FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2001 SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : FRUIT OF THE LOOM INTERNATIONAL LTD (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Carberry Worker Member: Mr O'Neill |
1. Redundancy payments - Interpretation under Sustaining Progress.
BACKGROUND:
2. The Union are in dispute with the Company in relation to the effect of the adjustment to statutory redundancy provisions on the existing Redundancy/Severance Package Agreement introduced by the Redundancy Payment Act, 2003. The Redundancy Payments Acts were amended in May 2003 to implement the recommendations agreed in the Report of the Redundancy Review Group. The Government agreed that it would enhance statutory redundancy terms to provide for two weeks pay per year of service with the abolition of differential by age and retain the bonus week in the calculation of payments. The rebate of 60% of the statutory redundancy payment from the Social Insurance Fund would apply to this revised level of statutory payment.
In November, 2003, the Company announced its intention to reduce the workforce and proposed to pay employees similar redundancy terms as under the old redundancy payments agreements and indicated that it would be prepared to discuss a new formula with the Union so that employees would be no worse off than under previous redundancy agreements. The Union states that the Company was not entitled to the increased rebate payable under the new statutory terms and the increased rebate should go entirely to the employees. No agreement was reached on the matter at local level.
Both parties referred the dispute to the Labour Court pursuant to Clause 3.3 of Part 2 of Sustaining Progress and under Section 20(2) of the Industrial Relations Act, 1969. The parties agreed to be bound by the Court's recommendation. A Labour Court hearing took place on the 15th January, 2004.
UNION'S ARGUMENTS:
3. 1. The existing agreed package, which is well established and has been used to effect a large number of redundancies within the Company, provides for a package of 3.5 weeks per year of service plus (the then) statutory entitlements.
2. The Union agrees under the terms of 'Sustaining Progress' there is to be no increasedcostto the employer.
3. The Company should not be using 'Sustaining Progress' for a purpose that it was never intended, to reduce the cost to them of making their employees redundant.
COMPANY'S ARGUMENTS:
4. 1. The Company does not believe that the spirit of the legislation would be met by allocating all benefits to one party in the dispute.
2. The Company has made every effort to accommodate a compromise solution to this matter. Employment levels have fallen from a high of 3200 to its current level of 412.
3. The Company is making every effort to keep the business competitive and remain viable.
4. The lack of co-operation from the Union and failure to reach a compromise has delayed the rationalisation programme leading to over production in one department. This inflexibility will add extra costs to the business.
5. The Government established a Review Group to examine the operation of the Redundancy Payments Scheme, to ensure the Scheme met the best requirements of employers and employees.
RECOMMENDATION:
The current agreement on redundancy terms provides for 3.5 weeks pay per year of service plus statutory entitlements. As a result of the adjustments in statutory redundancy terms introduced by the Redundancy Payments Act, 2003, it is now necessary to restructure that agreement.
Consistent with the provisions clause 3.3 of the pay Agreement associated with Sustaining Progress and having regard to the current level of redundancy pay provided for in the Company/Union agreement, the Court recommends that the restructuring should be on a cost neutral basis in this case. The parties should meet to agree the details of a new formula which meets this criterion. In so doing, regard should be had to the fact that Section 17(4) of the Employment Equality Act, 1998 has now been repealed in consequence of which it is no longer possible to differentiate between workers based on their age at the time service accrued.
Signed on behalf of the Labour Court
Kevin Duffy
27th January, 2004______________________
JB/MB.Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.