Labour Court Database __________________________________________________________________________________ File Number: CD89349 Case Number: LCR12490 Section / Act: S67 Parties: MUSGRAVES LIMITED - and - IRISH TRANSPORT AND GENERAL WORKERS' UNION;NO. 2 AND NO. 3 BRANCHES |
Compensation for past service.
Recommendation:
5. The Court has considered very carefully the arguments made by
the parties in their submissions. While the change in ownership
from Musgraves does involve some risk to the staff concerned the
Court is satisfied that, on balance, the imposition of a liability
of the type which would arise either by buying-out existing
service or maintaining a fund for such purposes on a contingency
basis would have mitigated severely against the successful
establishment of the new Company.
The Court therefore recommends that the payment offered to the
Cork employees be extended to the Dublin staff and accepted in
settlement of the claim.
Division: Mr O'Connell Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD89349 RECOMMENDATION NO. LCR12490
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: MUSGRAVES LIMITED
and
IRISH TRANSPORT AND GENERAL WORKERS' UNION
(NO. 2 AND NO. 3 BRANCHES)
SUBJECT:
1. Compensation for past service.
BACKGROUND:
2. The dispute concerns approximately thirty employees of Allied
Foods Limited, general operatives, administrative staff and
drivers. Allied Foods Limited was formerly Musgraves Frozen Foods
Division. A conflict of interest arose since stores which
purchased from Musgraves Frozen Foods Division were in direct
competition with Musgrave controlled stores. For this reason it
was decided to put Musgraves Frozen Food Division up for sale.
This resulted in a management buy-out in April, 1989. The new
Company is known as Allied Foods Limited and has employees both in
Dublin and Cork.
3. The Union advised management of its concerns regarding job
security and the resources available to the new Company in the
event of any possible future redundancies. Meetings and
correspondence took place in February and March, 1989 in relation
to this issue. The Union on behalf of the Dublin workers sought
compensation for past service with Musgraves.
4. An brief unofficial work stoppage took place in Cork on 23rd
March, 1989. This resulted in an agreement to pay #50 per year of
service to each employee in Cork affected by the change of
ownership. This offer was made to the Dublin workers and was
rejected.
5. The matter was referred to the conciliation service of the
Labour Court on 12th April, 1989. A conciliation conference took
place on 24th April, 1989 at which no agreement was reached. The
matter was referred to a full Court hearing for a binding
recommendation. The hearing took place on 19th June, 1989.
UNION'S ARGUMENTS:
3. 1. Some of the workers concerned have very long service.
Most have approximately ten years. The combined service of
the Cork and Dublin workers is approximately 1,000 years. The
earnings of the various staff are:-
drivers: #328 per week,
operatives: #276 per week,
administrative staff: #185 per week.
2. The workers were alarmed on hearing that they were to be
separated from the Musgrave Group, where, in their view, there
was a far greater degree of security. Had redundancies
occurred while the Company was owned by Musgraves the workers
could have expected a severance package of at least four weeks
pay per year of service and, in some cases, the opportunity of
alternative work. In the present circumstances, the workers
can have no such expectations should redundancies occur.
3. The Musgrave Group sold the Company for a substantial
figure which reflects, amongst other things, the expertise and
commitment of the workforce. Yet there has been no offer of
compensation made to the staff.
4. Management placed pressure on the Union by insisting on
their agreement to a binding Labour Court Recommendation or
alternatively to cause the collapse of the buy-out.
5. Management indicated to the Dublin workers that no similar
claim existed in relation to the Cork workers, yet an
unofficial dispute took place in Cork. Management then
attempted to foist the Cork settlement on the Dublin workers.
6. The Union is seeking a payment of four weeks pay per year
of service to the workers.
COMPANY'S ARGUMENTS:
4. 1. In putting the Company up for sale, three options existed,
a management buyout or to sell to either of two outside
bidders. The buyout package:
(a) saved all jobs at all levels,
(b) preserved and guaranteed the rights of all
employees,
(c) confirmed the existing rates of pay and potential
earnings,
(d) confirmed and guaranteed the transfer of service
from Musgraves to Allied Foods (service was
guaranteed under the 1980 mergers and acquisitions
directive),
(e) included transfer of Pension Fund, fully paid,
(f) was backed all the way by the suppliers as against
any other option.
This situation would not have existed had either of the other
two options been chosen. By accepting the management buyout
it was costing Musgraves approximately #10,700 per job.
2. The rejection by the Dublin workers of the Cork settlement
terms was unreasonable. Musgraves Limited in response to
earlier union demands had agreed a guaranteed redundancy
package for one year. Under the buyout agreement Musgraves
stood to be the main sufferers if the new business went wrong.
Subsequent to the buyout the new Company, Allied Foods Limited
prospered from its new freedom in the market place and have
increased employment in Cork.
3. Management is unaware of any precedent for this type of
claim especially under the circumstances outlined. The Cork
settlement is still on offer to the Dublin workers.
RECOMMENDATION:
5. The Court has considered very carefully the arguments made by
the parties in their submissions. While the change in ownership
from Musgraves does involve some risk to the staff concerned the
Court is satisfied that, on balance, the imposition of a liability
of the type which would arise either by buying-out existing
service or maintaining a fund for such purposes on a contingency
basis would have mitigated severely against the successful
establishment of the new Company.
The Court therefore recommends that the payment offered to the
Cork employees be extended to the Dublin staff and accepted in
settlement of the claim.
~
Signed on behalf of the Labour Court,
John O'Connell
___________________
27th July, 1989.
A. K. / M. F. Deputy Chairman.