Labour Court Database __________________________________________________________________________________ File Number: CD91665 Case Number: LCR13575 Section / Act: S20(1) Parties: NATIONAL CATERING LIMITED - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Claim for compensation for redundancy following the withdrawal of the Company from a client company.
Recommendation:
5. The Court has considered the submissions, oral and written
from the parties. The Court notes the unusual position of the
claimants and the terms of the contract which the Company had
entered into with the third party and from which it withdrew
for commercial reasons.
In all the circumstances of the case the Court recommends that
the Company offer and the Union accept 2 weeks pay per year of
service plus statutory entitlement for those who qualify and
with 1 weeks pay for those who do not qualify for redundancy.
Division: Ms Owens Mr McHenry Mr Rorke
Text of Document__________________________________________________________________
CD91665 RECOMMENDATION NO. LCR13575
INDUSTRIAL RELATIONS ACTS 1946 TO 1990
SECTION 20(1) INDUSTRIAL RELATIONS ACT 1969
PARTIES: NATIONAL CATERING LIMITED
and
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. Claim for compensation for redundancy following the
withdrawal of the Company from a client company.
BACKGROUND:
2. 1. The Company is involved in contract catering and
employs 450 workers. Since September, 1987 the Company
held the catering contract for a particular company. The
contract was only one of the 48 contracts which the
Company holds throughout the country. The contract which
the Company generally has with its clients, and which it
originally had with the client company, is a Cost Plus
Contract in which all operational costs including any
redundancy payments are met by the client on a monthly
basis. In 1988 due to pressure from the client company
the type of contract was changed whereby the client paid a
fixed monthly amount from which the Company was to pay all
costs. By July, 1991 the Company was suffering extensive
losses and informed the client company that the contract
could only be renewed on the original Cost Plus Fee basis.
This was not acceptable to the client company and the
contract was terminated.
2. The Union claims that the 12 workers who were made
redundant as a result of the termination of the contract
should be paid compensation in excess of their statutory
entitlement. The Union is claiming that the workers
should be paid statutory minimum redundancy payment plus 3
weeks pay for every year of service. It is also claiming
that workers who are not entitled to a statutory payment
should receive a lump sum payment of £500. The Company
states that it has no obligation to make enhanced payments
to workers in excess of their statutory entitlement.
The dispute was referred to the Labour Court under Section
20(1) of the Industrial Relations Act, 1969. The Court
investigated the dispute on Friday 17th January, 1992.
UNION'S ARGUMENTS:
3. 1. The workers are reasonable in their claim for
redundancy compensation as the responsibility for the job
losses lies solely with the Company. The Company did not
lose the contract either to a competitor or at the request
of the client it withdrew from the contract.
2. The Company has in the past made enhanced payments to
workers which were above their statutory entitlements. In
the case of the 12 workers concerned the claim as stated
would only cost the Company in the region of £10,000.
COMPANY'S ARGUMENTS:
4. 1. It is not normal practice of the Company to make
enhanced or ex-gratia payments. However in cases where
such payments have been made the matter has been discussed
in advance with the particular client company. It is the
client, under the terms of the Cost Plus Contract, who is
responsible for all redundancy payments. In the case of
the 12 workers in question the Fixed Price Contract did
not provide for the payment of redundancy. The Company
therefore cannot afford to pay in excess of statutory
entitlements. It is experiencing extensive financial
losses. This is the reason that the contract was finally
terminated.
2. Company clients range from small Industrial Units to
large corporations and as such each contract must be
viewed individually. The ability to make enhanced
payments depends on both the willingness of the client to
do so and the type of contract which is held. There is no
norm within the industry which governs such payments. To
create a precedent which would affect all individual
contracts would undermine the Company's competitive
position.
RECOMMENDATION;
5. The Court has considered the submissions, oral and written
from the parties. The Court notes the unusual position of the
claimants and the terms of the contract which the Company had
entered into with the third party and from which it withdrew
for commercial reasons.
In all the circumstances of the case the Court recommends that
the Company offer and the Union accept 2 weeks pay per year of
service plus statutory entitlement for those who qualify and
with 1 weeks pay for those who do not qualify for redundancy.
~
Signed on behalf of the Labour Court
Evelyn Owens
__________________________
28th February, 1992 Deputy Chairman.
A.NiS./N.NiM