FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : HOWMEDICA INTERNATIONAL (REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr McHenry Worker Member: Mr Rorke |
1. Closure of distribution centre (Shannon)
BACKGROUND:
2. The dispute concerns the Company's decision to contract out the warehousing and distribution facility at Shannon, and the resultant transfer of three workers to Limerick.
Up to December, 1998, the Company was a subsidiary of Pfizer Corporation. It operated two facilities in Ireland, a warehousing and distribution centre in Shannon, and a manufacturing plant in Limerick. Early in 1998, Pfizer decided to concentrate on its pharmaceutical business, and one of the results was the sale of the Company to Stryker Corporation in December, 1998 Previously Shannon, which was managed independently from Limerick, had operated as a centralised processing, warehousing and distribution centre, servicing all markets outside of the US. Following the sale of the Company to Stryker, Shannon now reports directly to Limerick and handles only Limerick products. The result is a reduction in staff and less warehousing space.
In May, 1999, the Union was informed that there would be a reduction in the number of employees in Shannon, from 15 to 3. This was to be achieved by way of voluntary redundancies. In total, throughout the Company, 65 voluntary redundancies were approved. The Company claims that the Union was informed of a proposal to contract-out the Shannon operation to Irish Express Cargo (IEC). The Union wrote to the president of Stryker Europe about the Shannon situation, and claims that he assured the Union that the Shannon operation would continue.
On the 31st of August, the Company announced that the Shannon operation was to be contracted-out to IEC, and that the remaining three workers would be relocated to the Limerick plant. The Company has offered to pay compensation to the three workers. The Union claims that the decision contravenes Clauses 7.0 and 7.1 of the Partnership Agreement. Clause 7.1 refers to the hiring of contractors to carry out non-value added activities.
The Union referred its case to the Labour Relations Commission, and a conciliation conference took place on the 15th of September, 1999. As the parties did not reach agreement, the dispute was referred to the Labour Court on the 12th of October, 1999, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 28th of October, 1999.
UNION'S ARGUMENTS:
3. 1. The work done by the members in Shannon was never considered as non-value added activities. The work in Shannon was warehousing and distribution.
2. The Union was assured by letter in March, 1999, that the operation in Shannon would continue at a reduced scale.
3. Agreement on the 65 voluntary redundancies would not have been possible if the contracting-out of Shannon had been known at the time.
4. The three workers do not want to relocate to Limerick. They wish to remain in warehousing in Shannon, which is the job they first applied for.
5. Despite an official number of three workers in Shannon, the average number since June varies from 8 - 11.
6. The Union and Company representatives who concluded the Partnership Agreement were clear about what was to be contracted-out, and Shannon was not part of this.
COMPANY'S ARGUMENTS:
4. 1. The Company must have the right to make decisions which are necessary to maintain and improve the effectiveness of the Limerick operation. It would not be viable to continue at Shannon with just three workers.
2. The Company does not believe that it is operating outside the spirit of the Partnership Agreement in regard to Clause 7.1.
3. The take-over of the Company by Stryker has resulted in a change of business philosophy, and major restructuring. Stryker has undertaken to honour all agreements, including the letter from the president of Stryker Europe in March, 1999, but reasonableness and common sense must be used to deal with issues that arise.
4. The Company has offered to financially compensate the three workers for the move to Limerick (details supplied to the Court).
RECOMMENDATION:
The Court has carefully evaluated the submissions of the parties to this disput.
Having considered the terms of the Agreement concluded between the parties in September, 1997, the Court cannot accept that the Company is precluded, per-se, from contracting-out warehousing and distribution at its Shannon facility.
The Court does accept that the letter sent by the Company to the Union in March, 1999, did provide an undertaking to maintain this facility, and did convey the impression that it would remain a source of direct employment. It is regrettable that the Company did not sufficiently clarify its position at the time the letter was written, or in light of later developments.
However, the subsequent reduction in the workforce at Shannon, following agreed voluntary redundancy, has made it impractical to maintain this operation with the remaining number of direct employees. In these circumstances, the proposed contracting-out of this operation is reasonable and should be accepted.
The Court, therefore, recommends that the Union accepts re-deployment on the terms offered by the Company.
Signed on behalf of the Labour Court
Kevin Duffy
4th November, 1999______________________
C.O'N./D.T.Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Ciaran O'Neill, Court Secretary.