FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : CLERY & CO (1941) PLC (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Murphy Worker Member: Ms Ni Mhurchu |
1. Restructuring/Rationalisation
BACKGROUND:
2. Clery & Co (1941) PLC operates a department store on O’Connell Street in Dublin and it also owns a number of furnishings businesses in Leopardstown, Blanchardstown and Guineys of Talbot Street. The Company, in a bid to address ongoing financial losses, is seeking to introduce new working arrangements and duties for the service grades with the resultant elimination of overtime and implementation of redundancies. The Company proposed to outsource the facilities management of the O'Connell Street store to a third party contractor. The Company contends that this will affect four portering positions and as a result the Porters will have the option of taking voluntary redundancy or transferring the employment to the incoming contractor. The Company would discontinue delivery services from the O'Connell Street store, which would result in further redundancies from the portering section. All redundancies and transfers would be on a voluntary basis initially but in the event that the scheme is oversubscribed, seniority should be taken into account. If the numbers sought are not reached then the redundancies would be implemented on a last in first out basis.
- The Union, on behalf of its members employed in the Cleaning, Transport and Portering Section, rejects the Company’s proposals on the basis that it would not accept a reduction of overtime. It would not be possible to continue to cover duties required with reduced staff numbers. The proposed voluntary redundancy package is inadequate and compulsory redundancies are unacceptable.
- The dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 7th September, 2005, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 6th December, 2005, the earliest date suitable to the parties.
- The dispute could not be resolved at local level and was the subject of a Conciliation Conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on the 7th September, 2005, in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 6th December, 2005, the earliest date suitable to the parties.
3. 1. The Company's proposals on the changes of Portering duties are not workable particularly with the outsourcing of the cleaning functions and the reduction of the Porters' numbers. There will be insufficient Portering staff left to provide an efficient and professional service to the clients of Clery's, resulting in delays, a back-log of work and an inadequate service in relation to the service presently provided by the Portering section.
2. The average length of service of the Union's members employed in the cleaning, goods inwards and transport sections is between twenty and thirty six years. The average age profile of those members is between forty to mid-fifties. The proposed redundancy package, and in particular the capping of same, denies the members their full statutory entitlement for service with the Company.
3. The Union is seeking on behalf of its members that a more reasonable and rational set of proposals effecting its members and a more favourable redundancy package be recommended, with particular concerns for members remaining in both full-time and part-time employment. Retention of current conditions of employment is sought, inclusive of overtime.
COMPANY'S ARGUMENTS:
4. 1. The Company, in its current weakened financial position, must implement the proposed restructuring to remain economically viable. Staff costs account for 26.7% of net turnover. This cost is unsustainable and must be contained to maintain the future viability of the Company. Portering overtime adds 30% to the Portering pay costs.
2. The value of the Union's claim for enhanced redundancy payments is unsustainable given the Company's current financial position. The Company's proposal of five weeks pay per year of service subject to a cap of one and a half years pay or €60,000, whichever is greater, is generous and takes account of the norms in the retail trade.
3. Following the introduction of the Company's proposal, there will be no requirement for services staff to work overtime. The Company's annual Portering overtime costs are in excess of €75,000 and it cannot afford to sustain this overtime cost in the future. The Company has offered to compensate employees for any loss of earnings resulting from its proposals.
RECOMMENDATION:
Having considered the submissions of the parties it is clear to the Court that there are three key issues which must be resolved before final agreement can be reached on the operational aspects of the Company's restructuring proposals.
These issues are:
The structure of a redundancy package;
Whether the redundancy scheme should be exclusively on a voluntary basis; and
The future position with regard to regular and rostered overtime
In respect of these three issues the Court recommends as follows:
Redundancy Package
The Court is of the view that the Company's offer of five weeks pay per year of service, inclusive of statutory entitlements, is reasonable in the circumstances and should be accepted.
The Company has proposed that the amount payable in any case should be capped at 1.5 times annual earnings or at €60,000, which-ever is the greater. The Court notes that the basic rate of pay of those likely to be made redundant is of the order of €19,000 p.a. There are, however, a small number of staff in the affected categories who, with regular overtime, are earning up to double that amount. The cap, as proposed by the Company, would result in the maximum amount which those on basic pay could receive being fixed at the equivalent of over three years pay. However, in the case of those with high overtime earnings, the amount receivable would be capped at the equivalent of 1.5 years pay.
In the Court's view some readjustment in the proposed capping arrangements is warranted particularly as it affects those with higher earnings. The Court recommends that in the circumstances of this case, and having particular regard to the service profile and the disparity in earnings between the higher earners and those on basic rates, the cap should be fixed at 2.25 times annual earnings or €60,000. The option which yields the higher amount should be applied in each individual case.
Voluntary / Compulsory Redundancy.
The Court recommends that the package be offered on a voluntary basis. Should there be insufficient volunteers to meet the reduction targets the parties should meet to address the problem. Should they fail to agree on an appropriate solution the matter may be referred back to the Court.
Overtime.
It appears clear that a small number of employees have regularly worked large amounts of overtime. In the case of those involved the total number of weekly hours worked is significantly in excess of the maximum number of hours permissible under the Organisation of Working Time Act, 1997. It is abundantly clear that the current practice in this regard is unsustainable and cannot continue.
The Court recommends that for those remaining, regular and rostered overtime should be bought out at twice its annual value measured on an individual basis.
Other issues.
On acceptance of this Recommendation the parties should resume their negotiations on the outstanding issues involved in implementing the restructuring of the services / portering grade. These negotiations should be completed by 31st January, 2006. If final agreement is not reached outstanding matters may be referred back to the Court for a definitive Recommendation.
Basis of the Recommendation.
This Recommendation is made having regard to the particular circumstances pertaining to the grades affected by the proposed restructuring and to the current financial and commercial circumstances of the Company. The terms of the Recommendation are not intended, and should not be relied upon, as having any precedent value in any subsequent situation of redundancy.
Signed on behalf of the Labour Court
Kevin Duffy
21st December 2005______________________
JO'CChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Joanne O'Connor, Court Secretary.