Labour Court Database __________________________________________________________________________________ File Number: CD9276 Case Number: AD92146 Section / Act: S13(9) Parties: NATIONAL CATERING LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Appeal by the Company against Rights Commissioner's Recommendation B.C. 405/91 concerning the Union's claim for the payment of an ex-gratia redundancy lump sum to a worker.
Recommendation:
5. Having considered the submissions made by the parties the
Court is satisfied that the Rights Commissioner's recommendation
is reasonable in the circumstances of the case. The Court
therefore decides that the recommendation should stand.
Division: Mr O'Connell Mr Keogh Mr Rorke
Text of Document__________________________________________________________________
CD9276 APPEAL DECISION NO. AD14692
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 13(9), INDUSTRIAL RELATIONS ACT, 1969
PARTIES: NATIONAL CATERING LIMITED
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Appeal by the Company against Rights Commissioner's
Recommendation B.C. 405/91 concerning the Union's claim for the
payment of an ex-gratia redundancy lump sum to a worker.
BACKGROUND:
2. The Company is involved in the contract catering business.
From 1972 to 1990 the Company seconded the worker concerned to a
client as chef/manager in charge of the client's catering
operation. The client engaged all the other catering staff and
met the associated costs. The Company states that it had a "cost
plus" contract arrangement with the client under which all the
costs involved in the employment of the worker, including
redundancy payments, are met by the client. In addition the
Company receives a small handling fee for its services. In
September, 1990 the contract with the client terminated and the
worker was made redundant. He received statutory redundancy
payments from the Company. A dispute arose between the Union
representing the other canteen workers and the client concerning
enhanced redundancy payments. The dispute was settled when the
client agreed to make enhanced redundancy payments based on a
formula of 3 weeks per year of service plus statutory to its own
catering staff. The Union made a claim to the Company for a
similar settlement for the worker concerned. The Company rejected
the claim. On 12th November, 1990 the worker received an
ex-gratia payment of £7,500 from the client. The Union claims
that the Company should pay an ex-gratia redundancy lump sum to
the worker based on the formula of 2 weeks per year of service in
addition to the statutory amount already paid. The Company
rejects the claim. The dispute was referred to a Rights
Commissioner who investigated it on 7th January, 1992 and issued
the following recommendation on 20th January, 1992:-
"In the light of the above, I believe that a compromise
position is appropriate. I therefore recommend that National
Catering pay a further £5,000 to the worker and that he
accept this in full and final settlement of all claims on the
Company in relation to his employment and its termination".
(The worker was named in the recommendation).
The Company appealed against the recommendation under Section
13(9) of the Industrial Relations Act, 1969. The Court heard the
appeal on 10th March, 1992.
UNION'S ARGUMENTS:
3. 1. When the client issued notice of redundancy to the canteen
staff the Union approached the Company regarding redundancy
payments for the worker. At the time a dispute arose between
the client and the canteen staff regarding enhanced redundancy
payments. The Company requested that they await the outcome
of that dispute. The Union made it clear that it would be
seeking, as a minimum, whatever terms were finally agreed
between the client and the canteen staff. When that dispute
was resolved with a settlement based on 3 weeks per year of
service the Union contacted the Company to have the settlement
extended to the worker. However the Company claimed that it
had no further obligation to the worker beyond the payment of
statutory redundancy.
2. The Company is seeking to establish a unique position by
evading the responsibility which all employers must deal with
in a compulsory redundancy situation. Due to the Company's
refusal to face its responsibilities to the worker the Union
appealed directly to the client who made an ex-gratia payment
in recognition of the worker's service. Notwithstanding this
payment the Company still has a responsibility for the loss of
the worker's job which must be met.
3. The worker has had 18 years service with the Company and
had earnings of about £400 per week prior to redundancy.
Applying the 3 weeks per year of service formula he should
receive an ex-gratia payment in the order of £20,000. The
Rights Commissioner's recommendation of £5,000 was clearly an
attempt at a compromise solution. The Company has rejected
this attempt to resolve the dispute.
4. In compulsory redundancy situations in the catering
industry other companies have agreed redundancy payments of 3
weeks per year of service plus statutory. The client also
applied this formula to its own staff. The Rights
Commissioner's recommendation and Labour Court Recommendation
No. LCR13575 clearly accepted that the responsibility for
redundancy payments lies solely with the Company and that an
ex-gratia payment should be made. The Union is prepared, as
an absolute minimum, to seek the extension of the terms of
LCR13575 to resolve the dispute (i.e. redundancy payments
based on the formula of 2 weeks pay per year of service plus
statutory entitlement).
COMPANY'S ARGUMENTS:
4. 1. From 1972 to 1990 the Company seconded the worker to the
client under a "cost plus" contract. Under this type of
contract the client is responsible for all costs in relation
to the worker's employment including redundancy payments.
When the contract was terminated the worker became redundant
and was paid statutory redundancy. The Company cannot afford
to pay an amount in excess of the statutory amount of payment.
2. It is standard practice for the Company to pay statutory
redundancy only. In some cases where enhanced redundancy
terms were agreed, payments were made with the agreement of
the client and the cost was recovered under the standard "cost
plus" contract. The amount of the enhanced redundancy payment
depends on the willingness and the ability of the client to
pay. In this case the Company strongly urged the client to
make an enhanced payment. The client then made a direct
payment of £7,500 to the worker in full and final settlement
of the Union's claim. The Company is not in a position to
respond to a further claim for enhanced redundancy payments
from the Union.
3. There is no "industry norm" for the payment of enhanced
redundancy terms and each case is taken on its merits. Over
the past 10 years there has been many cases with payments
ranging from nil to 3 weeks per year of service (details
supplied to the Court). Without exception all payments were
recovered from the Company's clients in full.
4. The Company operates in a highly competitive industry
where business is arranged on a contract basis. Such
contracts only provide for statutory redundancy as clients
could not be expected to agree to unquantified enhanced
redundancy payments. Any deviation from the standard terms
and conditions of individual contracts would have a serious
and detrimental effect on the employment of all staff. In
this particular case any further enhanced payment would
establish a precedent which simply cannot be met.
DECISION:
5. Having considered the submissions made by the parties the
Court is satisfied that the Rights Commissioner's recommendation
is reasonable in the circumstances of the case. The Court
therefore decides that the recommendation should stand.
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Signed on behalf of the Labour Court
John O'Connell
_______________________
27th March, 1992. Deputy Chairman
A.S./J.C.