FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : DEPARTMENT OF ARTS, CULTURE AND THE GAELTACHT/ THE OFFICE OF PUBLIC WORKS (OPW) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr McGrath Employer Member: Mr Pierce Worker Member: Ms Ni Mhurchu |
1. Travelling Expenses.
BACKGROUND:
2. The dispute concerns travelling expenses for approximately 26 general operatives employed on the Shannon Navigation.
An arrangement was been put in place in the early 1980s whereby each general operative is given a designated base and is paid an allowance in respect of travel from that base to his particular work location, which can vary up and down the Shannon. If the place of work is between 3 and 30 miles from base, the employee receives £7.49 per day or £37.45 per week. This payment is taxable. Where the work location is more than 30 miles from base a subsistence payment amounting to £93.18 per week, which is not taxable, is paid. These amounts are in present day values having been adjusted in line with general movements in rates since the time of the agreement.
According to the Union the workers have a threefold grievance:
(1) Many of them are required to travel about 20 miles each way every day for a taxable weekly payment of £37.45, which does not cover the costs involved;
(2) They are required to be at their place of work at 8.00 a.m. which means leaving home up to an hour beforehand;
(3) As the £37.45 is taxable it is included in earnings and is taken into account in determining eligibility for Family Income Supplement.
The Union has sought to have the issue addressed by management but has been advised that the taxation of the payments is a matter for the Revenue Commissioners. The matter was pursued with the Revenue Commissioners who confirmed that the payments were taxable. In the absence of any movement by the employer's side it is the Union's view that its members should revert to the pre-1980s situation whereby the OPW transported them to work.
The OPW said that an agreement was reached in 1982 under which each employee was assigned to the base nearest to his home and the payment arrangements were put in place. The taxation question had been raised prior to the agreement being reached and payment levels proposed had been rejected on the basis that they were taxable. The proposals were then revised upwards to take account of this fact. The figures were arrived at by taking the highest commuted civil service mileage rate of 24.96p and multiplying this by 30 miles per day (a figure agreed on as being a reasonable average over the year) giving £7.49 per day. This formula has operated since 1982 and the payments have been up-dated in line with revisions in the civil service mileage rates.
The OPW further stated that the taxation argument does not stand up as this issue had been raised and was taken into account prior to the signing of the 1982 agreement. Accordingly, the OPW claims, their no basis for an increase in the level of payments.
The dispute was the subject of a conciliation conference under the auspices of the Labour Relations Commission at which agreement was not reached. The dispute was referred to the Labour Court, on the 6th of December, 1996, in accordance with Section 26(1) of the Industrial Relations Act, 1990. The Court carried out its investigation, in Longford, on the 25th of February, 1997.
UNION'S ARGUMENTS:
3. 1. The payment of the allowance as a set figure renders it liable to be taxed. This has led to considerable grievances amongst the workers. They incur the expense of travel yet the state benefits by way of reduced cost to the Shannon Navigation and by way of taxes deducted from the allowance. There is, effectively, an additional subsidy to the employer, by staff, in that they are expected to be present at their allocated place of work by 8.00 a.m. The time taken to travel to work is ignored for the purposes of attendance.
2. The system of payment is for the administrative convenience of the OPW. The workers would prefer the alternative method of filling out claim forms weekly. However, they are being penalised by having their allowance taxed as part of their earnings, when in fact the allowance is not wages and is, in all respects, the same as mileage payments under the Travelling and Subsistence Regulations. The OPW is hiding behind the Revenue Commissioners by claiming that their "hands are tied on the matter".
3. Other employees treat their staff more reasonably in this regard (details supplied to the Court). When this was raised with the OPW, the response was that "the allowances were taxable and there is nothing the Department can do".
4. The inclusion of the travel allowance as earnings has caused the rejection of an application for Family Income Supplement by one worker, as his earnings on his P60 were too high to entitle him to qualify for the supplement.
DEPARTMENT'S / OPW'S ARGUMENTS:
4. 1. The whole question of the taxability of the allowance was comprehensively dealt with in the negotiations which eventually resulted in the agreement of 1982. Indeed the agreement was only arrived at as a result of a number of meetings and two conciliation conferences. One of the main issues in the dispute, which took over two years to resolve, was the issue of the taxability of the allowance. On two occasions offers which were recommended by Union negotiators were rejected by the workers because of the tax factor. The net result of this was that the offers had to be increased to allow for tax deduction in order to get Union acceptance.
2. Only the Revenue Commissioners can determine whether or not a payment should be subject to income tax. In bringing the case, the Union is hoping to persuade the Labour Court to put in place a payment which would be sufficiently large to ensure that, after tax, the worker would be left with a net figure of £37.45, or as near as possible to it.
3. There is no justification for discarding a formula that took two years to negotiate and that took that long precisely because the Union insisted in building into the payment an element that would take account of the tax factor. The existing formula provides that the payment be increased, not in line with cost of living increases, but in line with increases in the cost of using a worker's own car in the course of his/her work. Such increases are worked out according to a formula agreed at General Council level. Any formula that would replace the existing one would have to provide for updating of the payment from time to time. Updating on the basis of cost of living increases would be neither appropriate, nor acceptable to management.
4. Travel payment is paid to state industrial workers, local authority workers and construction industry workers in the Dublin area. These payments are taxable. Any adjustment of travel payments on the Shannon Navigation to take account of the tax factor would have very broad repercussions.
5. The workers concerned have already received their full entitlements under the Programme for Competitiveness and Work, including the provisions of Clause 3. there is, therefore, no further payment that can be made to them under that agreement, the terms of which are still in operation.
RECOMMENDATION:
The Court has fully considered all of the issues raised by the parties in their oral and written submissions.
The Court finds that the taxing of the payments referred to is a matter to be dealt with by the Revenue Commissioners. The Court would recommend that the parties state a case to the Revenue Commissioners if they consider that the payments should not attract tax.
It is the view of the Court that the present formula should continue unaltered. The Court does not, accordingly, recommend concession of the Union's claim.
The Court notes that the Department is prepared to examine, on its merits, any claim by individual workers for a change of base, provided it can be shown that another base is nearer to his/her home.
Signed on behalf of the Labour Court
Tom McGrath
2nd of May, 1997______________________
M.K./S.G.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Michael Keegan, Court Secretary.