Labour Court Database __________________________________________________________________________________ File Number: CD87468 Case Number: LCR11489 Section / Act: S67 Parties: E. I. COMPANY LTD. - and - ITGWU |
Claim for a change in the method of calculating redundancy compensation.
Recommendation:
7. Having regard to the circumstances in which the redundancies
are occurring the Court is of the opinion that the Company's
redundancy terms are reasonable.
The Court does not therefore recommend concession of the Union's
claim.
Division: Mr O'Connell Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD87468 THE LABOUR COURT LCR11489
CC87636
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
RECOMMENDATION NO. LCR11489
Parties: E. I. COMPANY LIMITED
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
Subject:
1. Claim for a change in the method of calculating redundancy
compensation.
Background:
2. The Company, which is a subsidiary of General Electric,
commenced operations in Shannon in 1963. It employs approximately
200 workers at present in the manufacture of consumer electronic
products. In April, 1987 the Company commenced a redundancy
programme which arose from the closure at the end of July, 1987 of
the Company's biggest product line - T.V. guns. Since April
approximately 100 redundancies have taken place.
3. The Company paid four weeks' basic pay per year of service
plus statutory redundancy compensation to all workers made
redundant since April, 1987. The Union is claiming that all
elements of pay should be included in the calculation of basic
pay. The Company rejected the claim.
4. No agreement was reached at local level and on 14th April,
1987 the matter was referred to the conciliation service of the
Labour Court. A conciliation conference was held on 14th May,
1987 but no agreement was reached. On 9th June, 1987 the case was
referred to the Court for investigation and recommendation. A
Labour Court hearing was held in Limerick on 29th September, 1987,
earlier dates were unsuitable to one or other of the parties.
Union's arguments:
5. (i) In calculating statutory redundancy lump sums, all
elements of pay, including payments in kind, that do
not vary in relation to the amount of work done are
included when calculating weekly pay. Average weekly
overtime for the 26 week period ending 13 weeks before
the date the redundancy is declared is also included.
In most of the cases involved, the inclusion of all
these elements would not break the stated max under the
Act i.e. #211. In the case of the others, they will
neither get their full weekly wage under the statutory
or ex gratia elements. This is very unfair insofar as
the redundancy has been brought about by a decision of
the parent company to relocate its production in order
to maximise its profit.
(ii) In 1986, the parent company bought out the R.C.A.
Corporation. The Company is part of General Electrics
Colour Television Business, but R.C.A. controlled a
much larger part of the market with factories in Brazil
and Puerto Rico producing four times the number of T.V.
guns at a lower cost than E.I. Even though the
business is lost to E.I. the parent company will still
continue to pick it up.
(iii) If the Company can re-organise and relocate production
to maximise profit, there is no logical reason why the
maximum benefit should not be given to the workers who
lose their jobs because of a decision of some faceless
people. All the Union is claiming is that the same
method of calculation as outlined in the redundancy
Act, without the #211 maximum, be used in calculating
the ex gratia lump sum.
Company's arguments:
6. (a) The Company's redundancy package is more than
competitive and is fair in the circumstances of the
current job losses. The Company cannot increase its
compensation package.
(b) In recent years employment in the Company has been
dropping as it has become more difficult to compete
successfully. With the loss of the T.V. gun product
line the Company is now in survival mode. It is
reducing overhead costs and trying to remain viable by
attracting new business. The U.S. is the Company's
major market (90%) and competitiveness in this market
is being severely impacted by the dramatic weakening of
the U.S. dollar, making Irish costs on dollars very
high.
(c) The Company compensation element of the redundancy
package has increased in recent years from 2 weeks' pay
per year of service in 1980 to the present level of 4
weeks' pay per year of service. Over that time
employment has fallen from 500 to 200 workers.
(d) In a recommendation in 1984 concerning redundancies in
the Company the Court stated that it:
"does not accept the view that the level of
redundancy payments can realistically be determined
by reference to precedence established elsewhere
but must in all instances take account of the
circumstances under which the actual loss of jobs
is occurring."
In recent years there is a very definite downward trend
in redundancy compensation as companies face an
increasingly difficult business climate.
(e) The Company's compensation element has always been
based on basic pay. All agreements and recommendations
concerning redundancy compensation have referred to
"week's pay" which has always been interpreted as basic
pay at the time of redundancy.
(f) Any concession of the Union's claim would have very
substantial cost implications for the Company, and
would have a knock-on effect in the event of future
redundancies.
(g) Redundancy packages vary from company to company
depending on circumstances of the company and on the
deal negotiated. They include lump sums per year of
service and statutory payments only. In the case of
E.I. the Company element, negotiated and implemented
has been basic weeks pay.
RECOMMENDATION:
7. Having regard to the circumstances in which the redundancies
are occurring the Court is of the opinion that the Company's
redundancy terms are reasonable.
The Court does not therefore recommend concession of the Union's
claim.
~
Signed on behalf of the Labour Court
John O'Connell
__29th___October,__1987. ___________________
T. O'M. / J. C. Deputy Chairman