Labour Court Database __________________________________________________________________________________ File Number: CD90288 Case Number: LCR12947 Section / Act: S67 Parties: CASH AND COMPANY LIMITED - and - IRISH DISTRIBUTIVE AND ADMINISTRATIVE TRADE UNION |
Claim by the Union concerning compensation for loss of earnings resulting from the re-grading of a Buyer.
Recommendation:
5. The Court recommends payment of #11,500 compensation for the
loss of office in this case.
Division: CHAIRMAN Mr Collins Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD90288 RECOMMENDATION NO. LCR12947
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: CASH AND COMPANY LIMITED
(SWITZERS GROUP)
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
AND
IRISH DISTRIBUTIVE AND ADMINISTRATIVE TRADE UNION
SUBJECT:
1. Claim by the Union concerning compensation for loss of
earnings resulting from the re-grading of a Buyer.
BACKGROUND:
2. In February, 1990 the Switzers Group and the Union reached
agreement on rationalisation within the group. The agreement
involved a number of redundancies and provided for an option of
re-grading, with compensation for loss of earnings, for senior
staff - Department Sales Managers (D.S.M.) and Chargehands. In
the case of Cash and Company, Cork, forty five redundancies were
sought and obtained on a voluntary basis. The agreement also
provided for the reduction in the number of Buyers and the
centralisation of the buying function. At that time there was one
Buyer based in Cork, who bought furniture, bedding and carpets for
both Cash's in Cork and Tood's in Limerick. The Buyer concerned
indicated that he would be prepared to revert to his previous
sales manager position. The Buyer was the only employee to choose
the re-grading option. Although the changes in the number of
Buyers was provided for during discussions on the agreement, no
specific discussions relating to Buyers took place. The dispute
between the parties relates to the application of the compensation
formula to the Buyer. The Union maintains that compensation
should be in line with agreed pro-rata arrangements. The Union
estimate that this would yield a compensation settlement of
#11,201. The Company on the other hand estimate that the Buyers
annual loss in earnings will be #3,548 and have offered him #7,000
in compensation. Local discussions could not resolve the matter
and on 29th March, 1990, the issue was referred to the
conciliation service of the Labour Court. No agreement was
reached at a conciliation conference held on 16th May, 1990 and
the issue was referred to the Labour Court on 31st May, 1990 for
investigation and recommendation. The Court investigated the
dispute on 20th June, 1990 in Cork.
UNION'S ARGUMENTS:
3. 1. The parties agreed that compensation should be paid
pro-rata to the individuals loss. It was accepted and agreed
that in the hypothetical case of two Chargehands, on the same
basic rate of pay, reverting back to being Sales Assistants,
where one received the standard Sales Assistant rate and the
other received a higher rate on a personal basis, they should
not receive the same level of compensation, but should be
compensated in proportion to their loss. Applying this
principle the compensation would be as follows:-
Chargehand Sales Loss Redundancy Compensation
Package
# # # # #
A 188.61 157.73 30.88 #16,000 25% Package = 4,000
B 188.61 173.17 15.44 #16,000 .5 x 25% Package = 2,000
Applying the same formula in the Buyer's case gives the
following:-
Buyer Sales Loss Redundancy Compensation
Manager Package
# # # # #
20,000 16,452 3,548 20,273 2.21x25% Package = 11,201
2. The logic of the Union's case is straight forward. If he
had lost #30.88 he would be entitled to 25% of his redundancy
package i.e. #5,068.33. Since he is losing 2.21 times the
#30.88 loss he must be entitled to 2.21 times the #5,068.33.
This would amount to #11,201. This figure is based on annual
salary only and takes no account of bonus earnings which
amounted to over #4,500 in 1988/89.
3. The Company's proposed compensation of #7,000 is based on
a formula of its own invention. If the Company wishes to
depart from agreed arrangements then the Union believes it is
appropriate to base compensation on the Buyer's real loss,
inclusive of bonus earnings, as the position to which he is
reverting does not have the potential for bonus earnings.
4. The Buyer has an excellent record. Given this, he had
every right to expect that his present level of earnings would
continue. On this basis he entered into financial commitments
which he would not otherwise have undertaken.
5. This is the first time that a Buyer in the group has been
subject to a salary cut. In all previous cases where a Buyer
was being demoted he held his salary.
COMPANY'S ARGUMENTS:
4. 1. In stepping back to the position of Furniture Centre Sales
Manager, the Buyer's salary is reduced from #20,000 to #16,452
per annum, resulting in a loss of #3.548. The Company has
offered #7,000 in compensation.
2. While the transfer of a Buyer was not specifically
referred to in the clause in the agreement relating to the
transfer of a Department Sales Manager (D.S.M.) or Chargehand
to a lower position, the Company accepted that compensation
should be calculated in such a fashion. The following
calculation was done:-
D.S.M. C/Hand Buyer
#244.39/week #188.60/week. #20,000/annum
C/Hand Sales Asst. Sales Manager
#208.60/week #157.73/week. #16,452/annum
Salary Loss P.A. #1,861 #1,605 #3,548
Compensation #4,032 #3,098 #4,930
Compensation
= Loss p.a.X. 2.16 1.93 1.38
Compensation figures were calculated on the basis of similar
services, basic rates at March, 1990 were used and Chargehand
commission was estimated at #20 per week. In reviewing these
figures and in view of the pro-rata issue the Company
considered that #7,000 or approximately twice the annual loss
was appropriate and generous by any standards.
3. The Union wishes to calculate compensation on the basis of
the compensation of others rather than by reference to the
loss sustained. The Union are basing the claim on a pro-rata
comparison with a Chargehand moving to a Sales Assistant
position. The Company suggests that a fairer comparison would
be the loss sustained by the Buyer compared to the loss of a
Buyer moving to a D.S.M. position, as the position of
Furniture Centre Sales Manager is similar in duties and
responsibilities to other D.S.M.s within the group. The
following are the calculations on the above basis:-
Buyer Buyer
#20,000/annum #20,000/annum
Sales Manager D.S.M.
#16,452/annum #12,708/annum
Salary Loss p.a. #3,548 #7,292
Compensation #4,930 #4,930
Compensation
= Loss p.a. X. 1.38 0.67
On the Union's method of computation the Buyer's loss would be
0.48 times that of the comparable person in a Buyer to D.S.M.
transfer, thus giving a pro-rate compensation figure of
#2,366.
RECOMMENDATION:
5. The Court recommends payment of #11,500 compensation for the
loss of office in this case.
~
Signed on behalf of the Labour Court,
Kevin Heffernan
___16th___July,____1990. ___________________
B. O'N. / M. F. Chairman