FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : DUBLIN PORT COMPANY (REPRESENTED BY ARTHUR COX, SOLICITORS) - AND - A WORKER DIVISION : Chairman: Mr Flood Employer Member: Mr McHenry Worker Member: Mr O'Neill |
1. Joint referral arising from High Court settlement terms.
BACKGROUND:
2. Before the 31st of January, 1998, pilots engaged by Dublin Port Company and its predecessor, The Dublin Port and Docks Board, were licensed not employed. Pilots were paid a fixed annual sum on which they paid tax on a self-employed basis under Schedule D.
The Dublin Port Company was established under the Harbours Act, 1996 and the assets and liabilities of the Dublin Port and Docks Company were vested in the Company on the 3rd of March, 1997. The pilots instituted High Court proceedings against the Company but the matter was subsequently settled with the terms of the settlement formally recorded.
Following consultation with the interested parties (including the worker) and SIPTU., the Company decided to organise the pilots as members of staff.
The 1996 Act provided that if the Company decided to proceed by way of employment rather than by way of licence, the Company could make provision of compensation by it to any holder of a pilots licence as respects the financial loss (if any) that, in the opinion of the Company, the said holder would incur in consequence of the Company carrying into effect the said decision.
In the course of the settlement negotiations the question of compensation was raised. The Company maintained that as far as it was concerned no financial loss arose to the pilots by reason of becoming employed. The pilots held the contrary opinion. In accordance with clause 4 of the settlement terms it was agreed to refer the matter to the Labour Court under Section 20(2) of the 1969 Act. A Court hearing was held on the 15th of November, 2000 this was adjourned and reconvened on 16th January 2001.
WORKER'S ARGUMENTS:
3. 1. Pilots were and still are, on duty at immediate notice in the Pilot Station, or at short notice to be called from home or on mobile phones.
2. Pilots provide 24 hour cover and a car is obviously necessary to provide this cover.
3. Being self-employed, pilots paid tax under Schedule D and could offset motor expenses against their tax.
4. As employee of the Dublin Port Authority , pilots cannot offset motor expenses against income tax and this is where the significant loss in income occurs.
5. Directly employed pilots are subject to the penalties and procedures of the Act, as well as to disciplinary procedures under employment legislation.
6. To ensure equity among pilots, the starting salary of 1st February 1998 should have covered any losses suffered by pilots as a result of forced change in tax status.
COMPANY'S ARGUMENTS:
4. 1. The pilots (including the worker) became employed on exactly the same terms and conditions as they previously enjoyed as licensed pilots. The Company cannot see how in these circumstances and, in the light of the benefits derived by them under the Settlement Terms, any financial loss arises to the pilots.
2. The Company believes that the losses claimed are not properly allowable to the pilot.
3. The Company supplies uniforms and mobile telephones to the pilots and pays the home telephone rental .
4. The Schedule D motor expenses and motor vehicle wear and tear deductions/expenses claimed by the claimant while he was a self- employed pilot ( and which he now claims are not available to him as a Schedule E taxpayer) constitute legitimate loss to the extent only that the deductions/expenses are properly claimed.
5. The Labour Court should not condone or award a payment which is designed to compensate for any tax deduction which is improperly claimed.
RECOMMENDATION:
The issue before the court relates to the compensation to be paid to the pilots who transferred from being self-employed to being direct employees of the company, as part of an agreement arrived at, following a dispute between the parties. In the original legislation, section 56(2) of the 1997 Act, there was a paragraph which dealt with compensation, indicating that the pilots would be compensated for loss due to the transfer. In the subsequent discussions the word “legitimate” was inserted into the payment of compensation clause.
The company for its part accepts that it did agree to compensate for loss but that it clearly indicated that all claims must be for “legitimate” loss, and that the wording contained in the high court settlement is clear on this point.
The company's claim is that while the pilots may have enjoyed tax allowances for travel to and from work when self-employed these allowances were not necessarily legitimate, and they would not have stood the test of legitimacy if examined closely by the Revenue.
The claimant argues that he understood he would be compensated for loss suffered as a result of his change of employment status. He is adamant that he was unaware of the significance of the wording used in the agreement and that it was never explained to him by his legal representative at the time.
At the original hearing the claimant agreed to approach the Revenue Commissioners to clarify that he had been allowed claim for travel to and from work under schedule D of the tax code, prior to transferring to schedule E and that he would still enjoy this allowance if self-employed. Subsequently the claimant decided not to approach the Revenue in relation to this issue and a reconvened hearing took place.
The Court has heard expert opinion from both sides which is contradictory. The company expert arguing that he does not believe the expenses allegedly allowed by the Revenue should come under the heading legitimate, and that they would be disallowed by the Revenue Commissioners if they were audited or examined.
The claimants expert has told the court that as his financial adviser she had claimed these expenses over the years, and they have been conceded. She further argued that as a former tax inspector she believed that these expenses were legitimate.
Given these conflicting opinions it is extremely difficult for the court to decide the merits of the case on a tax basis. It was suggested by the company that a hypothetical case be put by the Court to the Revenue Commissioners for clarification but it is the Court’s view that such a request is unlikely to elicit a response, and even if it did, it is likely to raise more questions.
Having considered all the information before it the Court is of the view that the agreement arrived at was more an Industrial Relations solution than a legal one, and evolved as a means of settling a dispute, thereby enabling the company and the employees to move forward. On the same basis the court believes that the resolution of this dispute lies in an Industrial Relations solution rather than legal interpretation.
The Court therefore recommends that the parties enter into discussions to try to agree a satisfactory compensation package. While the Court is of the view that the expectations of the claimant is excessive in this particular case, it equally believes that the company offer should be improved, bearing in mind that whether the tax situation was legitimate or otherwise it would appear that the claimant was enjoying the allowance prior to transferring.
The discussions between the parties should be completed within 6 weeks of this recommendation and if they fail to agree on a compensation figure the court will on request make a recommendation to resolve the dispute.
Signed on behalf of the Labour Court
Finbarr Flood
23rd February, 2001______________________
H.MC.D./C.C.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Helena McDermott, Court Secretary.