FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : BURMAH CASTROL (IRELAND) LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Employer Member: Worker Member: |
1. Dispute concerning redundancy terms.
BACKGROUND:
2. In March 1996 the Company announced a major rationalisation and restructuring plan in its fuels/lubricants Division. It proposed the subcontracting of all fuel/oil deliveries, some lubricant deliveries and the closure of the provincial depots in Cork Galway and New Ross. The plan involves 40 redundancies, 30 from the operative driver etc. grade and 10 from administration. This present claim concerns the drivers/operatives grades. Management maintains that the rationalisation proposals are essential to ensure its future competitiveness and viability. The Company offered the following severance package to workers.
Category: Employees Under 50Category: Employees over 50Category: Employees
aged between 60 &63
7 weeks per year of service 3.5 weeks per year of service 3.5 weeks per year of service with the following maximums applying:
To a maximum of 104 weeks pay To a maximum of 52 weeks pay At age 60 ........... 39 weeks pay* (inclusive of statutory redundancy) (inclusive of statutory redundancy)At age 61 ........... 26 weeks pay*PlusPlusAt age 62 ........... 13 weeks pay*
A payment of 13 weeksA payment of 13 weeksAt age 63 ........... zero weeks pay
(to cover all other statutory(to cover all other statutory* (inclusive of statutory
entitlement)entitlement)redundancy)
PlusPlus* (pro rata for months within year)
A deferred pension based onAn immediate pension based onPlus
actual serviceactual serviceA payment of 13 weeks (to
(with no discount factor applying)cover all other statutoryetitlement)Plus
An immediate pension based on
actual service (with no discount
factor applying)
The Union claimed an improvement in the Company's offer as follows:
*Employees under 50 years of age:
8 weeks pay per year of service excluding the state entitlement.
Calculation of the weeks pay to be based on:-
Basic Pay
Shift Allowance
Unscheduled Delay Allowance
The above to apply to employees of Castrol with the addition of responsibility pay for those employed in Burmah.
To a maximum of 104 weeks pay.
Plus a payment of 26 weeks pay to cover items such as annual leave, pay in lieu of notice.
Deferred pension based on actual service.
Those aged 48 and over to get immediate Pension based on actual service.
*Employees over 50 years of age:
8 weeks pay per year of service excluding state entitlement.
Calculations of the weeks pay to be based on
Basic Pay
Shift Allowance
Unscheduled Delay Allowance
The above to apply to employees of Castrol with the addition of responsibility pay for those employed in Burmah.
To a maximum of 104 weeks pay.
Plus a payment of 26 weeks pay to cover items such as Annual Leave, pay in lieu of notice.
An immediate Pension based on
Basic Pay
Service Pay
Unscheduled Delay Allowance
and responsibility pay for those employed in Burmah.
Management rejected the Union's claim. The dispute was referred to the Labour Relations Commission and two conciliation conferences were held on the 28th May and 14th June 1996. Agreement was not possible and the dispute was referred to the Labour Court on the 2nd July 1996. A Court hearing was held on the 23rd July, 1996.
UNION'S ARGUMENTS:
3. 1. The Company is profitable and its decision to contract out some of its services will ultimately increase profits. Many of the workers concerned have given long and loyal service to the Company. The decision to make them redundant will adversely affect their standard of living.
2. The Company's offer is totally inadequate, particularly as the redundancies will not be voluntary. The Union accepts that many competitor companies have ceased direct labour. However these companies negotiated attractive severance packages with workers which took into account the workers' circumstances.
3. The Company is not ceasing to trade. It has taken a corporate decision to leave direct employment. This decision will increase Company profits. The severance package which the Company has offered is based on an outdated precedent of voluntary redundancies. In these circumstances the redundancies will be compulsory and the Union is seeking a severance package for the workers concerned similar to packages already paid by other companies in the industry.
COMPANY'S ARGUMENTS:
1. Acceptance of the Company's rationalisation plan is essential for its survival. It must reduce costs and improve its trading position.
2. The cost of the plan will be in the region of £3m of which almost £2m will be paid in personal separation terms. In addition, 23 of the 40 workers involved will receive immediate pensions without any discounting factors applying. Management has arranged job opportunities for 22 of the 40 workers being declared redundant.
3. The Company is a very small operator representing approximately 1% of the European operation. Its plan is in essence a survival package. The terms are the best the Company can justify. The cost of concession of the Union's claim would be an additional £1.4m. The Company cannot afford this cost. However if minor adjustments are required to make the Company offer more acceptable, these could be considered.
RECOMMENDATION:
The Court considered all the information presented including the subsequent information supplied on age structures and years of service. Taking this information into account and the fact that employment will be available with the contractors for a significant number of employees, the Court recommends that the Company separation terms be modified as follows:-
(1) pension to apply from 48 years (details on method of application to be as indicated by the Company during the Court hearing).
(2) First option on alternative employment to be given to those not qualifying for a pension i.e. those below 48.
(3)Where the option of employment with contractors requires relocation, and an individual is not eligible for pension, a further £10,000 to be added to the Company lump sum, if the individual takes the retirement option.
(4) For over 50 years the maximum of 52 weeks to be increased to 78 weeks.
(5)Lump sums to be exclusive of statutory entitlements, for all taking the separation terms.
Signed on behalf of the Labour Court
Finbarr Flood
9th August, 1996______________________
T.O'D./S.G.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.