FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 20(2), INDUSTRIAL RELATIONS ACT, 1969 PARTIES : MCCORMICK MACNAUGHTON LIMITED (REPRESENTED BY IRISH BUSINESS AND EMPLOYERS' CONFEDERATION) - AND - UNITE & AGEMOU DIVISION : Chairman: Ms Jenkinson Employer Member: Mr Murphy Worker Member: Mr Nash |
1. Inability to pay final phase of Towards 2016; Company is disputing findings of the Assessor's Report
BACKGROUND:
2. The Company distributes Caterpillar Construction Equipment, Marine and Electrical Generating Equipment and has outlets throughout the island of Ireland. The claim concerns 90 members of both Unions who are based at Company's premises on the Naas Road in Dublin who have not been awarded the 2.5% pay increase due under the final phase of Towards 2016, payable since 1st April, 2008, in accordance with Section1.9(ii) of the Agreement.
The Company claimed inability to pay the increase due to ongoing trading losses and this issue was referred to the Labour Relations Commission by UNITE which resulted in an Assessor being appointed to appraise the then current financial position of the Company and to determine whether or not the Company could in fact pay the percentage increase.
The Assessor in his Report dated 26th September, 2008, stated:-
" I have considered its position (the Company) very carefully and have come to the conclusion that at this time I do not uphold its claim under Clause 1.9(ii)."
The Company disputes the findings of the Assessor in his Report, saying that the trading position of the firm has deteriorated significantly since the date of the report.
The dispute was referred to the Labour Court on the 22nd December, 2008, in accordance with Section 20(2) of the Industrial Relations Act, 1969, and both parties agreed to be bound by the Recommendation. A Labour Court hearing took place on the 15th January, 2009.
UNION'S ARGUMENTS:
3. 1. The Union accepts in full the Assessor's Report, including the Company's ability to pay the 2.5% wage increase payable since April, 2008.
2. The Union never accepted the Company request for a 3-month deferral of the 2.5% wage increase.
3. There is a willingness to engage in measures aimed at reducing costs in the interests of protecting jobs going forward.
COMPANY'S ARGUMENTS:
4. 1. The business projections given to the Assessor were too optimistic, the 59% drop in demand for product has since risen to a 75% drop.
2. The retrospective cost of the increase would be €150,000 and the money is simply not there at present, considering the €11 million loss forecast for 2008.
3. The Assessor's Report is for all intents and purposes now an historical document.
RECOMMENDATION:
This dispute concerns a plea by the Company of inability to pay the final phase of “Towards 2016”, i.e. 2 ½ % from 1st April 2008.
Clause 1.7 of the Agreement provides that an employer may plead inability to pay the terms of the Agreement where this would lead to a serious loss of competitiveness and employment. Clause 1.9 sets out the procedure to be followed where such a plea is made and Clause 1. 9(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 that the Company could not seek the protection of Clause 1.9 (ii).
The Assessor concluded as follows:
- “The company’s trading has deteriorated very significantly this year and despite having made profits consistently in the last few years it has now moved to a significant loss making position. At this stage it cannot see the market changing until 2010 and I would agree with this assessment.
I have considered its position very carefully and have come to the conclusion that at this time I do not uphold its claim under Clause 1.9 (ii).”
The Company discounted the findings of the Assessor’s Report on the basis that it was experiencing serious financial difficulties at the time of his examination of its records in September/October 2008, however, since then the situation had substantially disimproved.
As the dispute remained unresolved following the Assessor’s 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 Court has considered the submissions made by both sides and has considered all of the financial and related information with which it was provided. Furthermore, the Report of the Assessor has also been fully considered and given serious weight. The Court is satisfied that the Company is experiencing very serious financial and competitive pressures and, based on its current financial situation and its deteriorating losses, is therefore satisfied that the employer has demonstrated that it cannot pay the final phase of “Towards 2016”.
The Court so decides.
Signed on behalf of the Labour Court
Caroline Jenkinson
9th February, 2009______________________
JFDeputy Chairman
NOTE
Enquiries concerning this Recommendation should be addressed to John Foley, Court Secretary.