Labour Court Database __________________________________________________________________________________ File Number: CD91673 Case Number: LCR13538 Section / Act: S26(1) Parties: ZURICH INSURANCE - and - MANUFACTURING SCIENCE FINANCE |
Dispute concerning severance arrangements.
Recommendation:
8. The Court having considered the views of the parties as
expressed in their oral and written submissions given the special
circumstances of this case considers the issues in dispute should
be resolved on the following basis.
1. That the severance payments be the equivalent of 5 times
on employee's weekly pay for each year of service except
in the case of employees opting to take an immediate
pension on a non actuarially reduced basis when the
severance payment to which they would be entitled will be
a maximum of 104 weeks pay.
2. That those employees aged between 45 and 49 who have 25
years or more pensionable service should receive a
payment of four (4) times the Statutory Redundancy
Payment in addition to the severance payments referred to
in the severance package Clause 5.
3. The Clauses of the severance package should be amended in
accordance with the above.
The Court so recommends.
Division: MrMcGrath Mr Keogh Mr Devine
Text of Document__________________________________________________________________
CD91673 RECOMMENDATION NO. LCR13538
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
PARTIES: ZURICH INSURANCE
(REPRESENTED BY THE FEDERATION OF IRISH EMPLOYERS)
and
MANUFACTURING SCIENCE FINANCE
SUBJECT:
1. Dispute concerning severance arrangements.
BACKGROUND:
2. The Company is a branch of Zurich Insurance Company of
Switzerland and engages in most classes of general non-life
insurance. The Company has operated in Ireland since 1928 and
employs approximately 40 workers.
3. On 5th November, 1991 the Company informed its workforce of
its decision that it would in future concentrate its underwriting
activities on the industrial commercial sector and it would be
disengaging from all other forms of business. As a result of this
decision 80% of the work-force is to be made redundant.
4. The Union objected to the compulsory redundancies and
indicated to the Company that its main priority was the retention
of jobs and that it would be prepared to negotiate a
rationalisation plan on a voluntary basis. This was unacceptable
to the Company who put forward an early retirement/severance
package (details supplied to the Court). The Company's offer did
not meet the Union's aspirations and the matter was referred to
the Labour Relations Commission on 26th November, 1991. A
conciliation conference was held on 29th November, 1991. At the
conciliation conference the Company offered improved terms on its
early retirement/severance package. The Union was prepared to
accept the amended offer subject to the following improvements.
(1) Deferred pensions for those workers aged between 45-50
years with 25 years service to be paid at age 50.
(2) An improvement in severance terms.
(3) The removal of the 104 weeks ceiling on lump sum
payments.
(4) Recognition of previous service in the industry prior to
joining Zurich for pension purposes.
5. The Company indicated that it was not prepared to make any
further improvements on its offer. The Commission, with the
consent of the parties, referred the dispute to the Labour Court
for investigation and recommendation under Section 26(1) of the
Industrial Relations Act, 1990. A Court hearing was held on 13th
January, 1992.
UNION'S ARGUMENTS:
6. 1. The Company's Irish operation has been profitable. The
decision to reorganise the Irish operation was based on the
losses sustained in the U.K. This is totally unfair to the
Irish workforce.
2. The Company's offer of severance payment of five weeks'
pay per year of service (inclusive of statutory redundancy
lump sum) is in line with voluntary severance packages
generally. However the Company is compulsorily making its
workforce redundant and as it is the second biggest insurance
Company in Europe it is able to improve on the severance terms
offered.
3. The workers will be unable to secure similar employment,
particularly the older section of the workforce. The
improvements which the Union is seeking would go some way to
cushion the blow of the forthcoming redundancies.
4. The Company is retaining 25% of its business. The number
of staff it proposes to retain (5, perhaps 7) is inadequate to
cope with this business.
COMPANY'S ARGUMENTS:
7. 1. The decision to reorganise the Irish operation is
irrevocable and the timetable for proceeding to reduce staff
numbers by the Summer of 1992 must now proceed.
2. The terms arrived at following the Conciliation Conference
have been amended from the Company's position and have, in
some way, addressed every issue raised by the Union.
3. The claim in respect of those employees aged between 45
and 50 with 25 years or more pensionable service to be given a
deferred pension payable at age 50, even with some offset
factor on the severance payment, is cost prohibitive. It
could well be seen as excessively favourable treatment to
those individuals. The Company proposed to pay these workers
twice the statutory in addition to the five weeks already on
offer.
4. The Company believes that the current package addressed
every major issue likely to be encountered by employees in
these unfortunate circumstances and is a well balanced set of
proposals which are fair and reasonable for all concerned.
RECOMMENDATION:
8. The Court having considered the views of the parties as
expressed in their oral and written submissions given the special
circumstances of this case considers the issues in dispute should
be resolved on the following basis.
1. That the severance payments be the equivalent of 5 times
on employee's weekly pay for each year of service except
in the case of employees opting to take an immediate
pension on a non actuarially reduced basis when the
severance payment to which they would be entitled will be
a maximum of 104 weeks pay.
2. That those employees aged between 45 and 49 who have 25
years or more pensionable service should receive a
payment of four (4) times the Statutory Redundancy
Payment in addition to the severance payments referred to
in the severance package Clause 5.
3. The Clauses of the severance package should be amended in
accordance with the above.
The Court so recommends.
~
Signed on behalf of the Labour Court
Tom McGrath
____________________
29th January, 1992 Deputy Chairman.
M.D./J.C.