, to apply from August 09 to December 09. While the majority were members of the negotiating trade union, SIPTU, and were aware of the conciliation talks, none were members of that union at the precise time those proposals and options were voted on. Others were never members of that particular union and reasoned that since they had no role in any proposals then the outcome of this process did not necessarily apply to them.
In addition to resigning or never having been members of this union SIPTU they had as a group joined and became members of another trade union the IWU. This particular union was not affiliated to the Irish Congress of Trade Unions. It did not have negotiating rights with the employer. This second union’s request to the employer to negotiate with it,on the pay cut was rejected. During the course of the employees’ evidence references were made to the fact that they attended several meetings, on the issue, in different locations on various dates, between May and end of July 2009.
They had been advised by their “new” Union not to respond/communicate with Management at these meetings, but merely to listen.
The Employee Representatives put forward the case that since the Medical Practitioners were the key beneficiaries of the EMPLOYER facility, those Medical Practitioners should contribute financially to EMPLOYER to make up for the shortfall in the HSE funding, and by doing so the need for pay cuts to staff would not be necessary.
One of the witnesses stated in his evidence that at the commencement of his employment in 2005 that he was advised to join the prevailing union SIPTU as the price of not doing so would be the loss of his job. Prior to his resignation from that union on 23 June 2009 this witness held a position of shop steward within that union. He was aware of the proposals at the conclusion of the LRC and on 17 June volunteered to be a scrutiniser for the counting of ballot papers. However five days later he submitted his resignation from that union.
Employer’s Case
Following conciliation talks at the Labour Relations Commission (LRC) in June 2009 involving SIPTU and the employer and because of further cuts in funding, certain proposals emerged in early June between those parties which again would negatively impact on the remuneration and working conditions of this particular group of workers. Meetings were organised with the purpose of discussing those cuts. The relevant employees were presented with four options and selected option [c] a 20 per cent pay cut from August 2009 to December 2009. A vote was sought on this issue. That ballot took place on 16, 24 and 25 June in a number of locations, of those who voted over eighty per cent opted for the pay cut of twenty per cent
Subsequent to that vote and as a consequence of further negotiations that cut was reduced to ten per cent before the end of 2009.
The branch secretary of this union SIPTU, was informed by fax on the evening of 24 June 2009 of several resignations from the union. Those resignations came mostly from members at a particular centre. This SIPTU secretary told the Tribunal that he was advised by one of the employees involved in this case not to call to that centre the next day to ballot as nobody would be present there to vote. His Union had no further communications from this resigned group subsequent to that date.
The operations manager confirmed that the terms of a 2005 Labour Court recommendation had been implemented in full. That agreement between the employer and SIPTU in effect gave members of that union pay parity with equivalent grades of staff in the Health Service Executive. It was applied to all employees of the company regardless of union membership and it was fully implemented by October 2008.
The employer submitted that all employees had benefitted from the pay parity as set out above and cited cases in support of the legal principle that parity of pay means it is a term and condition of employment such that any deduction made because of a reduced budget from a sole funder is a lawful deduction within the meaning of Section 5(1)(b) of the Payment of Wages Act 1991 and that therefore no compensation is reasonable in the circumstances. They further submitted this was an express term in the contract of employment of 21 of the 24 employees, as for the remaining 3, there was an implied term in the contract of employment.
She added that it was not possible that the employees did not know that the pay cuts would take effect from August 2009 in light of the extensive consultation process engaged, with SIPTU, meetings held for all employees to attend to discuss the finances of the company and non pay cost measures taken, the conciliation process with the Labour Relations Commission. In relation to the non SIPTU members at the time of the collective agreement the employer maintained that those employees were given the opportunity to consult directly with the company both prior to June 2009 and again later that summer, and gave the dates and venues where such consultations took place.
The employer submitted that it was not open to a minority of employees to disrupt the collective bargaining process and the wishes of the majority by defecting to a rival union when the result of a ballot became known. The company also argued that it was unacceptable for most of this group of employees to notify the company of their decision to withdraw their membership of the negotiating trade union during the balloting process and still not be bound by the collective bargaining process.
The employer submitted that none of the 3 non-SIPTU members advised the company during the extensive consultation process that they were not accepting the pay cut during the consultation process from April to July 2009 or at any stage up to the roll out of the pay cut and their acquiescence was an acceptance by the employer who acted in good faith on consent .
Determination:
The Tribunal had appeals to consider both on behalf of the employer and sixteen (reduced from twenty-two) employees of the Decision of the Rights Commissioner ( Reference Number r065472 pw 08 et al) under the Payment of Wages Act 1991 given on the 21st of October 2010. The question was whether or not there had been a lawful pay deduction. Having heard extensive evidence and documentation submitted the The Tribunal were satisfied of the following ;.
There was a need for cost containment. HSE funding was reduced. The employer had considered all options to reduce costs. Had implemented non pay cuts where it could. That the company is wholly funded by the HSE and any additional funding from any other source would result in an equal reduction of HSE funding.
The employer met staff in Tralee, Macroom and at various other centres in Cork. There was a ballot of trade union members. A majority agreed to the reduction as was rolled out on the 4th of August 2009. SIPTU communicated the agreement to the Employer on the 3rd of August 2009. A letter was sent out to all employees on the 4th of August 2009 confirming the pay cut with immediate effect.
There was in existence the Labour Court Recommendation (LCR18089) dated the 9th of February 2005 where the Court recommended that the Unions claim for parity with the appropriate HSE grades be conceded and which was fully implemented in 2008. That LCR formed part of all employees terms and conditions of Employment.
There was an employee handbook which formed part of the contract of employment and which acknowledged the exclusive formal negotiating rights of SIPTU and the INMO with the company. The policy on Union membership confirms that while membership is voluntary for an employee it confirms that all employees will be bound by any collective agreement reached between the nominated Unions and the company to include pay.
The Tribunal therefore finds that the pay deduction was lawful and there was consent. There was express consent in writing to the deduction as required by Section 5(1) (C) of the Payment of Wages Act, 1991 as given by SIPTU on the 3rd of August 2009. Consent had been given on behalf of all employees regardless of the union membership.
Without prejudice to the foregoing and in the alternative the Tribunal is satisfied having heard the evidence and considered submissions on behalf of the parties to include extensive documentation submitted, that given the reduction in the funding by the HSE to the company and its financial circumstances and as allowed for under Section 6 (2) of the Payment of Wages Act, 1991 we find the deduction was proper and reasonable and therefore no compensation is required in the circumstances.
Accordingly, the Tribunal, having heard testimony and submissions over several days, finds that the Rights Commissioner erred and, therefore, unanimously overturns the Rights Commissioner Decision (Reference Number r-065472-pw-08 et al.) under the Payment of Wages Act, 1991 and allows the appeal in favour of the employer in that the claim is not well founded and fails in accordance with the Section 6(2) of the Act.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)