Labour Court Database __________________________________________________________________________________ File Number: CD9029 Case Number: AD9013 Section / Act: S13(9) Parties: IRISH RAIL - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Appeal by the Company against Rights Commissioner's Recommendation ST 71/89 concerning compensation for loss of earnings.
Recommendation:
5. Having considered the submissions from both parties the Court
is satisfied that the loss of earnings suffered by the claimants
was as a result of the Company's action based on the financial
losses being incurred on the contract in question. These losses
arose from a decline in business. The Court does not recommend
compensation for loss of earnings in this case and accordingly
upholds the Company's appeal.
Division: Ms Owens Mr Collins Mr O'Murchu
Text of Document__________________________________________________________________
CD9029 APPEAL DECISION NO. AD1390
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 13(9)
PARTIES: IRISH RAIL
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Appeal by the Company against Rights Commissioner's
Recommendation ST 71/89 concerning compensation for loss of
earnings.
BACKGROUND:
2. Following the introduction of liner train working at Waterford
port in the late sixties there was a requirement for road vehicles
to transport containers not destined for or originating in
locations serviced by rail. Road vehicles were contracted out by
the Company and by the early seventies the Company was receiving
an adequate financial return from seven vehicles. By the late
seventies this arrangement became uneconomic. Measures taken by
the Company to arrest the worsening situation were unsuccessful.
In nineteen eighty four the number of vehicles was reduced from
seven to four. In the following three years the operation proved
to be uneconomic and on 11th September, 1987 the contract vehicles
were withdrawn. The four vehicle drivers concerned were given
alternative employment. The Union claims that for ten years or
more the four drivers concerned enjoyed twenty two hours overtime
per week and consequently are entitled to compensation for loss of
earnings based on the agreed formula of two and one half times the
actual loss to a maximum of four thousand six hundred pounds each.
The Company claims that it was forced to terminate the contract
operation for economic reasons and that in such circumstances
compensation for loss of earnings should not be made. The matter
was referred to a Rights Commissioner who investigated the dispute
on 21st September, 1989 and issued the following recommendation on
10th October, 1989:-
.Recommendation
" The exercise was clearly a rationalisation of the
Company's business due to loss making contracts. Seven
voluntary redundancies occurred as a result. The Company
did not lose business it decided to shed what is
considered uneconomic business. It is no different to a
manufacturing company which decides to shut down an
uneconomic line of business. In my view the Union has
established a case for compensation for real loss.
However, it must in my view, be real ongoing loss to which
the formula of two and half annual loss can be applied.
There is no loss beyond the first year (87/88) when O/T
earnings were down as follows in each case as compared to
86/87.
* Worker A #3,037
Worker B #1,358
Worker C #1,401
Worker D # 77
However in 1988/89 worker A earned #4,244 more on O/T than
in 1987/88, a net gain of #1,207. I have deducted this
gain from his loss of #3,037 in the previous year leaving
a nett loss of #1,830.
Worker B earned #2,761 more on O/T in 1988/89 than in
1987/88. His loss in 1987/88 was #1,358. He therefore,
is a net beneficiary to the tune of #1,403. He therefore
has no claim for real loss.
Worker C earned #1,021 more on O/T in 1988/89 than in
1987/88. His loss in 1987/88 was #1,401. His nett loss
is therefore #380 respectively.
Worker D earned #3,302 more on O/T in 1988/89 than in
1987/88. His loss in 1987/88 was #77. He therefore is a
nett beneficiary in the amount of #3,225. Clearly he has
no case for real loss incurred.
Since there is no ongoing loss for the two who suffered
nett loss over the three years 86/88 and 88/89, the 2.50
times formula cannot apply in equity. Instead I recommend
that they receive 50% of the actual loss incurred of
#1,830 and #380 respectively."
* The workers concerned were named in the Rights Commissioner's
recommendation.
The Company, on 8th January, 1990 appealed this recommendation to
the Labour Court under Section 13(9) of the Industrial Relations
Act, 1969. The Court heard the appeal in Waterford on 31st
January, 1990.
UNION'S ARGUMENTS:
3. 1. The Union contends that as the Rights Commissioner found
that this was a case of rationalisation the terms of the
compensation formula should apply without the qualification of
"real loss" as calculated by the Rights Commissioner.
2. The four workers concerned should be compensated for loss
of earnings through the formula normally applied by the
Company in such cases i.e. two and one half times the annual
loss up to a maximum of four thousand six hundred pounds. The
loss should be based on the twelve month period following the
change compared to the previous twelve months.
The actual losses were as follows:-
Worker A - #3.037 x 2.5 = #7,592 (max applies.)
Worker B - #1,358 x 2.5 = #3,395
Worker C - #1,401 x 2.5 = #3,502
Worker D - #77 x 2.5 = #192
3. The above exercise would have been the normal manner in
which the formula would have been applied and should not have
been subject to reductions as a result of overtime earnings
which might occur in subsequent years, as has been recommended
by the Rights Commissioner.
COMPANY'S ARGUMENTS:
4. 1. The Company contends that the Rights Commissioner
seriously erred in his assessment of the case. To adopt the
Rights Commissioner's Recommendation would seriously undermine
a basic principle applying to the question of compensation for
loss of earnings and could establish a new threshold for such
compensation. It could open the way for similar claims in the
future associated with necessary economy measures adopted
throughout the Company arising from a declining revenue from
business and a deteriorating financial position.
2. The Rights Commissioner erred in his judgement of the case
when he states that the situation was "no different to a
manufacturing company which decides to shut down an uneconomic
line of business". The important flaw in this analogy is that
in a manufacturing company the staff concerned would have been
made redundant. In this case the Company managed to find
employment for the four drivers concerned which gives them
higher overtime earnings than they have previously enjoyed.
4. 3. The amount of compensation is not the main issue of the
Company's appeal. What is important is the fact that the
change in employment for the four workers concerned arose from
the discontinuation by the Company of a contract which was
financially unjustifiable. Where changes in working
arrangements are necessary for economic reasons compensation
for loss of earnings should not be paid.
DECISION:
5. Having considered the submissions from both parties the Court
is satisfied that the loss of earnings suffered by the claimants
was as a result of the Company's action based on the financial
losses being incurred on the contract in question. These losses
arose from a decline in business. The Court does not recommend
compensation for loss of earnings in this case and accordingly
upholds the Company's appeal.
~
Signed on behalf of the Labour Court,
Evelyn Owens
___28th___March,___1990. ___________________
A. S. / M. F. Deputy Chairman