Labour Court Database __________________________________________________________________________________ File Number: CD918 Case Number: LCR13224 Section / Act: S67 Parties: STAFFORD TRANSPORT LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Redundancy payments.
Recommendation:
6. The Court, following the discussions, and in accordance with
the undertaking given at the hearing will recommend solely on the
issue of severance terms to be paid to the workers involved in the
proposed closure of the Company.
Having considered the submissions in respect of this issue the
Court recommends that the employer's offer be amended to provide
for an amount of #800 per year of service.
Division: Mr O'Connell Mr Brennan Ms Ni Mhurchu
Text of Document__________________________________________________________________
CD918 RECOMMENDATION NO. LCR13224
INDUSTRIAL RELATIONS ACTS, 1946 TO 1976
SECTION 67
PARTIES: STAFFORD TRANSPORT LIMITED
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Redundancy payments.
BACKGROUND:
2. The Company employs six full-time drivers and one casual
driver. In the last few years the Company has been facing
difficulties due to increased competition, etc. In December, 1989
it retained the services of a consultant to report on the future
outlook for the Company. The consultant's report identified two
main options: the securing of further business, or; the cessation
of the business. During 1990 the Company attempted to obtain more
business in order to improve its position. However, while some
new business was generated no real success was achieved. During
1990 the Company advised the Union that it was facing serious
difficulties and that based on a second consultant's report which
had been commissioned it saw no alternative but to close the
business and make all the drivers redundant.
3. A number of meetings took place at local level, however, no
agreement could be reached on the matter. On 15th October, 1990
the matter was referred to the conciliation service of the Labour
Court. Conciliation conferences were held on 1st November, 1990,
13th November, 1990 and 5th December, 1990. The Company made an
offer of #420 per year of service inclusive of statutory
entitlements, equivalent to 2.50 weeks' pay per year of service
(inclusive of statutory entitlements) calculated at basic rates.
This was rejected by the Union whose position is that up to 40% of
the haulage business is internal and that at least three of the
workers should be retained in employment in order to carry this
work out and that the other four workers should receive a lump sum
of #1,000 per year of service plus statutory entitlements. The
Company then increased its offer to #500 per year of service
(inclusive of statutory entitlements), however, this was also
rejected by the Union. Agreement could not be reached at
conciliation and on the 21st December, 1990 the issue of
redundancy payments was referred to the Labour Court for
investigation and recommendation. The Court investigated the
dispute on the 7th February, 1991.
UNION'S ARGUMENTS:
4. 1. In discussions between the Company and the Union,
management has admitted that the Company had been profitable
up to the end of the last financial year (1989) and that its
decision to close was based on its assessment of what the
future would be. The Company has advised the Union that among
its assets are properties which the Union assumes were
acquired out of past profits, created by the labour of the
workers. The Company has agreed with the Union that up to 40%
of the haulage business the Company had was internal, i.e.
performed on behalf of other associated companies such as
Stafford Shipping (Ltd) and Stafford Fuels (Ltd) who would
then have to hire in outside haulage contractors if this
Company ceased trading.
2. In an effort to secure the Union's agreement to the
redundancies the Company made available to the Union on a
confidential basis a slightly edited copy of the consultant's
report. A study of this report convinced the Union that it
should accept that job losses were inevitable. However, in
coming to that conclusion the Union also concluded that, since
up to 40% of the haulage business was internal and would still
exist, at least 3 of the workers should be retained. The
Union's position, therefore, is that a redundancy package
should be made available for up to four of the workers with
the balance of the workers retaining their jobs. In relation
to the redundancy payments, a lump sum of #1,000 per year of
service plus the statutory entitlements is the minimum that
would be fair and reasonable. This is near to the norm of
such settlements which is 3.50 weeks pay per year of service.
COMPANY'S ARGUMENTS:
5. 1. In recent years the Company has been operating in an
extremely difficult environment. Various measures were taken
to control and reduce costs but the underlying pattern of the
business remained unfavourable. The second consultant's
report which was commissioned as a result of a suggestion by
the Union, to analyse and review the Company's action and to
reassess the situation, identified closure as the only real
option. Extensive consultation has taken place with the Union
and the Company has reluctantly, and without haste, come to
the decision of closure which must now be implemented without
further delay.
2. In examining the issue of severance terms the dominant
consideration from the Company's viewpoint is the fact of a
closure as distinct from a rationalisation. In the case of
the latter the Company would have an opportunity to recoup
some or all of the funds paid in severance over a period of
time. In the case of closure, which is a decision not lightly
reached, the Company will not have a possibility of recouping
any funds paid out. In responding to the Company's position
the Union has made certain claims in regard to the inclusion
of overtime in the calculation of severance terms, however,
overtime as an element of earnings has never been guaranteed
by the Company. The Company does not accept that there is a
requirement to include overtime as part of an "ex-gratia"
severance package, and there is no precedent in the Company
for the inclusion of total earnings in a severance package.
In all the circumstances, the Company's offer of #500 per year
of service inclusive of statutory entitlements should be
accepted.
RECOMMENDATION:
6. The Court, following the discussions, and in accordance with
the undertaking given at the hearing will recommend solely on the
issue of severance terms to be paid to the workers involved in the
proposed closure of the Company.
Having considered the submissions in respect of this issue the
Court recommends that the employer's offer be amended to provide
for an amount of #800 per year of service.
~
Signed on behalf of the Labour Court
John O'Connell
________________________
12th March, 1991 Deputy Chairman.
U.M./J.C.