FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : DONEGAL HEALTHCARE (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - AMALGAMATED ENGINEERING AND ELECTRICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Keogh Worker Member: Ms Ni Mhurchu |
1. Redundancy Terms.
BACKGROUND:
2. The dispute concerns the redundancy terms offered to two workers. The Company manufactures medical devices and employs 232 workers. It was established in 1982 and was originally part of the IMED Corporation and was taken over by Pharmacia and Upjohn in 1995. In February, 1999 there was a management buy out and the Company became Donegal Healthcare. The Company has been trading at a significant loss during 2000. Following an evaluation of its operations carried out by the Irish Productivity Centre, the Company, as part of a rationalisation process, declared thirteen workers redundant with effect from 11th January, 2001. Eleven workers were from the Management /Admin area and two are craftworkers. The Union representing the two craftworkers accepts the need for the redundancies but claims 5 weeks pay per year of service plus statutory as this was paid in previous redundancy situations. The Union claims that the previous redundancy deal has the status of an agreement. The Company rejected the claim stating that no agreement was in place and it cannot afford to make ex gratia payments. The dispute was referred to the Labour Relations Commission. A conciliation conference was held on the 26th January, 2001 but agreement was not reached. The dispute was referred to the Labour Court by the Labour Relations Commission on the 30th January, 2001. A Court hearing was held on the 8th February, 2001.
UNION'S ARGUMENTS:
3. 1. The transfer of the IMED Corporation to Pharmacia Upjohn was done on the basis of the Transfer of Undertakings Regulations 1980, subsequently in 1999 the management buy out was effected. The redundancy package in force negotiated by another union with IMED was an ex gratia payment of 5 weeks plus statutory. In 1997 Pharmacia and Upjohn made a number of workers redundant and one worker affected was a craft chargehand who received 5 weeks plus statutory.
2. At the time of the transfer, the Union was advised that all agreements were still in existence. The Company has accepted that 5 weeks plus statutory was paid in the various redundancies over the years as per the agreement but now is not prepared to pay other than statutory.
3. Under the Transfer of Undertakings Regulations, any agreement, in place prior to the take-over of the Company, is still in being unless negotiated and changed. No negotiations and no changes to that agreement have taken place. The Company is required by law to pay the redundancy terms of 5 weeks plus statutory as provided for in the agreement.
COMPANY'S ARGUMENTS:
4. 1. The Company, in the past, has treated all employees equally with regard to redundancy. In the current circumstances, where 13 workers are being made redundant, the Company cannot differentiate in relation to the terms paid to these workers.
2. It is a fact that in the past, the Company, under its various ownerships made ex gratia payments amounting to 5 weeks per year of service plus statutory redundancy. Given the Company's current financial situation it is not in a position to make any ex gratia payments.
3. The terms of any redundancy payment must take account of the commercial and economic circumstances of the Company pertaining at the time. In the past the Company was part of multinationals with substantial financial resources on which to draw. It is now a limited company whose sole income is sales revenue.
4. The Company is not in a position to raise additional funds at this time due to its existing high levels of borrowing arising from the purchase of the company in 1999. Any ex gratia payments would have the effect of placing the Company's immediate viability in doubt and would delay the Company's return to profitability.
RECOMMENDATION:
The Court notes that on each previous occasion on which redundancies occurred, ex-gratia compensation equal to five weeks pay per year of service was paid. This, in the Courts view, did create an expectation that similar terms would be paid in the present case.
However, the Court believes that regard must be had to the changed ownership and financial position of the company in structuring a redundancy package to resolve the present dispute. The Court, therefore, recommends that the company offer to pay three weeks per year of service, together with the statutory terms, at the time the redundancies take effect. The parties should meet again in twelve months from that date to review the financial position of the company and subject to a sufficient improvement in that position an additional two weeks pay per year of service should then be paid.
Should the parties fail to reach agreement at that time the matter may be referred back to the Court.
Signed on behalf of the Labour Court
Kevin Duffy
20th February, 2001______________________
TOD/CCDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Tom O'Dea, Court Secretary.