FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 2004 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : TOPAZ ENERGY LIMITED FORMERLY IRISH SHELL LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Doherty Worker Member: Ms Ni Mhurchu |
1. Company's refusal to implement long standing agreement on 'last in first out' LIFO.
BACKGROUND:
2. Topaz Energy Limited acquired Irish Shell Limited in December, 2005. Irish Shell has been established in Ireland since 1903 and is involved in the marketing and distribution of oil products. The Company presently employs approximately 73 staff in Ireland in sales, distribution and support functions. The parties are in dispute concerning selection for redundancy. The Union claim that an agreement exists which provides that selection should be by LIFO. The Company contends that the agreement referred to was terminated in 2003. The Union are seeking to have LIFO restored.
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 17th January, 2005 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on the 5th May, 2006.
UNION'S ARGUMENTS:
3.1 The Company has broken a long standing agreement on ‘last in first out’ The LIFO agreement was predicated on an agreement on changes in pay which has been of direct benefit to the Company because it reduced rates by 30% for new entrants. The Company has enjoyed considerable savings ever since.
2. The Company acted unreasonably by not suspending the redundancies pending a Labour Court determination. The Union members concerned (2) were made compulsorily redundant in January 2005.
3 The Company failed to adhere to normal industrial relations procedures, i.e. maintenance of the status quo until the procedures have been exhausted.
4. The Company’s method of selection was neither fair or transparent. The Company has shown total disregard for normal industrial procedures and has unilaterally changed what is regarded as a contractual obligation.
COMPANY'S ARGUMENTS:
4.1The Company agreed to the ‘LIFO’ principle in 1993 as part of an agreement with the Union on introduction of new pay rates. The thrust of the Union’s request and the Company’s concession of same was to allay any fears that existing staff had that their positions would come under greater focus for redundancy in the future on an economic cost basis.
2. The Company advised the Union in June 2003 that it proposed to change the methodology for selection of staff for redundancy and make the selection process one which meets business need and which is most fair and equitable in all the circumstances.
3. Although the Union voiced its objection at a meeting with the Company in August 2003, the principle issue was not subsequently pursued by the union and the Company has continued to use the new selection process to effect redundancies since 2003 without issue.
4. The new selection process has found favour with the vast majority of staff in the organisation who see it as most fair and equitable in all the circumstances as it does not offer any particular section of staff any advantage over their colleagues.
5. The new selection process is fair and objective and selection is carried out in line with comprehensive assessment of each candidate for new positions in the organisation.
RECOMMENDATION:
It is clear that the parties concluded an agreement in 1993, the purpose of which was to provide that future selection for redundancy would, in the absence of volunteers or early retirement, be by LIFO. That agreement was concluded in the context of a concession by the Union to the introduction of lower rates of pay for new entrants. There is nothing in the written terms of the agreement to indicate that the commitment to the use of LIFO was limited in duration, nor was there any provision for its termination on notice.
In a letter dealing with restructuring and redundancies sent to the Union in July 2003 the Company expressed its intention to select candidates for redundancy by way of competency assessment. This letter did not refer to the 1993 Agreement. At a subsequent meeting the Union indicated its opposition to the proposed method of selection and its willingness to agree to any change in the 1993 Agreement. Nonetheless, the Company proceeded to make selections for redundancy by way of competency assessment. This was not challenged by the Union at the time. The Company now contends that these events combined to terminate the 1993 Agreement.
The Court has reviewed all of the correspondence which passed between the parties in relation to this matter. In its letter to the Union dated 30th July,2003, the Company gave no indication of a desire to renegotiate the 1993 Agreement or to engage with the Union in seeking to vary its terms. It merely indicated an intention to apply a method of selection which was at variance with that provided for by the Agreement. Furthermore, in its letter of 16th November the Company simply claimed that the Agreement was outdated for the reasons stated. It did not claim, either expressly or implicitly, that the Union had agreed to terminate the agreement whether tacitly or otherwise.
The Court notes that the Company did put the Union on notice of its intention to introduce selection by assessment and, for reasons which were explained to the Court, the Union, while rejecting the Company's proposal, did not pursue the matter formally or procedurally for a period of 18 months. Nevertheless, the Court cannot accept the Company's assertion that the 1993 Agreement was properly terminated in a normal industrial relations sense. The Court has also considered the Company contention that since a number of redundancies have been implemented by way of competency assessment, this now constitutes custom and practice. As the Court has previously pointed out, custom and practice cannot in itself be relied upon to offset or supplant the clear terms of the extant written agreement (see most recent Recommendation 18412 - Heatons Letterkenny and MANDATE, issued 6/12/2005).
Circumstances frequently change after an industrial relations agreement is concluded which makes its terms more or less attractive to one or other party than was originally envisaged. Nonetheless, parties are expected to honour their agreement for its duration or until it is voluntarily altered through negotiation, including where necessary, third party adjudication.
In the present case it is clear that the Company no longer believes that LIFO is an appropriate mode of selection for redundancy. In these circumstances the normal strictures of good industrial relations dictates that the Company should raise the matter with the Union and that the parties should enter into formal negotiations with a view to putting in place a mutually acceptable system for the future.
The Court recommends that the parties should commence negotiations as soon as practicable for the purpose of reaching agreement on future selection for redundancy. If the parties cannot reach agreement the normal industrial relations procedures should be utilised.
With regard to the individuals who were selected for redundancy in contravention of the 1993 Agreement, no specific claim was presented on their behalf. It is also noted that they chose to pursue their grievance by way of Common Law proceedings. While that is their absolute right, the Court does not accept that they can now seek redress in respect of the same grievance by way of an industrial relations claim. Moreover, the individuals subsequently accepted a redundancy settlement and discontinued their legal action.
Accordingly, the Court does not recommend that issues relating to their selection for redundancy be reopened at this stage.
Signed on behalf of the Labour Court
Kevin Duffy
22nd May, 2006______________________
JBChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jackie Byrne, Court Secretary.