Labour Court Database __________________________________________________________________________________ File Number: CD89541 Case Number: LCR12553 Section / Act: S67 Parties: KILKENNY TEXTILE MILLS - and - IRISH TRANSPORT AND GENERAL WORKERS UNION |
Terms of a redundancy settlement.
Recommendation:
6. The Court has given very careful consideration to the
circumstances of this case, both as to the restructuring /
re-equipping of the plant in Kilkenny, and to the manner in which
the negotiation of a settlement was carried out by both parties
both prior to and at conciliation.
The Company, in its detailed Statement to the workforce of 6th
July, 1989, said that it was "...prepared to negotiate with the
Unions a voluntary severance.....", however the actual manner of
the negotiations was such that the Company did not consider it
appropriate to improve upon its offer of 3 weeks pay per year of
service plus statutory entitlement prior to the full Court
hearing.
In light of the foregoing the Court recommends that all volunteers
for redundancy accepted by the Company should in addition to the
Company's proposals receive a sum of #600.
Division: MrMcGrath Mr McHenry Mr Devine
Text of Document__________________________________________________________________
CD89541 RECOMMENDATION NO. LCR12553
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: KILKENNY TEXTILE MILLS
(REPRESENTED BY THE FEDERATED UNION OF EMPLOYERS)
AND
IRISH TRANSPORT AND GENERAL WORKERS UNION
SUBJECT:
1. Terms of a redundancy settlement.
BACKGROUND:
2. The Company is owned by the Santens Group which is based in
Belgium. The Kilkenny plant was established in February, 1983 and
currently employs one hundred and sixty workers in various
categories. It manufactures spun cotton yarn the end use of which
is in the making of terry towels. On 6th July, 1989 the President
and management of the Company met with the Unions and announced
that there was an urgent need to introduce a major investment and
re-organisation programme during the next twelve months in order
to secure the future of the Company. This programme would involve
the introduction of new machinery and the re-organisation of work.
The programme would also require a reduction in the workforce by
sixty on a phased basis of ten workers per month from January to
July, 1990. The Company stated that it would negotiate a
voluntary severance scheme and in the event of the number of
volunteers falling short of what was required, redundancy would
take place in accordance with Article 15 of the Company/Union
Agreement (see Appendix A).
3. At local level discussions the Union advised the Company that
while the re-organisation plan would have to be negotiated, it
accepted in principle the Company's plan. The Company made a
first and final offer of statutory redundancy payment plus an
additional three weeks' pay per year of service, subject to
agreement being reached on the termination of employment dates and
other relevant details not yet discussed. This was unacceptable
to the Union on the basis that, as the average length of service
of the workers was short and average earnings low, the lump sum
involved, which would be less than #4,000, was not an attractive
voluntary package. The Union subsequently made a claim for twelve
weeks pay per year of service or part thereof plus statutory
redundancy entitlement. In addition, that those workers, if any,
made redundant on a compulsory basis should have the right of
first refusal on any future suitable vacancies and that short term
workers who had recently been let go and who had not yet completed
their probationary period should receive compensation of #1,000.
No agreement was reached and on 14th July, 1989 the matter was
referred to the conciliation service of the Labour Court. A
conciliation conference was held on 2nd August, 1989, at which no
progress was made and the matter was referred to the Labour Court
for investigation and recommendation. The Court investigated the
dispute on 11th September, 1989. A letter recommendation on the
matter issued on 13th September, 1989.
UNION'S ARGUMENTS:
4. 1. The Union accepted the fact that if the Company did not
keep up to date with modern technological developments it
could quickly become uncompetitive. The Company stated that
it intended to approach the question of redundancy selection
by way of introducing a voluntary redundancy package. The
Union informed the Company that it would prefer to resolve the
issue by means of a negotiated voluntary severance plan and
the Company should offer an attractive monetary package.
However, the Company put forward a first and final offer which
was far from attractive. The Company has failed to
acknowledge that as the average length of service is only
about four years and average earnings are at the lower end of
the scale of average industrial earnings, the average lump sum
on offer was less than #4,000 which would not attract
volunteers.
2. It is not the formula that is used that makes a redundancy
offer attractive, even if the formula compares favourably with
those used in comparable situations. An offer is judged on
what it means in monetary terms. A management that is
properly in tune with the thinking of its workforce should be
able to judge the size of the lump sum required in order to
attract the required number of volunteers. The Union has
detailed the various amounts yielded from three to twelve
weeks pay for one to seven years of service and an age and
length of service profile (details supplied to the Court).
The Union's claim is based on an estimate of the minimum lump
sum required to attract volunteers, divided by the average
length of service and by the average gross weeks pay.
4. 3. It can be assumed that workers who volunteer for
redundancy do so because they have some future means of
support or definite prospects of alternative employment.
However, workers made redundant compulsorily have no such
prospects. By the date that the first redundancies are due to
take place, thirteen of the workers will not have enough
service to qualify for statutory payments, however, by July,
1990 when the last of the redundancies would take place, six
of those thirteen would qualify (details supplied to the
Court). There has been a serious decline in the number of
industrial jobs in Kilkenny over the last six or seven years.
It is essential that if there are compulsory redundancies
adequate compensation is paid. The situation should be dealt
with by means of a package which will attract volunteers.
COMPANY'S ARGUMENTS:
5. 1. The Company must undertake the re-organisation plan if the
plant is to have a secure future. Until now the manufacturing
process has been ring-spinning. The policy of Santens has
always been to keep pace with technological developments and
to provide customers with the most up-to-date product at
competitive prices. In order to continue to do this, the
Company must introduce the technology of open-end spinning.
The Group has a number of options for locating this
technology, at present the preferred location is Kilkenny,
however the necessary reorganisation must be carried out in a
controlled environment, within certain cost parameters and
without disruption to the operation. The reorganisation
necessary to introduce up-to-date technology must go ahead if
the Kilkenny plant is to have a medium term future.
2. In arriving at its position the Company has taken a number
of considerations into account. The basis of the redundancy
offer is that it should be fair with regard to settlements
recommended by the Labour Court and also in relation to
redundancy settlements in the textile industry. An
examination of settlements within the industry in the last few
years shows that the Company's offer compares favourably and
is at the top end of settlements in the industry (details
supplied to the Court). The Company must strike a balance
between a fair severance payment and managing its resources so
that the business and the remaining jobs can be sustained.
The Company's offer of three weeks plus statutory entitlement
is a fair one in all the circumstances.
RECOMMENDATION:
6. The Court has given very careful consideration to the
circumstances of this case, both as to the restructuring /
re-equipping of the plant in Kilkenny, and to the manner in which
the negotiation of a settlement was carried out by both parties
both prior to and at conciliation.
The Company, in its detailed Statement to the workforce of 6th
July, 1989, said that it was "...prepared to negotiate with the
Unions a voluntary severance.....", however the actual manner of
the negotiations was such that the Company did not consider it
appropriate to improve upon its offer of 3 weeks pay per year of
service plus statutory entitlement prior to the full Court
hearing.
In light of the foregoing the Court recommends that all volunteers
for redundancy accepted by the Company should in addition to the
Company's proposals receive a sum of #600.
~
Signed on behalf of the Labour Court,
Tom McGrath
__29th__September,__1989. ___________________
U. M. / M. F. Deputy Chairman
APPENDIX A
CLAUSE 15(a) OF COMPANY/UNION AGREEMENT
"It is recognised that business or economic circumstances can
arise which may leave the Company with no alternative but to
declare a redundancy situation. Where workers are made redundant,
the prime consideration will be to protect the employment of as
many people as possible consistent with maintaining the most
efficient operation. Should a redundancy situation arise, prior
consultation shall take place with the Union. In such cases, the
Company will seek to retain certain employees, who because of
their experience, talent and ability are especially valuable to
the Company. All other things being equal, seniority will then be
the primary consideration"