FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : DUNBIA MEATS (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Grier Worker Member: Ms Ni Mhurchu |
1. Non-payment of the last two phases of Sustaining Progress II.
BACKGROUND:
2. Dunbia (Kilbeggan) is part of the Dunbia Group which was established in 1976. The Company supplies beef and lamb products for the national and international retail, commercial and food service markets.
The Company currently has 190 employees of whom approximately 32 are members of the Union.
In September 2005 SIPTU, on behalf of its members, approached the Company concerning payment of the final two phases of Part two of Sustaining Progress. The Company stated that it was not in a position to pay the two phases, as it was not operating at a profit.
The Union referred the dispute to the Labour Relations Commission and a conciliation conference took place on the 21st June, 2006. Following the conference both parties agreed to participate in a Cost-Offsetting Programme. The only cost saving identified by the employees was the setting of TARE weights on products. The Union maintains that this change was implemented and led to some cost saving for the Company. This however was seen by the Company to be part of the duties of employees and was therefore not considered to be cost saving. The employees subsequently withdrew from the Cost-Offsetting Programme.
The case was referred back to the Labour Relations Commission for conciliation and agreement was reached to have an Assessor appointed to review the ability of Dunbia (Kilbeggan) to pay the remaining two phases of Sustaining Progress.
On 6th July 2007 the Company and the Shop Stewards attended a meeting at the Labour Relations Commission to review the outcome of the Assessor's report, which concluded that the Company 'continues to trade unprofitably and has not yet declared a financial outcome that could warrant payment of the final two phases of Sustaining Progress II.'
The dispute was referred to the Labour Court on the 3rd September, 2007, in accordance with the terms of Sustaining Progress on behalf of the parties under Section 20(2) of the Industrial Relations Act, 1969, with both parties agreeing to be bound by the recommendation of the Labour Court. A Labour Court hearing took place on the 1st April, 2008.
UNION'S ARGUMENTS:
3. 1. The Union believes that some form of wage increase should be paid to its members in light of the cost saving measures the members identified and which the Company implemented and saved approximately €120K per annum.
2. The Union maintains that a number of their members' rates of pay have already been caught up with by the increases in the National Minimum Wage over the past years and there is now a fear that the plant will become a minimum wage factory in the near future if no wage increase is secured.
3. The Company's continuous pleading inability to pay wage increases totalling 16.5% over the period since October 2004 to the present day is unprecedented. This employment is no longer sustainable to the members.
COMPANY'S ARGUMENTS:
4. 1. In October 2004 the Company were informed of the impending loss of a major contract which had a substantial impact on the Dunbia (Kilbeggan ) plant. As a result of this the Company had to review its direction and try to develop new marketing opportunities. During this period the Company was selling its product at a loss in order to keep the plant operational and to retain employees.
2. The occurrence of unforeseen events in 2007 will lead to the Company experiencing substantial projected losses for the year ended March 2008. Foot and Mouth has restricted the availability of cattle sourced from the UK into the Republic of Ireland for de-boning and the 13.4% fall in sterling from €1.44 to recent all-time lows of €1.27 has led to downward pressures on GBP sales, which have been 30% of output.
3. The Company has undergone significant change in recent times and has worked consistently to ensure the viability of the business. Due to the continuing increases in operational costs, minimum wage increases, trends in cattle prices, increasing energy bills and the transport cost to export to the European market, the Company continues to operate at a loss and remains heavily dependent on its parent company in terms of having access to sufficient working capital to keep the Company liquid and operational. This was also highlighted in the Assessor's report.
RECOMMENDATION:
This dispute concerns a plea by the Company of inability to pay the last two phases of Sustaining Progress II.
Clause 1.8 of the agreement provides that an employer may plead inability to pay the terms of the agreement where this would lead to serious loss of competitiveness and employment. Clause 1.10 sets out the procedure to be followed where such a plea is made and Clause 1.10(ii) deals with situations where an employer claims inability to meet the terms of the agreement in full.
The agreement provides that the onus is on the employer to substantiate the plea. The procedures prescribed by the agreement involve an examination of the economic, commercial and employment circumstances of the employer by an Independent Assessor appointed by the LRC.
Having examined the financial information supplied by the Company, the Assessor concluded: -
- "I am satisfied that Exel*continues to trade unprofitably, and has not yet declared a financial outcome that could warrant payment of the final phases of Sustaining Progress 2.”
As the dispute remained unresolved following the Assessors report, it was referred to the Court pursuant to Section 20(2) of the Industrial Relations Act, 1969. The Court is confined to determining whether the Employer can or cannot pay the terms at all.
The Union stated that the workers involved in the claim had not received pay increases since December 2004 and stated that their employment was no longer sustainable.
The Court notes the Company has initiated changes/investments, which it hopes, will bring it into profit and ensure the viability of the business.
The Court has considered the submissions made by both sides and has considered all of the financial and related information with which it was provided. The Report of the Assessor has also been fully considered and given serious weight. The Court is satisfied that the Company is experiencing significant financial and competitive pressures and is therefore, satisfied that the employer has demonstrated that it cannot pay the final two phases of Sustaining Progress II along with the appropriate retrospection.
The Court recommends that the Company should keep the Union informed of the progress of its new business initiatives/investments, on a regular basis. The Court also recommends that the parties should meet to re-assess the situation in August 2008.
The Court so decides.
- * Exel Meats, Kilbeggan (Exel) referred to in the Assessor’s Report is now known as Dunbia Meats.
Signed on behalf of the Labour Court
Caroline Jenkinson
17th April, 2008______________________
Deputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to Madelon Geoghegan, Court Secretary.