Labour Court Database __________________________________________________________________________________ File Number: CD9416 Case Number: LCR14389 Section / Act: S26(1) Parties: NEODATA SERVICES LIMITED - and - MANUFACTURING, SCIENCE, FINANCE |
Dispute concerning redundancy terms.
Recommendation:
The Court has examined all of the information made available and
has taken account of the views expressed by the parties in their
oral and written submissions.
The Court has noted that no redundancies will be effected before
May, 1994, and also the efforts being made, with some success, to
maximise employment in the enterprise.
The Court, therefore, calls on both parties to seek to retain as
many jobs as possible.
Given all the circumstances, the Court recommends that employees
being made redundant receive 3 weeks' pay per year of service
inclusive of statutory entitlements.
Division: MrMcGrath Mr Keogh Mr Walsh
Text of Document__________________________________________________________________
CD9416 RECOMMENDATION NO. LCR14389
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
NEODATA SERVICES LIMITED
AND
MANUFACTURING, SCIENCE, FINANCE
SUBJECT:
1. Dispute concerning redundancy terms.
BACKGROUND:
2. The Company is a subsidiary of Neodata Incorporated, and has
operated in Ireland since 1969, providing services to
companies in the direct marketing sector, principally
relating to subscription fulfilment. The Company employs a
staff of 408 in its offices at Limerick, Listowel, Newcastle
West and Kilmallock. In mid-November, 1993, the Company
announced its intentions to restructure its operations, with
the consequent migration of its operation from Ireland to its
customer service-centres in the U.S., at Boulder, Colorado
and Des Moines, Iowa. This reorganisation would result in
the redundancy of all Irish-based staff, the first group in
March, 1994, and the balance over the following 12-15 months.
The Company, however, is committed to securing alterative
work and new business opportunities, with a view to
minimising the redundancies required. Accordingly, the
Company hopes that redundancies will not be required before
May, 1994. The impact of the Company's announcement was
considerable and was received with alarm by the workforce.
The Company offered a redundancy package of 2 weeks' pay per
year of service, plus statutory entitlements. This was
rejected by the Union. A meeting between the parties took
place on the 8th of December, 1993, at which the Union sought
a redundancy package of 8 weeks' pay per year of service.
A conciliation conference followed on the 15th of December,
1993, at which agreement was not reached. The Union modified
its claim to 6 weeks' pay per year of service but the Company
was not in a position to increase its offer. The dispute was
referred to the Labour Court, on the 14th of January, 1994,
in accordance with section 26(1) of the Industrial Relations
Act, 1990. The Court investigated the dispute, in Limerick,
on the 9th of February, 1994.
UNION'S ARGUMENTS:
3. 1. Commitment by the staff over many years of profitable
trading by the Company has been based on a trust that, if the
various increases in productivity and reductions in wages and
other costs were achieved, then the Company was determined to
retain its operation in Ireland. Agreement was reached on
these matters and the Company has publicly stated that its
withdrawal from Ireland is not based on cost-factors, but on
a desire to run the Company in a way which would allow for
faster processing times. If the Company wishes to renege on
the workers' trust, which brought considerable benefits to
the Company in previous years, then it should be recognised
that the staff are entitled to substantial compensation for
that breach of trust.
2. The staff have a reasonable expectation that, in line
with normal industrial relations practice in this country,
where an employer decides to restructure his business,
employees who lose their employment have a right to
compensation from that employer. Such compensation would be
regarded as part of the cost of the restructuring.
3. The Company has benefited over many years because of the
structure of the labour market in the Company's various
locations. This structure has contributed to keeping wages
low and providing a pool of labour for recruitment.
Conversely, the possibility of gaining alternative work for
the staff who are to lose their jobs is very slim, and a
substantial severance package is required to carry the staff
through what could be an extended period of unemployment.
However, the vast majority of the staff do wish to continue
working, preferably in their present jobs.
4. In 1988, a rescue plan was agreed between the Union and
the Company. Part of the package included salary reductions
and loss of bonus. Voluntary redundancy was offered to 80
people on terms of 4 weeks' pay per year of service inclusive
of statutory entitlements.
In 1991, following the closure of a section of the Limerick
office, voluntary redundancy was offered to 39 people on
terms of 3 weeks' pay per year of service plus statutory
entitlements.
As the current best estimates indicate, 100 full-time jobs
and 50 seasonal employees may be retained. The Company is,
therefore, proposing to make 240 people compulsorily
redundant. Compensation for these employees who have
demonstrated their commitment to the Company must be
substantially in excess of that paid for the voluntary
redundancy of a smaller group.
5. The financial and economic circumstances facing the
workers made redundant have also changed since previous
agreements on redundancy were reached. The possibility of
finding alternative employment is greatly reduced as
unemployment now stands at approximately 297,000. The recent
elimination of pay-related benefit will mean a net loss of
#1,500 approximately, to each worker on the maximum of the
Grade 1 scale.
6. The redundancy package offered by the Company compares
very poorly with redundancy packages offered by neighbouring
companies or similar businesses throughout the country
(details supplied to the Court).
COMPANY'S ARGUMENTS:
4. 1. The Company has a record of compensating its personnel
according to its means. It is generally acknowledged that
over many years of operations in Ireland, the Company was a
benchmark in the region, against which a lot of other
organisations were rated, relative to terms and conditions of
employment.
The Company has developed its own survival strategy over
recent months and is proving to be relatively successful at
this early stage. It intends to continue to fight and is
confident that additional business can be won. However, to
enable it to compete with any prospect of future viability
requires additional investment. At the outset of discussions
with the Union, it was stated that limited funding was
available. Despite the Company's belief that it was too
early at that stage to put final terms forward, ( 2 weeks'
pay per year of service plus Statutory) it conceded to Union
demands. That was in the event of a total cessation of
operations in Ireland with approximately 400 job losses.
2. The current position is that, at worst, approximately
200 redundancies may arise and then only if all further
efforts at acquiring new business fail. Consideration must
be given to the marketing and investment costs associated
with securing 200+ jobs together with ongoing efforts to
attract more business. The Union, inexplicably, appear
unable to take this reality into the equation. The Company,
it must be stressed, has limited funding only, and is
endeavouring to maximise benefits as fairly as it is
permitted. Essentially, the Company is attempting to
secure the maximum number of jobs, while honouring its
commitment to pay two weeks' pay per year of service together
with meeting it's statutory obligations. This must be
achieved within specific financial limits.
3. Since the initiation of discussions with the Union, the
overall financial state of the Company has substantially
deteriorated. From the change of ownership in 1990,
accumulated losses to date stand at approximately $72m. Such
losses are well above all previous expectations and obviously
eliminate prospects of additional resources. Senior Board
approval was obtained only after strenuous argument to gain
terms in excess of statutory obligations. This was before
the aforementioned figures were available. Throughout
discussions, the Union apparently failed to give credence to
the fact that the Company was, within tight financial
parameters, striving at all times to reduce job losses and
increase new business prospects, thus protecting employment.
There appeared to be a belief that endless funds could be
tapped to secure agreement.
4. The co-operation of the workforce together with that of
the I.D.A., have contributed considerably to the marketing
efforts to date. However, the Company was and is surprised
at the failure of the Union to help secure agreement at local
or Labour Relations Commission level. Such an outcome would
have greatly enhanced the perceived image of the Company's
marketing efforts in the international arena. Little value
appears to be put on the fact that the Company is also trying
to extend the phasing-out of work as long as it possibly can.
5. The future of all involved in the Company hangs in the
balance. It is imperative that consideration be given to the
cost of investment to secure new jobs. Likewise, provision
must be made for those employees, many with long service, who
must leave.
6 Realistically, the Company's financial position (details
supplied to the Court) would dictate payment of statutory
obligations only. However, the Company is mindful of the
unblemished industrial relations record built up by
management and staff over the past twenty five years. It is
also aware of the social implications of its decisions and of
the importance of its imput into the economy of the region.
RECOMMENDATION:
The Court has examined all of the information made available and
has taken account of the views expressed by the parties in their
oral and written submissions.
The Court has noted that no redundancies will be effected before
May, 1994, and also the efforts being made, with some success, to
maximise employment in the enterprise.
The Court, therefore, calls on both parties to seek to retain as
many jobs as possible.
Given all the circumstances, the Court recommends that employees
being made redundant receive 3 weeks' pay per year of service
inclusive of statutory entitlements.
~
Signed on behalf of the Labour Court
11th April, 1994. Tom McGrath
M.K./A.L. ---------------
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Michael Keegan, Court Secretary.