Labour Court Database __________________________________________________________________________________ File Number: CD91503 Case Number: LCR13438 Section / Act: S26(1) Parties: OMMITRON LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION;PROFESSIONAL AND MANAGERIAL BRANCH |
Dispute concerning the proposed redundancy of six workers in the administrative grades.
Recommendation:
The submissions of the parties and the oral evidence presented
leaves the Court convinced that the trading position of the
Company and the jobs of the workforce are in considerable danger.
Against this background the Court makes the
following recommendation:-
REDUNDANCIES:
The Court understands the arguments of skills/service put forward
by the Company as the basis for the proposed redundancies and
accepts their general validity. Notwithstanding this position the
Court notes that the Clerical staff have borne a considerably
higher proportion of redundancies over the past year than any
other grouping. The Court therefore recommends that two of the
proposed redundancies of clerical staff should be postponed for a
period of six months from the date of this recommendation. At
that time, the question of the continued employment of these staff
should be considered by the parties having regard to work
requirements, and the general effect of the redundancies and the
market situation.
REDUNDANCY TERMS:
- 3 weeks payment per year of service and statutory payment
for service up to 5 years.
- 3½ weeks payment per year of service and statutory payment
for service between 5 years and 10 years.
- 4 weeks payment per year of service and statutory payment
for service over 10 years.
The Court does not consider it appropriate to recommend the
purchase of staff shares by the Company.
Division: CHAIRMAN Mr Collins Mr Rorke
Text of Document__________________________________________________________________
CD91503 RECOMMENDATION NO. LCR13438
THE LABOUR COURT
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 20(1) INDUSTRIAL RELATIONS ACT, 1990
PARTIES: OMMITRON LIMITED
(Represented by the Federation of Irish Employers)
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
(PROFESSIONAL AND MANAGERIAL BRANCH)
SUBJECT:
1. Dispute concerning the proposed redundancy of six workers in
the administrative grades.
BACKGROUND:
2. Onmitron Limited (formally Erictron) manufactures electronic
equipment mostly as a subcontractor to other companies. Erictron
was the manufacturing arm of L.M.Ericsson and was set up in
1987. In 1989 there was a buy out of Erictron by its employees.
Erictron changed its name to Omnitron on 1st July, 1991.
3. The employees' service with Erricson, Ericton and Omnitron is
continuous for the purposes of the Redundancy Payments Acts. When
the employees bought Erictron in 1989, L.M.Ericson made them an
ex gratia payment, in the form of shares in Erictron, in respect
of their service with it to 1987. Shares were allocated:-
Directors 40%
Management 25%
Production Staff 35%
and sold at par (£1). The company is not publicly quoted. The
shares can be traded between the employees.
5. The Company did not fare as well as expected and in January,
1991, 20 temporary staff in the production area were let go and 8
jobs (of a total of 20) in the administrative grades were declared
redundant. Five of the administrative grade workers reverted to
their former operative jobs, one remained in the administrative
area and 2 opted to be made redundant.
6. There has been no improvement in the Company's trading
position and it is now proposed to rationalise further by
implementing 58 redundancies to effect all categories of
employees. The workers involved in this dispute are employed in
the administrative area. The Company proposes to pay redundancy
at the rate of 2.5 weeks' pay per year of service from 1st
January, 1987 and statutory payment. The Union is opposed to
redundancies. It is seeking an improvement in the severance terms
for those who may wish to accept voluntary redundancy
arrangements.
7. The issue was referred to the Labour Relations Commission on
29th August, 1991. A conciliation conference was held on 12th
September, 1991. As no agreement was reached the Commission
considered the dispute under Section 26(1)(a)(b) of the Industrial
Relations Act, 1990 and with the consent of the parties the matter
was referred to the Labour Court for investigation and
recommendation. A Court hearing was held on 17th September, 1991.
UNION'S ARGUMENTS:
7. 1. The Company reduced the number employed in the
administrative grades from 20 to 12 in February, 1991. The
remaining workers have a full workload. Some work proper to
them is being performed by other workers. Management now
propose a further 6 redundancies in the area. This is
disproportionate to the overall reductions being sought, i.e.
production workers 25% to 30%, management grades 45% and
administration 75%.
2. The work of the administrative staff is to be divided
among the management grades (details supplied to the Court).
The workers view this as an attempt to eliminate their
grade and to renege on the guarantees regarding grades,
scales, job evaluations etc. given at the time of the worker
buy-out .
3. Management maintain that the loss of a particular
contract is the main cause of the redundancies sought. This
loss has been qualified at 30%. Allowing that there is no
direct relationship between production and the work of the
administrative staff, only one or two jobs in the
administrative grades should be effected.
4. Some workers would avail of a voluntary redundancy
package if the terms were improved. The shareholdings of the
employees is a major problem. The Company should buy back the
shares at their original value. The Company projected an 80%
possibility of a successful venture, work for the 250 staff
then employed and the acquisition of new customers and
products.
COMPANY'S ARGUMENTS:
8. 1. The Company's proposed redundancies affect all areas of
the factory and are as a result of the significant loss of
sales due to the general recession in the U.K. and the
difficulties one of the Company's major customers is
experiencing. The product supplied to that customer was
made of many components purchased from 100 suppliers. This
generated a heavy administrative workload. This work no longer
exists(details supplied to the Court).
2. The same criteria has been used in selecting all workers
for redundancy. Implementation of the Company's
rationalisation plan is necessary to achieve savings and
maintain the viability of the Company.
3. The severance package offered is the same as agreement
reached at a conciliation conference when previous
redundancies were being implemented. The Company's financial
position does not permit it to exceed its offer.
4. The current articles of association of the Company do
not allow it to purchase its own shares. It would also be
illegal to purchase shares because it has insufficient
reserves.
RECOMMENDATION:
The submissions of the parties and the oral evidence presented
leaves the Court convinced that the trading position of the
Company and the jobs of the workforce are in considerable danger.
Against this background the Court makes the
following recommendation:-
REDUNDANCIES:
The Court understands the arguments of skills/service put forward
by the Company as the basis for the proposed redundancies and
accepts their general validity. Notwithstanding this position the
Court notes that the Clerical staff have borne a considerably
higher proportion of redundancies over the past year than any
other grouping. The Court therefore recommends that two of the
proposed redundancies of clerical staff should be postponed for a
period of six months from the date of this recommendation. At
that time, the question of the continued employment of these staff
should be considered by the parties having regard to work
requirements, and the general effect of the redundancies and the
market situation.
REDUNDANCY TERMS:
- 3 weeks payment per year of service and statutory payment
for service up to 5 years.
- 3½ weeks payment per year of service and statutory payment
for service between 5 years and 10 years.
- 4 weeks payment per year of service and statutory payment
for service over 10 years.
The Court does not consider it appropriate to recommend the
purchase of staff shares by the Company.
~
Signed on behalf of the Labour Court
10th October, 1991 Kevin Heffernan
M.D./U.S. ---------------
Chairman