FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : FRUIT OF THE LOOM INTERNATIONAL LIMITED (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Flood Employer Member: Mr McHenry Worker Member: Mr O'Neill |
1. Redundancy terms.
BACKGROUND:
2. Fruit of the Loom International Limited is a wholly owned subsidiary of the US Corporation 'Fruit of the Loom Inc.'. The Corporation employs 30,000 people in over 60 locations worldwide. The Company employs 2076 people in the Republic of Ireland and 509 people in Derry, Northern Ireland.
On the 27th of August, 1998, the Company confirmed its previously announced decision to close the Dungloe plant with effect from the 27th of November, 1998, with a loss of 53 jobs. The Company entered negotiations with the Union in September, 1998, on redundancy terms for the 53 workers. The issue was the subject of two conciliation conferences under the auspices of the Labour Relations Commission on the 4th of November, 1998, and the 13th of November, 1998.
The Union's initial claim was for 7 weeks' pay per year of service plus statutory entitlement. The Company offered to pay 2.5 times statutory and agreed that workers with less than two years' service would be regarded as having two years' service. The average service of workers at the Dungloe plant is 3.5 years.
Following negotiations the Union's claim was modified to 5 weeks' pay per year of service plus statutory, with the Company offering 2.5 weeks' pay per year of service plus statutory. As agreement was not possible the issue was referred to the Labour Court in accordance with Section 26(1) of the Industrial Relations Act, 1990. The Court investigated the dispute on the 27th of November, 1998.
UNION'S ARGUMENTS:
3. 1. The workers concerned have been loyal employees who produce work of high quality and meet all targets set for them. They have contributed to making the Company the success that it is and are entitled to a decent severance package, the best that the Company can afford. The prospects of them securing alternative employment in a part of Donegal ravaged by high unemployment are indeed slim.
2. The reason for the redundancies is not lack of work or lack of profit. The jobs are being moved to Morocco because of the huge differential in wage costs. The Company will save approximately £160 per person per week on labour costs alone. The Company will recoup the cost of a severance package of 5 weeks' pay per year of service plus statutory entitlement within seven months (28.42 weeks).
3. There are a large number of precedents for settlements of 5 weeks' pay per year of service plus statutory entitlement (details supplied to the Court), many in circumstances less favourable for the employers and with no prospect of recouping the monies.
4. Fruit of the Loom is a successful company by any reasonable criteria whose financial position is substantially improving. The Company made an operating profit of £3.74 million in 1996 compared to a loss of £12.76 million the previous year. The Company can clearly afford to meet the Union's modest claim without any undue hardship.
COMPANY'S ARGUMENTS:
4. 1. The Company regrets that it should have to declare any number of persons redundant. The Company withheld confirmation of its decision to close the Dungloe plant in the hope that an alternative employer might have been found to take over the facility. This was not possible and it is now clear that the Dungloe facility was carried by the Company for approximately two years, when otherwise it should have been closed.
2. The redundancy packages quoted by the Union refer to companies in the petro/chemical, pharmaceutical and drinks/brewing industries. The Company rejects comparisons with these companies as their labour costs would be substantially less than those in the clothing industry, the companies were not within the North West region and, to the Company's knowledge, they were highly profitable companies who did not record cumulative losses.
3. Details of the Company's financial position have been given to the Court. Despite a 16.5% increase in sales in 1997 the Company recorded substantial operating losses. The Company's financial position is unlikely to improve substantially in the short-term due to continuing pressure to reduce prices, re-structuring costs, accumulated losses of recent years and levels of debt of the parent Company.
4. Within the past year workers represented by SIPTU accepted a voluntary redundancy package of 2 weeks' pay per year of service plus statutory entitlements. The Company's present offer is a fair and reasonable one. It is a substantial improvement on this package and on another one paid in 1996 on the closure of the Bray plant. The Company is deeply concerned at the serious implications that the Dungloe settlement may have in the event of the Company having to declare any further redundancies.
RECOMMENDATION:
The Court considered carefully all the written and oral submissions made by the parties.
While the issue before the Court relates specifically to this particular plant, the Court was made aware that further redundancies, of a similar nature, were imminent in the other local Company plants.
The Court, having given careful consideration to all the information available and the background to this case, recommends that redundancy terms for employees should be as follows:-
1. 3½ weeks' pay per year of service plus statutory redundancy payment.
2. Those with less than 2 years' service to be credited with 2 years' notional
service.
Signed on behalf of the Labour Court
Finbarr Flood
11th December, 1998______________________
D.G./D.T.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Dympna Greene, Court Secretary.