FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(1), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : DONEGAL SHIRT COMPANY (AUSTIN REED GROUP) (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Keogh Worker Member: Mr Rorke |
1. Dispute regarding the alleged non-implementation of agreed severance arrangements following the closure of the Donegal Shirt Company.
BACKGROUND:
2. The Company (a subsidiary of the Austin Reed Group) was involved in the manufacture of high quality mens' shirts and ladies blouses and employed 136 workers at Lifford, Co. Donegal.
Following the Company's decision to close its manufacturing operations in Lifford, as from the 26th of February, 1999. The parties entered into negotiations on a redundancy package for the workforce and agreement was reached on this issue. The arrangement provided for the payment of statutory redundancy plus an ex-gratia payment of two weeks' pay per year of service. The ex-gratia payment was subject to a minimum payment of £1,000. Workers with less than one year's continuous service were to receive an ex-gratia amount of £300 or 2 weeks' pay, whichever was the greater, workers with a year's continuous service but less than 104 weeks' would be brought up to a notional 2 years' service and accordingly receive an ex-gratia payment of 4 weeks' pay. In March, 1999, the Union wrote to the Company claiming that it has not properly calculated service of the ex-gratia amounts in respect of 32 workers and that the Company calculations were contrary to the terms of the agreement. Management rejected the claim. On the 8th of July, 1999, the Union referred the dispute to the Labour Court under Section 20 (1) of the Industrial Relations Act, 1969, and agreed to be bound by the Court's recommendation. By letter dated 24th of September, 1999, the Company informed the Court that due to the unavoidable absence of a key company spokesman, it could not attend the hearing, however, it provided a comprehensive written submission which was considered by the Court. A Court hearing was held in Donegal on the 28th of September, 1999.
UNION'S ARGUMENTS:
2. 1. Immediately prior to the closure of the Company the parties negotiated the terms which would give effect to the Labour Court Recommendation in respect of a further 700 redundancies at Fruit of the Loom. The terms of that agreement as they relate to the calculation of service for ex-gratia purposes have virtually identical wording. There has never been any ambiguity in the Fruit of the Loom agreement and it is for this precise reason that those same words were used in the agreement for Donegal Shirt Company.
2. 2. The Company agreed "to afford statutory redundancy terms along with an ex-gratia severance payment of 2 weeks' pay per year of continuous and reckonable service". Similarly agreement was made for those on incentive earnings to calculate a weeks' pay for ex-gratia purposes on the same basis as for statutory redundancy payments i.e. averaged over 26 weeks prior to the 13 weeks before the date of redundancy. Thirdly, it was agreed "to credit workers who accumulated service prior to reaching 16 years of age with two weeks' pay per year of service for each reckonable year based upon the same calculation as in the Redundancy Payments Acts.
3. 3. A number of workers are due 2 weeks' pay in respect of service accumulated prior to reaching 16 years of age. Yet despite agreeing to afford two weeks' pay per year of service for each reckonable year based upon the same calculation as in the Redundancy Payments Acts, the Company have made no payments to these workers in respect of this service.
3. 4 Management made issue of the discharge forms signed by workers. These forms are designed to ensure that now further claim will be taken against the Company by any former workers arising out their employment with the Company and are a normal part of redundancy negotiations. The Union advised its members to sign these forms while it processed the workers' grievance, since the Union viewed it as part of the same claim as agreed by the Company. The Union had also a verbal assurance from the Managing Director of the Austin Reed Group that the Company would rectify its error if advised to do so by its representative.
3. 5. Workers made an agreement with the employer in respect of the decision to terminate their employment by reason of redundancy. They adhered to its terms in every detail including the orderly closure of the plant and the Company's efforts to complete work in progress. The total amount due in outstanding severance payments to workers is £13,321.24 (details of the calculation supplied to the Court).
COMPANY'S ARGUMENTS
4. 1. In negotiating the severance arrangements with the Union the Company had a number of objectives.
(i) To agree a fair and reasonable settlement with our employees at Donegal Shirt who had given many years of loyal service.
(ii) To agree a severance package which would not create difficulties in the event of redundancies at our UK plants.
(iii) To convince the Board of Directors of the need to spend additional monies in excess of Irish Statutory entitlements.
2. The norm in the UK textile sector is payment of the UK statutory redundancy entitlement of a week per year of service. Any settlement in the Republic of Ireland would have to reflect this industry norm. To add to Company difficulties the negotiation took place in the Republic, however, the processing and calculation of the severance payments was handled here in Crewe.
3. In Management's reading and understanding of the agreement there are two separate elements to the severance package:
(i) The statutory redundancy entitlements, which have a complex set of calculation rules and;
(ii) the ex-gratia element which as the agreement states is based on "continuous and reckonable service". This sentence was included a a number of employees had broken service and service before the age of 16 years. In particular, some female employees resigned in the 1970's to give birth, and rejoined the Company later. This clause was designed to limit benefit to continuous service. A separate arrangement was later agreed to cater for employees with service before their 16th birthday.
When the package was agreed, Management approached the Board of Directors for the necessary funding, which amounted to IR£637,566.14. This amount was based upon the statutory element and the ex-gratia amount calculated on yearly service. When the funding was approved the figures were transmitted to Lifford for examination by SIPTU prior to payment.
The agreement is silent on the method of calculating service for the ex-gratia amount. It was Management's clear understanding that the Redundancy Act rules would only apply to the statutory element.
4. Each employee signed a discharge form which was submitted to the Union in advance for approval.
The form clearly states that the amounts paid are "in full and final settlement" of all claims against the Company.
5. The Company has acted honourably and fairly in all its dealings with both its employees and the Union. The Company has honoured the terms of the agreement to the letter and the Union has failed to identify where the Company has failed to comply.
The Union has pursued the Company for failing to observe a provision which is not in the agreement. The Company wishes to state that it no longer operates in the Republic of Ireland and is disturbed by this apparent attempt by the Union to tarnish the Company's reputation by making this serious allegation of breaching an agreement.
RECOMMENDATION:
The Court has carefully evaluated the submissions of both parties in this dispute.
The Court is firmly of the view that in the absence of any indication to the contrary, the only reasonable interpretation which can be placed on the agreement reached between the parties is that all elements of the agreed redundancy package would be calculated in accordance with the Redundancy Payments Acts, 1967 - 1991.
Accordingly, the Court recommends that the Union's claim be conceded in full.
Signed on behalf of the Labour Court
Kevin Duffy
12th October, 1999.______________________
TOD/BCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.